Square Purchases Afterpay to Offer Settlement in Installments Services

On Sunday, Square announced that it has plans to buy Afterpay, an Australian fintech company. The company centers around allowing customers to make payments in four-free installments, and if they miss an automatic payment, they pay.

Over the 16 million customers Afterpay has access and manage their installments over the Square Cash App. However, it is still not possible until the final transfer takes place over the first quarter of 2022.

Square is Advancing its Payments Option

Square, founded by Jack Dorsey, was created to develop technology that brings together merchant services and mobile payments into a straightforward service. For example, its Cash App allows users to send and receive money. It also has a point-of-sale service that enables merchants to process payments at the comfort of their mobile phones.

Afterpay runs a Buy Now, Pay Later (BNPL), also known as a point-of-sale loan. The platform allows shoppers to make a purchase then pay for it in equal installments without interest rates or fees attached.  BNPL allows up to $1,500 worth of purchases, making it convenient for users to buy more priced items.

Square’s CFO, Amrita Ahuja, stated that the Afterpay acquisition would ensure consumer interest in a new buying opportunity that is transparent and can directly manage. He added that this is an excellent opportunity to develop a powerful e-commerce platform that will work for the customer.

Dominating Wall Street?

In just the first two months of this year, 2021, BNPL grew 215% year-on-year. According to an Ascent survey, more than half of the U.S. population uses the “buy now, pay later” service to avoid paying interest on credit cards or buying an item, not within their budget.

An analyst at CreditCards.com said that BNPL is targeting young adults in that it is transgenerational. A survey by Cardify.ai shows that millennials and Gen Z make up 80% of the transactions. Before therefore, the young population is a perfect target as it avoids extra charges from loan fees. Also, they might want to buy something new, but they lack the money for it. 

According to Oliver Wyman, a management consultant, companies that offer such services carried out more than $20 billion worth of transactions in the U.S. alone. Moreover, the number will only increase, and by 2025, Kaleido Intelligence estimates that about $680 billion worth of transactions will take place using such installments.

Bitcoin live price
price change

Wall Street may just have found a fair competitor because of the speculated growth of the “buy now, pay later” services. As a result, payment service providers such as FinTech, American Express, and even the payment giant, Paypal, are coming up with their versions of the BNPL to capture the growing market.

Stay up to date with our latest articles