Square has agreed to purchase Afterpay in an acquisition that is valued at $29 billion. Square which is known for its white merchant tablets, is now planning on expanding into the credit businesses and Afterpay is going to help them do that.
Afterpay allows its customers to purchase goods and pay them back through four interest-free payments; the service will only charge the user extra if the user misses a payment. Square is interested in tapping into this market especially after the COVID-19 pandemic increased the popularity of credit. In addition, Square believes that Afterpay’s methods of lending offer safer credit to younger generations as well as those most affected financially by the pandemic.
Jack Dorsey, Square’s chief executive stated, “Square and Afterpay have a shared purpose, we built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”
Afterpay has had its share of problems over the past year in which Afterpay services are not legally considered loans under U.S. law. This resulted in Afterpay settling with California after being accused of illegal practices and the company requiring a refund of $900,000 to its consumers. Since then, the company has been expanding and is now attempting to partner with Westpac Banking Corp. in which the company will have its own bank accounts.
Source: Wall Street Journal
