Square announced that it would acquire the leading Australian BNPL provider Afterpay for AUD 39 billion (USD 29 billion), a 31% premium to its market value, via a share swap. The transaction is expected to close in Q1 2022. Anthony Eisen and Nick Molnar (Afterpay’s co-founders and co-CEOs) are expected to join Square after the deal to lead Afterpay’s business units. In addition, Square will appoint one Afterpay director to its board.

Afterpay is an Australian BNPL solution provider that allows customers to pay for their purchases over four bi-weekly installments. Afterpay does not charge upfront fees or interest; it generates revenue through customers’ merchant fees and late fees. In addition to Australia, Afterpay operates in markets such as the US, Canada, the UK, and New Zealand, as of June 2020. In FY2020, Afterpay’s platform facilitated AUD 11.1 billion (approximately USD 7.7 billion) in transactions, reflecting 112% YoY growth. Similarly, it more than doubled its active customers to around 10 million. The Australian and New Zealand markets accounted for roughly 60% of platform transactions; however, 57% of its active customers were in the US (5.6 million, June 2020).

Square intends to integrate Afterpay into its Seller (Square’s merchant ecosystem) and Cash App (digital wallet, 70 million users as of August 2021) products. Through these integrations, Square intends to offer BNPL solutions to its existing community of merchants. Cash App could also potentially become a primary touchpoint for BNPL at Square, allowing customers to shop for BNPL deals and set up installments through the digital wallet.