The news: Square plans to acquire Australia-based buy now, pay later (BNPL) provider Afterpay in a whopping $29 billion deal that's set to close in Q1 2022.
The acquisition gives Square access to Afterpay’s more than 16 million customers and nearly 100,000 global retail partners. Square plans to integrate Afterpay—which lets customers pay for purchases in four interest-free biweekly installments—into both its seller- and consumer-facing ecosystems.
What this means: Square’s entrance in the BNPL market is set to make waves as competition grows between incumbent BNPL providers and new players.
BNPL’s popularity soared last year during pandemic-driven financial uncertainty as consumers embraced flexible payment solutions: US BNPL users hit 24.9 million, up 114.8% compared to 2019, per Insider Intelligence forecasts. This year, the market is set to widen to 45.1 million—pushing new entrants, like PayPal, into vying for a piece of the market and adding pressure on incumbent providers to maintain their share. Sweden-based BNPL giant Klarna, for instance, has gone on an acquisition spree to build out its solution and maintain its competitive edge.
The big takeaway: Square’s acquisition arrives on the heels of strong Q2 results: Its gross payment volume (GPV) increased 88% year over year, with seller GPV accounting for 90% of total GPV, and Cash App Business GPV accounting for the rest. Making Afterpay available to its sellers can help induce more sales and bolster the company’s GPV and revenues.