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Twitter’s payment firm Square to acquire Afterpay

By BFTLR Team

Square Inc., the payment firm of Twitter Inc co-founder Jack Dorsey, is going to purchase buy now, pay later (BNPL) pioneer Afterpay Ltd. For $29 billion. The business model works on upending consumer credit by charging merchants a fee to offer small point of sale loans that their shoppers repay in interest-free installments, bypassing credit checks. Overtaking Afterpay is a decision that would validate the industry of buy now, pay later competing with Affirm Holdings Inc., Paypal Holdings Inc. & Klarna Inc. Dorsey believes in creating a fair financial system, accessible & inclusive. Afterpay is the one that has built a trusted brand aligned with the principles. Afterpay founders regard this deal to be an important recognition of the Australian technology sector as homegrown innovation is shared in the world. Afterpay was created in 2014 is a bellwether of the niche no-credit-checks online payments sector that had to boost up in the pandemic especially among the youngsters as they choose to pay in installments for their daily items. BNPL firms are established to lend shoppers instant funds, up to a few thousand dollars, that can be paid back interest-free. They are not bound by the credit laws as they make money from merchant commission, late fees & no interest payments. BNPL providers need not perform a background check, unlike other credit card companies. Nominal details like name, address & birth date suffice the purpose. This makes BNPL an easy target for fraud. The lenient restrictions have gained popularity & are also a major reason for having many users. This rapid growth in the sector has even forced Apple to launch such a service. Squares’ deal has helped Afterpay gain a huge customer base targeting the main market US where the fiscal 2021 sales tripled & reached A$11.1 bn. Afterpay shareholders will receive 0.375 of Square class A stock for every Afterpay share they own implying a price of $126.21 per share based on Square’s Friday close. The deal also includes a break clause worth $385 million triggered under certain conditions.

Source: Reuters

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