Square plans to buy Australian financial technology company Afterpay as it looks to expand further into this market.
The payments company of Twitter founder Jack Dorsey has announced a $29 billion all-share deal, the price of which represents a 30% premium over the last closing price of After Buy, according to CNBC Arabia.
Square CEO Dorsey said in a statement: Square and Afterpay share a common purpose. We built our business to make the financial system more fair, accessible and inclusive, and AfterPay has built a trusted brand that aligns with these principles.
AfterPay's share price in Australia is reported to have jumped more than 23% on Monday morning on the news.
Square noted that consumers are avoiding traditional credit, especially younger buyers.
The San Francisco-based payments company already offers installment loans, which it said have been a powerful growth tool for Square sellers' business. It plans to integrate AfterPay into both vendor systems and cash applications.
AfterPay allows its 16 million customers to pay in four installments without interest and pay fees if they miss the automatic payment.
The deal is expected to close in the first quarter of 2022.
So-called installment loans have been around for decades, and have historically been used for large purchases such as furniture.
Online payment players and fintech companies are vying to launch their own version of pay later products for online items at hundreds of low dollars.
It was reported last month that Apple is planning to launch an installment lending platform in partnership with Goldman Sachs.
Earlier, Square announced its second-quarter results, bringing gross profit up 91% from a year ago, representing a record quarterly growth rate for the payments company.< /p>
Cash app earnings rose 94%, and net revenue excluding Bitcoin was $1.96 billion for the quarter, up 87% year-over-year.
Square's cash app now has 40 million active customers transacting monthly.
