Square is entering the quickly-growing installment loan market with its acquisition of the Australian fintech company Afterpay.
The $29 billion deal is expected to close during the first quarter of 2022, CNBC reported.
“Square and Afterpay have a shared purpose,” Square CEO Jack Dorsey said. “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.”
Square allows individuals to take credit card payments anywhere while Afterpay enables customers to pay in four interest-free installments, CNBC reported.
“We will further accelerate our growth in the U.S. and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers,” Afterpay CEOs and co-founders Anthony Eisen and Nick Molnar said, according to Yahoo Finance.
CNBC stated Square believes the addition of Afterpay will result in “a more powerful ecommerce platform.”
“Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands,” Dorsey said.
Afterpay's share value skyrocketed 19% after the acquisition was announced. The sale will also cost Square 30% more than the last acquisition of Afterpay.
Square, which is based in San Francisco, also owns Cash App, and its gross profit increased 91% from last year according to the most recent quarterly reports.
Installment loan payments are offered by many companies including American Express, Klarna, Mastercard and PayPal.