Square plans to integrate Afterpay into its payments ecosystem. Here are the top-line bullets you need to know.
Square, a financial services provider, has acquired Afterpay, a buy now, pay later platform at a $29B valuation in an all-stock deal. The deal is expected to close in Q1’22.
WHO ARE THE PARTIES TO THE DEAL?
- Afterpay: Australia-based Afterpay allows customers to pay for their purchases in interest-free installments. The company has 16M active customers and 100K active merchants across 9 countries. It has a global team of 700 employees and has reported a total income of $417.2M in the first half of 2021.
- Square: California-based Square offers payments processing solutions for businesses, including hardware like payments terminals.
Source: Afterpay
WHY DOES THE MARKET MATTER?
- The fintech market is projected to grow at a CAGR of 23.41% to reach a value of $324B by 2026, according to Market Data Forecast.
- Today, BNPL reflects a small portion of the overall spending on payment cards (including credit, debit, and prepaid cards), an industry that sees roughly $8T in annual spend volume in the US. However, there is growing evidence that BNPL is at an inflection point. By 2025, the global BNPL industry is expected to grow 10-15x its current volume, topping $1T in annual gross merchandise volume by some estimates. This growth trajectory has incumbents paying close attention and increasing their efforts to improve the digital user experience.
- In 2021, BNPL players have already set an annual funding record with over $2.1B in equity funding across 20 deals.
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