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SYDNEY – Square Inc. has entered into an all-share deal valued at approximately $ 29 billion to acquire Afterpay Ltd. from Australia, a installment payment company that positions its service as a cheaper and more responsible alternative to a credit card.
Square said it plans to integrate Afterpay into its Seller and Cash App business units, which would allow more retailers to offer buy-now and post-payment services at checkout.
Afterpay’s technology allows users to pay for goods in four interest-free installments, while receiving the goods immediately. Customers only pay a fee if they miss an automated payment, a violation that also locks their account until the balance is paid off. Afterpay says this limits bad debt, especially in a downturn when job security is precarious and household finances are strained.
Most of Afterpay’s revenue comes from retail merchants, who pay a percentage of the value of each order placed by customers, plus a fixed fee. The company is growing across the United States through deals with retailers including Anthropologie and Free People.
“Square and Afterpay have a common goal,” said Jack Dorsey, CEO of Square. “We built our business to make the financial system more fair, accessible and inclusive, and Afterpay has built a brand of trust aligned with these principles. “
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