Gary Schwartz

Square in San Fran & Afterpay in Melbourne have tied the ecosystem knot. What does $30 billion get Square? It allows for an enviable laddered service offering across its merchant network … and most importantly adds the extremely sexy Buy Now Pay Later (BNPL) moniker to Square’s suite of financial services.

BNPL is a white hot sector designed for a next-gen consumer that is less connected to the corner bank and leery of high monthly credit card fees. BNPL slices the cost of the check-out basket into a few bite size payments spread over a few months.

Square closes the deal Q1 2022. The company can layer BNPL directly within its Cash App and Seller ecosystem. More products make for a more lively and revenue rich financial ecosystem.

BNPL is expanding at a voracious rate globally. In Canada, Afterpay is a founding member of the Canadian Lenders Association BNPL Roundtable

What’s the angle on this Square deal?

1. Expands cross-sell services inside the Seller and Cash App ecosystems.
2. Provides differentiation and scale to Afterpay.
3. Provides long-term growth with revenue synergy and stickiness.

Afterpay shareholders will get Square shares that are currently trading at 120x forward earnings.

“Acquiring Afterpay is a ‘proof of concept’ moment for buy now, pay later, at once validating the industry and creating a formidable new competitor for Affirm Holdings Inc, PayPal Holdings Inc and Klarna Inc. We expect Square will invest heavily to integrate Afterpay and accelerate organic revenue growth,” Truist Securities analysts said.