Square, digital payments company, acquires credit payments firm

With the pandemic, digital payments became more common. More and more people rely on technology to make their purchases. However, although the user may be willing to pay through the new options available online, they do not always have the resources to do so in cash and, for this reason, credits or the buy now pay later mode is very popular. Precisely following this trend is that Square acquired the credit payment firm Afterpay.

Installment payment services are all the rage in the era of the pandemic and Square, the digital payments company founded by Twitter CEO Jack Dorsey, bought BNPL's Australian company Afterpay for $ 29 million.

Afterpay is a company that allows users to buy a product online or in-store and pay for it in four installments. Under their terms, the first quarter is paid in advance and subsequent quarters are paid every two weeks. The interesting thing about this service is that it does not charge interest, since Afterpay's business model is to make money with retailers who pay to be part of the service. However, it must be clarified that there are charges for late payments.

Along with PayPal, which jumped on this trend last September with its Pay in 4 feature, the Afterpay system has been especially popular in recent months. In fact, it's one of many buy-now-pay-later businesses that have flourished since the Covid-19 pandemic made online shopping more common. In fact, research company CB Insights expects the sector to grow 10-15 times by 2025.

On the purchase of the company, Jack Dorsey shared in a statement Square and Afterpay have a shared purpose. We created our business to make the financial system more fair, accessible, and inclusive, and Afterpay has created a trusted brand aligned with those principles. Together, we can better connect our Cash App and Seller ecosystems to offer even more attractive products and services to merchants and consumers, putting the power back in their hands.

With the purchase of Afterpay, Square will seek to expand its market, which will not be difficult because Afterpay has 16 million users worldwide, with more than 100,000 merchants registered in its service, being its native country, Australia, the company's second-largest market.

The deal is expected to close in early 2022, Square said, announcing that one of Afterpay's executives will be appointed to Square's board.

Square's businesses

Square may not seem as common a service as PayPal could be, however, little by little it has been adding more functions and, with it, more users.

The company made headlines last July when it announced that it would create a new business focused on Bitcoin, in which it is already a great investor because, remember, Dorsey is a great proponent of the use of this digital currency that, in his opinion, can help democratize access to financial services.

Square shared that the new Bitcoin-centric business will help developers design decentralized financial products. Or, in Dorsey's words, an open development platform with the sole objective of facilitating the creation of decentralized, non-custodial, and permissionless financial services.

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