Square scoops up Afterpay in the battle of BNPL

“Buy now, pay later” (BNPL) — which at one point seemed to be reserved for Pelotons — has officially reached the masses.

The most recent news?

Jack Dorsey’s Square has agreed to purchase Afterpay, an Australian BNPL leader, for $29B.

The model lets consumers break big purchases into smaller payments, often without interest

Usage has exploded during the pandemic:

• 60% of consumers say they have used BNPL
• 51% have used it during the pandemic
• 215% increase in YoY usage in January and February

The spike in usage has been matched by a flurry of activity in the space, including:

• Affirm’s IPO in January
• Klarna’s acquisitions of Hero and APPRL (and fundraising from A$AP Rocky)

Unsurprisingly, competition is heating up

In a recent tweet, 2PM’s Web Smith shared a timeline of Affirm’s US market share, highlighting just how crowded the space has become:

• Q4 2018: 78%
• Q1 2021: 16%

And it’s about to get even hotter

Last month, Apple announced that it’s working on a BNPL product of its own.

Looking at the price tag, some analysts are wondering why Square didn’t do the same when they’ve shown the ability to build products in-house (e.g., Cash App, a merchant Point-of-sale (POS) system, etc.).

Regardless, we agree with this take that it only makes sense for the acquisition to be paid out in 4 equal installments.