Square is spending $ 29 billion to get into split payment

It is a new way of consuming, in full expansion in the United States, in Australia, in Scandinavia, and which begins to reach France. Split payment, which allows consumers to shop online by paying only after delivery, in installments and at no cost, is experiencing tremendous growth. The explosion of e-commerce, since the start of the Covid-19 pandemic, has accelerated its adoption.

To establish itself in this market, the American payment group Square, founded and directed by Jack Dorsey – also boss of Twitter -, will buy the Australian Afterpay, one of the pioneers of “buy now, pay later” (“Buy now pay later”), by putting $ 29 billion (€ 24.4 billion) on the table. The operation, announced on Sunday 1er August, will be through a share exchange and is expected to close in the first quarter of 2022.

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The Australian firm, founded in 2014, thus gained considerable value in a few months: its acquisition by Square valued the title of Afterpay at 92.6 dollars, while the share was worth less than 7.3 dollars at the start of 2020. two Afterpay founders will each pocket $ 1.8 billion. The Chinese group Tencent, which in 2020 had invested $ 220 million to take a 5% stake in Australian fintech, is expected to receive $ 1.24 billion.

“This is the meaning of history”

Founded in 2009, Square was already one of the heavyweights in the payments industry. The company first owed its success to its mini-bank card reader, to be connected to a smartphone to transform it into a payment terminal, which quickly equipped millions of small businesses, cafes and SMEs in the United States. . The company then branched out into online payment and person-to-person payment.

The lender advances the amount of the purchase to the e-merchant, then is reimbursed the amount in several installments by the customer. In most cases, these are small amounts loaned over a short period of time.

With Afterpay and its 16.2 million customers worldwide, the group hopes to compete with competitors of the caliber of PayPal, which has developed its own installment payment offer. “Split payment has become a standard. For a whole part of the population, paying in installments will become a reflex. Offering it therefore became a must for Square, if it wanted to continue, says Julien Maldonato, partner at Deloitte. This is the meaning of the story: in a world of payments in full consolidation, you have to develop quickly, so as not to fall prey. “

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