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Square to acquire Afterpay for $29B

283 points by sanmak 5y ago

azemetre 5y ago
Kinda amazed at how different the leadership is between Square and Twitter under Dorsey. You can tell which company he is spending most of his time with and which one is getting neglected.
- scrollaway 5y ago
  You can? ... Which is which? Because I genuinely can't.
  - RichEO 5y ago
    It’s Twitter
    - scrollaway 5y ago
      Care to elaborate?
      - azemetre 5y ago
        Oh man, I would have honestly said Square. Product development at Square seems to be way way better than Twitter, compare the last 3-years between the two. Twitter hasn't really done much with it's platform, they never really done much with monetization and other platforms are eating into their space (patreon, onlyfans, substack). I mean they literally invented tiktok before tiktok with Vine and that acquisition just floundered into dust. Juxtaposed to Square, that has done really interesting purchases like Tidal, Crew, Kredit Karma, Weebly. They are definitely moving in a directed one-stop finance and collaboration shop. I think they're one of the more innovative fintech companies that have been making tremendous ground over the last decade.
        pjg 5y ago
        Credit Karma ? It was acquired by Intuit, not Square
        jlamberts 5y ago
        As part of the Intuit purchase Credit Karma had to sell off their tax service, which Square bought. I'm guessing that's what OP is referring to.
misiti3780 5y ago
How does Afterpay make money if they do not charge interest?
- toomuchtodo 5y ago
  Merchant fee (same as paid by a merchant when accepting a CC) which subsidizes the zero percent financing payment plan to the consumer.
  - misiti3780 5y ago
    thanks!
    - deleted 5y ago
      [deleted]
  - AussieWog93 5y ago
    Just to expand upon what the parent said, their fee is significantly higher than the companies that just process credit cards (around 6% compared to the industry standard rate of 2.9%). I believe they eat the loss when the customer defaults, though.
    - systemvoltage 5y ago
      Oh boy...so this 6% fee is then indirectly passed onto consumers.
      - AussieWog93 5y ago
        Yep. To be fair, so are the (lower, but non-zero) fees from Visa/MasterCard/Amex/PayPal. It's a textbook example of an externality.
        roenxi 5y ago
        The fee is paid by the customer. It isn't an externality. An externality is when the cost is paid by someone who isn't party to the transaction.
treelovinhippie 5y ago
Ok so Square has opted to engage in predatory practices. Noted.
- junon 5y ago
  I'm completely out of the loop here but plan to integrate Stripe into a new product. Can you elaborate?
  - SV_BubbleTime 5y ago
    I think he’s saying that these big entrenched players immediately buy up any competition or threats. Meaning this isn’t really any sort of free market, if you are so large you can absorb or destroy smaller entities ensuring that you will always be the leader in your market. And because governments have no teeth when it comes to monopolies or anti-competition this skates by world wide. That was my read, could be wrong.
  - treelovinhippie 5y ago
    Afterpay is a buy now, pay later scheme. It's literally a loan shark service. 25% of their revenue comes from late fees. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also warned 15 per cent of users, and half under 29, had taken out an additional loan to pay for the services, while 55 per cent of consumers paying late had used at least two different buy now, pay later providers in the past six months." https://www.afr.com/companies/financial-services/one-in-five-buy-now-pay-later-users-are-missing-payments-20201116-p56evk https://www.afr.com/companies/financial-services/one-in-five...
    - wonnage 5y ago
      How is a zero-interest payment plan loan shark-esque? Total late fees appear to be capped at the lesser of 25% or $68, which also seems less predatory than any credit card.
chirau 5y ago
I have noticed that there isn't a lot of chatter on HN about Square. But on closer inspection it is a fascinating success story. They are building and cornering a whole ecosystem there. And their valuation is remarkable. Not just hype, but execution. Kudos to them. Between them and Stripe, it's nice to have something in payments to admire and be excited about. I remember a time when we had to deal directly with Authorize.net, wow that was a mess!
- dangrossman 5y ago
  My merchant account is cheap (interchange plus 0.1% or so) and the gateway they set me up on is Authorize.net. Still using it after 17 years or so, although indirectly via Spreedly. If you go to a craft show or popup market or anything like that, every vendor has a Square reader to take cards. They're super successful with "offline solopreneurs" -- the independent one-person small businesses. One of my many side gigs is selling laser-cut wood stuff of all sorts, and I make a set of Square Reader docks that sell really well. I just made several this weekend. https://www.etsy.com/shop/ligninandlight?section_id=26787311 https://www.etsy.com/shop/ligninandlight?section_id=26787311
  - ampdepolymerase 5y ago
    How much are the delivery fees for this sort of products?
  - 55555 5y ago
    > My merchant account is cheap (interchange plus 0.1% or so) and the gateway they set me up on is Authorize.net It's crazy most people don't know you can get this. Seems like every popular merchant account provider is a bad deal in comparison. For those curious, you get it from banks. Open a company account at a major conventional bank then ask them for a merchant account. The default they offer you is interchange + 0.2% or so. Many debit cards have an interchange rate of about 1%. When you pay 30 cents + 3% or 2.9% or whatever you're sortof being screwed.
    - dd36 5y ago
neximo64 5y ago
Now square has access to basically a checkout page for a good proportion to the online web out there.
- SV_BubbleTime 5y ago
  If anyone was following the news about PayPal working with ADL to stop wrong thinkers having accessing payments/receipts, erm “Fight Extremism” (great until your views are considered extreme, and if you don’t think that’s possible consider a talk with your 10 year ago self about vaccine passports or forced vaccination or trans athletes or border/immigration or canceling comedians or ending the filibuster, etc)… I don’t think I can support anyone having even remotely strong market dominance anywhere for payments. [0] Maybe Stripe can just process payments, but who knows because “silence is violence” now. They did ban the Trump Store after the 11/6 fiasco [1] despite nothing on the store breaking any TOS or referencing the capital riot, just a broader “This guy is bad news!” condition they could/would/should have used at any time. [0] https://thefederalist.com/2021/07/26/paypal-is-conspiring-with-the-anti-defamation-league-to-decide-which-political-views-are-acceptable-in-finance/ https://thefederalist.com/2021/07/26/paypal-is-conspiring-wi... [1] https://www.wsj.com/articles/stripe-stops-processing-payments-for-trump-campaign-website-11610319116 https://www.wsj.com/articles/stripe-stops-processing-payment...
  - __float 5y ago
    This story is about Square, not Stripe.
chrisseaton 5y ago
Anyone know the difference between Afterpay and Clearpay? Two brands for the same thing? Why?
- interesting22 5y ago
  Trademark issues in Europe
- robin_reala 5y ago
  That confused me as well (I’ve previously worked a little on Arvato’s AfterPay) but it was cleared up by https://www.smh.com.au/business/companies/afterpay-forced-to-change-name-for-uk-launch-by-dutch-rival-20190506-p51kix.html https://www.smh.com.au/business/companies/afterpay-forced-to...
mberning 5y ago
Horrible. People ought to know enough to not use these products in the first place, but people will use it anyway. They should be required to show the long term effects before being used, much like the gore packaging used on cigarettes in some places. What’s the financial equivalent of lung cancer or having a stoma?
- chrisseaton 5y ago
  The long-term effects of a zero-interest loan? What are those?
  - version_five 5y ago
    The OP is onviously using hyperbole, but there are certainly long term effects from encouraging people to spend beyond their means. For example, it makes people's financial position more precarious: if your income is mostly committed to monthly payments, you are in more danger of getting into trouble from a layoff, illness, etc. If a big portion of society is in this position (and they are) this is a concern. I think people should be allowed to make their own choices, but I don't believe it's harmless to promote living beyond one's means.
    - mberning 5y ago
      Right. Afterpay, Affirm, Klarna, etc. are generally not used by well off and financially literate/prudent people. Just like gambling and lotteries. They are generally used by people that don’t need help screwing up their finances. While I do agree that people should be free to do what they want I think it should be presented with some realistic and frankly harsh warnings.
  - phist_mcgee 5y ago
    You sound like a BNPL marketer. The loan has late fees, the app is branded as a easy POS way to buy things with money you don't have. There is no credit check. You can sign up to a dozen of the services at once. It is credit, it has the same negative effects as credit. BNPL is as bad for people as 20% apy credit cards are.
pylon 5y ago
As a customer are there any downsides to using these BNPL platforms when I'm buying something? I generally never buy anything online that I can't afford to pay for it outright so I have never used them before.
- benmanns 5y ago
  You might miss out on some credit card rewards or protections (chargebacks, extended warranties, extended return periods, etc).
  - phist_mcgee 5y ago
    Trickily, BNPL is pushed as 'not credit', which I find deeply disingenuous. The product they push is utilised by compulsive spenders, or poorer people. These people have always used credit, much to their collective disadvantage. Branding it as 'like lay-by, free up your cashflow' is in my opinion a dangerous option for many people.
    - wonnage 5y ago
      It's rather paternalistic to assume poor people can't handle credit.
      - jokethrowaway 5y ago
        They would definitely be less poor if they could
      - phist_mcgee 5y ago
        Are you kidding? Poor people of course cannot handle credit, because they don't have the cashflow or savings to prevent the use of credit in disadvantageous situations. I am not saying poor people shouldn't have credit, I am saying credit is most destructive for poorer people, and so any service that targets that market is exploitative of their misfortune.
        5y ago
treelovinhippie 5y ago
Square is buying a loan shark service. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also warned 15 per cent of users, and half under 29, had taken out an additional loan to pay for the services, while 55 per cent of consumers paying late had used at least two different buy now, pay later providers in the past six months." https://www.afr.com/companies/financial-services/one-in-five-buy-now-pay-later-users-are-missing-payments-20201116-p56evk https://www.afr.com/companies/financial-services/one-in-five...
- AussieWog93 5y ago
  Are Afterpay really to blame for this? Credit cards have been around since the 80s and are far more predatory. Pawnbrokers have been around for centuries. Even without debt, so many people have an impulse to spend as much as they can and put themselves in a financially precarious situation where one emergency bowls them over. I'm not saying Afterpay are ethical, but I'm sure you'd find a similar amount of people foregoing necessities to make dumb impulse purchases regardless of payment method.
  - Andys 5y ago
    The problem is their target market is people who don't have (or can't get) a credit card. If you already have a credit card, whats the point of Afterpay?
    - AussieWog93 5y ago
      > The problem is their target market is people who don't have (or can't get) a credit card. Are you sure? Pretty much anyone with a job can get a ridiculously high credit limit. >If you already have a credit card, whats the point of Afterpay? Capped late fees, for one. Afterpay lets you impulse purchase things you can't afford but doesn't trap you on a neverending treadmill of servicing debt.
- 5y ago
interesting22 5y ago
Very sad to see this. I seriously expected Afterpay to become Australia's first $1t tech company.
- sydthrowaway 5y ago
  Uh a payments company having Apple level value??
  - b3n 5y ago
    Apple has a vastly bigger market cap than $1t.
- deleted 5y ago
  [deleted]
- madeofpalk 5y ago
  Is Afterpay a tech company in a way that any other bank, or Qantas, isn't a tech company?
hn_throwaway_99 5y ago
I've just come to accept that I'll never understand corporate finance. Based on the data I could find, this works out to a sales price of about 76 times revenue for Afterpay. Even for a fast growing company, how can they ever grow into that valuation? Of course, it's an all stock deal, so perhaps it's better to just consider what percentage of Square they're giving to Afterpay stockholders, but I still just can't wrap my head around these prices given the revenue numbers.
- chrisseaton 5y ago
  Acquisitions are priced on speculated future potential after acquisition, and thinking about the potential cost of acquisition by someone else, not revenue today.
- version_five 5y ago
  We're in a gigantic bubble
  - babesh 5y ago
    There have been tens of trillions of dollars and other currencies created from thin air the last year and a half. And more is being created currently. This isn’t just the US government. It’s basically all governments in the world. EDIT: Fed has been purchasing 120b of assets per month https://cheddar.com/media/federal-reserve-to-keep-up-asset-purchases-despite-seeing-some-economic-progress https://cheddar.com/media/federal-reserve-to-keep-up-asset-p... Federal government has spent at least 3.5 trillion on COVID-19. EDIT2: More like 8.6 trillion. 2 trillion added by the bills passed early 2021. https://datalab.usaspending.gov/federal-covid-funding/ https://datalab.usaspending.gov/federal-covid-funding/ That is the US. Then add all the other countries in the world. That much extra money chasing the same amount of the goods and services, investments, etc… So either we are in a bubble or currency has been devalued. EDIT3: Fed spending is about 25k per person in the US.
    - Clewza313 5y ago
      > So either we are in a bubble or currency has been devalued. ¿Por qué no los dos? Seriously, to me it looks like we were in a bubble even before COVID, and that has now been juiced up by all the newly printed money sloshing around.
jtsiskin 5y ago
“Shop now. Pay over 6 weeks.” How is this technically different from a credit card? Just a longer timer period?
- dangrossman 5y ago
  No interest, no credit check, late fees are capped, and it won't ever ding your interest rate or credit history if you do miss a payment.
  - mcintyre1994 5y ago
    At least in the UK they do reserve the right to file missed/late payments with credit reference agencies FWIW.
sillysaurusx 5y ago
I got hopeful when I read "Scheme Implementation," but unfortunately lisp for financial services doesn't seem to be the goal. Maybe someday.
- jmeister 5y ago
  Brazil’s Nubank is all-in on clojure: https://www.finextra.com/newsarticle/36297/nubank-buys-firm-behind-clojure-programming-language https://www.finextra.com/newsarticle/36297/nubank-buys-firm-... Sweden’s Klarna seems to be using Clojure along with other FP languages: https://news.ycombinator.com/item?id=23379264 https://news.ycombinator.com/item?id=23379264
  - sillysaurusx 5y ago
    This is awesome! Thank you for pointing out some cool finance-related companies that use lisp.
pdog 5y ago
$29B is a pretty significant, even for an all-stock acquisition and a company of Square's size. It would be interesting to see the motivation for this beyond a "shared mission" or "economic empowerment."
BugsJustFindMe 5y ago
Every time I see one of these announcements, the valuations go up and up and up and up. I remember not long ago being wowed by a 1B acquisition. That was called a unicorn because of how incredible it was. And now we're at 29B. Is this just because money is all a joke?
- vmception 5y ago
  Kind of? If you follow monetary policy circles, you would know that we are only close to the predicted level of fantastic market distortions that should be expected. It is fantastic to see it play out, such as valuations much larger than before, as well as the unexpected areas of speculation and shifts in market tolerances for worse deals. But we aren't even done yet! And this comes with a pretty clear agreement on the limitations of monetary policy, like we know massive central bank balance sheet increases don't accomplish their [stated] goals well. But we also expect central bank balance sheets to increase by further distorting the market. When central banks purchase things, whoever they bought it from now has money that didn't exist before the transaction. This money doesn't "trickle down" into the economy, instead it more so pools with these people that are active in the capital markets, and they are trying to figure out how to make more of that money faster than the central bank buys and creates more. So the only way to do that is to attempt greater and greater deals. Because there is nothing else to buy - the central bank already bought the "good investments" (bundles of mortgages, treasuries, investment grade corporate bonds, even some junk bonds) and is also looking for more just like you are! So now you have to take greater risks, maybe this $29 Billion deal that the central bank won't try to get in on! The conundrum is that now the capital markets are expecting the central bank to buy everything, especially the dips. (most central banks don't buy stocks, but when they buy fairly illiquid bonds from people those people often buy stocks. in US a lot of the stimulus money came directly from the central bank after Congress modified its charter to give currency directly to people in exchange for nothing, and the recipients also bought stocks. the same sentiment is distributed in all socioeconomic classes even the top 0.01%.). So if the central bank gives a hint at reducing purchases (called "tapering"), the markets crash, and the central bank is strongly advised to continue! The stated purpose is to get people to invest in "main street", instead of just the same small collection of assets. Turns out, it doesn't matter and nobody wants to invest in random entrepreneurs. The market is signaling that it would rather pay to not invest in randoms (in many parts of the world, government bonds have a negative yield, which means people are paying to own a bond while also further losing on inflation). So if you do have access to the capital markets due to your pedigree or network or net worth, the stuff you sell - your company's shares that you typed up on a sheet of paper, or whatever - will have a much higher valuation because other people have nothing else [eligible] to buy and need to put their money somewhere! The US is the strongest hold out on negative interest rates, and is the largest market too, so the anticipation of the "season finale" is that the US gets to that territory as well, and then we really get to see some fireworks in the market as it is a major psychology barrier as well. Watch the 2 year and the 10 year treasury rates, as they are seen as having the most liquidity and trading activity. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield https://www.treasury.gov/resource-center/data-chart-center/i... As you can see they are really close to 0% right now, for a prolongued period of time. Getting to this negative stage requires SOOOOooooo much infathomable amounts of money, hoarding government bonds. But the central bank is the main purchaser of these bonds, from both the treasury and private owners on the secondary market, as they buy they push the yields closer to zero. (bond price increase = lowers yield) fun times ahead! expect greater valuations and quick!
gillytech 5y ago
I don't like Jack Dorsey.
shell0x 5y ago
As a foreigner in Australia, I can't help but to think that Australians really don't know how to handle finances and are too irresponsible to use a credit card, so Afterpay and Zip stepped in. Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.
- robertwt7 5y ago
  Actually, the biggest afterpay's market is in US.
  - shell0x 5y ago
    Oh wow, I didn't know that :)
- siquick 5y ago
  I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit card debt, a mortgage covering 60% of a salary, and a leased car seem to be fairly standard for a lot of my peers. It feels like they’re all 3 missed months of salary away from having absolutely nothing. Obviously all anecdotal but still astounding and probably not too uncommon here in Sydney.
  - catmanjan 5y ago
    Other than mortgage (and HECS) nobody I know uses debt - Australians love second hand cars
    - Tehdasi 5y ago
      So basically it's 90+% of debt for housing (scroll down to the pie chart): https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world https://www.finder.com.au/australias-personal-debt-reported-... I'm including 'Investment debt' cause who are we kidding? It's all investment properties.
moneywoes 5y ago
Why couldn't they roll out their own competitior? Wouldn't that be a lot cheaper? I guess much more difficult to expand in the Aus market?
- notatoad 5y ago
  definitely cheaper to build the tech, but possibly more expensive by the time they've convinced all the stores include a "pay later with square" button. as always with these things, they're buying the market not the product.
- paxys 5y ago
  Easy for them to build something technically equivalent, impossible to guarantee that it will get the same usage. There's a reason why companies like Google, Amazon, Apple do hundreds of acquisitions every year despite having enough money and talent to build it all on their own.
robertwt7 5y ago
I guess this is one of the move by Afterpay higher up to fight the competition after knowing Apple and Paypal going into BNPL game as well
xyst 5y ago
Like the payment networks, payment gateways will soon be dominated by a few big players: Stripe, Square I really wish digital currency (ETH, BTC) would take off in the main stream world. The amount of silent middlemen involved in paying a merchant with a credit/debit card is nauseating to say the least.
- toomuchtodo 5y ago
  https://www.pymnts.com/news/faster-payments/2021/five-banks-test-fednow-real-time-payments-system/ https://www.pymnts.com/news/faster-payments/2021/five-banks-... https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-service/ https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
- granzymes 5y ago
  There is room for far more than 2 large players. https://2c2p.com/ https://2c2p.com/ https://adyen.com/ https://adyen.com/ https://checkout.com/ https://checkout.com/ https://braintreepayments.com/ https://braintreepayments.com/
jordemort 5y ago
How many installments are they splitting paying the acquisition over?
geekpowa 5y ago
Afterpay's business model relies on high merchant fees which merchants, under their merchant agreement, are not allowed to pass onto their customers. So from customers point of view, afterpay often appears to be cheaper than other payment channels such as credit card / paypal. Afterpay roll into a new merchant, cannibalise existing payment systems and at leat for the low margin merchants I work with, who are not savvy enough to look at their own sales data, their business becomes less profitable. Their whole business model is deeply unethical IMO, harms merchants and harms customers who do not use Afterpay as merchants have to amortize cost of business across all their customers. The Australian regulator dropper the ball last year when considering legislation to align Afterpay with credit card instruments on this issue. Eventually regulators will realise this is harmful behaviour and align things correctly.
- judge2020 5y ago
  > which merchants, under their merchant agreement, are not allowed to pass onto their customers. Is this audited by Afterpay perhaps? A company might just increase prices due to quarterly losses and not specifically because of this fee, even if it does contribute to a large amount of margin loss.
  - geekpowa 5y ago
    Merchants are not allowed to add a surcharge line item for using Afterpay. Instead they have to increase base pricing across the board to cover their increased costs. Afterpay are quite happy for merchants to do this, what they don't like, and what they actively police, is merchants adding a line item passing Afterpay costs onto the consumer. The macroeconomic impact is potentially enormous. Your mission is to capture an entire generation of consumers (millennials) to use your payment mechanism, and embedded in that is a hidden cost which is comparable to consumer VAT (called GST in Australia) that the sovereign nation also levies. Eventually regulators will take notice of this massive some of money. A comment I once read of HN as while back resonates deeply with me, that is how broken and unsolved the problem of paying for things electronically remains, in terms of costs, reliability, security and ease of access. Inspite of all the incredible transformation that has occurred over the past 30 years. You think about all the money that moves around for electronic payments, in an ideal world, the net levy should be a fraction of a %, not the 1.5%-3.0% that is charged by credit cards or the 6-8% that BNPL charge.
Khaine 5y ago
In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mechanism. Banks have also responded and offer credit cards that don’t act like normal credit cards[1] [1] https://www.commbank.com.au/credit-cards/commbank-neo.html https://www.commbank.com.au/credit-cards/commbank-neo.html
- ZephyrBlu 5y ago
  I'm an early 20s Kiwi zoomer, so somewhat similar demographic. I don't have a credit card and see no point in it. I use a debit card for everything. I don't think most of my friends have credit cards either, but maybe they do and I don't notice.
  - xenihn 5y ago
    I've received roughly $3000 in rewards from my credit card usage over the past six years. Not a life-changing amount, but not completely insignificant, either. I think the biggest thing that I've lost is data privacy, but I would think that debit cards incur the same cost. I've never used any of the benefits like extra insurance/warranty, but it's nice to know they exist. Chargebacks on debit cards are also much more painful than on credit.
    - distances 5y ago
      Assuming NZ is like Europe, the are no rewards thanks to fees being low due to regulation. Chargebacks exist but are not as strongly defaulting on consumer side; to succeed, you need real proof of merchant not holding up their side.
    - jlangenauer 5y ago
      You do realise that you have paid that $3000 in higher prices, right? The credit card companies and banks are not giving you free money.
      - etempleton 5y ago
pjg 5y ago
Seems like a simple value proposition here: BNPL is growing like crazy. Square doesn't have a strong product in BNPL space. Add to that it will get a presence in AUS/NZ and it becomes a good value to Square expanding product and global footprint. Paying about 20-25% of it's market cap to acquire a company at appx 20X multiple of it's revenue with a growth rate of 1X. Seems like a fair deal in today's hot market. Is there anything else to it ?
andymoe 5y ago
Interesting that square is making this kind of large purchase. I’ve not been following them too closely but what I have noticed recently is a ton of local (SF) merchants switching from square to Toast.
indigodaddy 5y ago
Does Square have anywhere near this kind of cash or stock value, for a 29B acquisition? I just don’t really get this stuff..
- leodriesch 5y ago
  They seem to have a market cap of 112B, so 29B seems like a big chunk. But I'm not an expert in this finance stuff.
kart23 5y ago
I've seen the afterpay button when shopping online. Hate to say it, but this is absolutely taking advantage of people with poor spending & saving habits. I see it mostly at overpriced/luxury/hype online stores, where the desire to own a product doesn't come from a place of need, but from society & marketing. I buy some of this stuff, so I'm not hating on that. But some people are truly addicted to shopping, and enabling that is morally wrong.
- greenbeans1991 5y ago
  How is it different than credit cards?
  - kart23 5y ago
    You can get afterpay without having credit. You can get afterpay even if you owe $7k on your maxed-out credit cards. Bank of America doesn't have a shiny button turning those $200 dollar pants into '4 payments of $50' on a website. It's like asking 'hows flavored vape juice different from cigarettes'. Both bad, but they appeal to different markets and one takes advantage in a more sinister manner. No doubt there are people that can use it in a healthy manner, but overall it's a net negative. Credit cards can be just as predatory in my view though.
  - equinoxmist 5y ago
    Just easier. I use credit cards, but also have a Klarna account. If the shop uses Klarna, I will often use that because it is to well integrated, and then pay off Klarna with my CC, which in turn is paid a month later. Essentially I don't pay for something for over 2 months.
- deleted 5y ago
  [deleted]
say_it_as_it_is 5y ago
Curious about the Scheme Implementation Deed. What are the benefits of this arrangement?
deleted 5y ago
[deleted]
fb03 5y ago
For a brief moment, I thought: "Damn, what a game company wants to do absorbing a payment company?' ... heh it was the other Square.
qeternity 5y ago
Given the relative sizes of the businesses and the all stock transaction, this should really be termed a merger instead of an acquisition.
nikolay 5y ago
This is crazy - 10% of Mastercard for a lame service! The existence and success of Afterpay and Quadpay (now Zip) prove one thing - people don't have money enough cash or credit and this is sad!

283 points by sanmak 5y ago

Kinda amazed at how different the leadership is between Square and Twitter under Dorsey. You can tell which company he is spending most of his time with and which one is getting neglected.

scrollaway 5y ago
You can? ... Which is which? Because I genuinely can't.
- RichEO 5y ago
  It’s Twitter
  - scrollaway 5y ago
    Care to elaborate?
    - azemetre 5y ago
      Oh man, I would have honestly said Square. Product development at Square seems to be way way better than Twitter, compare the last 3-years between the two. Twitter hasn't really done much with it's platform, they never really done much with monetization and other platforms are eating into their space (patreon, onlyfans, substack). I mean they literally invented tiktok before tiktok with Vine and that acquisition just floundered into dust. Juxtaposed to Square, that has done really interesting purchases like Tidal, Crew, Kredit Karma, Weebly. They are definitely moving in a directed one-stop finance and collaboration shop. I think they're one of the more innovative fintech companies that have been making tremendous ground over the last decade.
      - pjg 5y ago
        Credit Karma ? It was acquired by Intuit, not Square
        jlamberts 5y ago
        As part of the Intuit purchase Credit Karma had to sell off their tax service, which Square bought. I'm guessing that's what OP is referring to.

misiti3780 5y ago

How does Afterpay make money if they do not charge interest?

toomuchtodo 5y ago
Merchant fee (same as paid by a merchant when accepting a CC) which subsidizes the zero percent financing payment plan to the consumer.
- misiti3780 5y ago
  thanks!
  - deleted 5y ago
    [deleted]
- AussieWog93 5y ago
  Just to expand upon what the parent said, their fee is significantly higher than the companies that just process credit cards (around 6% compared to the industry standard rate of 2.9%). I believe they eat the loss when the customer defaults, though.
  - systemvoltage 5y ago
    Oh boy...so this 6% fee is then indirectly passed onto consumers.
    - AussieWog93 5y ago
      Yep. To be fair, so are the (lower, but non-zero) fees from Visa/MasterCard/Amex/PayPal. It's a textbook example of an externality.
      - roenxi 5y ago
        The fee is paid by the customer. It isn't an externality. An externality is when the cost is paid by someone who isn't party to the transaction.

treelovinhippie 5y ago

Ok so Square has opted to engage in predatory practices. Noted.

junon 5y ago
I'm completely out of the loop here but plan to integrate Stripe into a new product. Can you elaborate?
- SV_BubbleTime 5y ago
  I think he’s saying that these big entrenched players immediately buy up any competition or threats. Meaning this isn’t really any sort of free market, if you are so large you can absorb or destroy smaller entities ensuring that you will always be the leader in your market. And because governments have no teeth when it comes to monopolies or anti-competition this skates by world wide. That was my read, could be wrong.
- treelovinhippie 5y ago
  Afterpay is a buy now, pay later scheme. It's literally a loan shark service. 25% of their revenue comes from late fees. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also warned 15 per cent of users, and half under 29, had taken out an additional loan to pay for the services, while 55 per cent of consumers paying late had used at least two different buy now, pay later providers in the past six months." https://www.afr.com/companies/financial-services/one-in-five-buy-now-pay-later-users-are-missing-payments-20201116-p56evk https://www.afr.com/companies/financial-services/one-in-five...
  - wonnage 5y ago
    How is a zero-interest payment plan loan shark-esque? Total late fees appear to be capped at the lesser of 25% or $68, which also seems less predatory than any credit card.

chirau 5y ago

I have noticed that there isn't a lot of chatter on HN about Square. But on closer inspection it is a fascinating success story. They are building and cornering a whole ecosystem there. And their valuation is remarkable. Not just hype, but execution. Kudos to them. Between them and Stripe, it's nice to have something in payments to admire and be excited about. I remember a time when we had to deal directly with Authorize.net, wow that was a mess!

dangrossman 5y ago
My merchant account is cheap (interchange plus 0.1% or so) and the gateway they set me up on is Authorize.net. Still using it after 17 years or so, although indirectly via Spreedly. If you go to a craft show or popup market or anything like that, every vendor has a Square reader to take cards. They're super successful with "offline solopreneurs" -- the independent one-person small businesses. One of my many side gigs is selling laser-cut wood stuff of all sorts, and I make a set of Square Reader docks that sell really well. I just made several this weekend. https://www.etsy.com/shop/ligninandlight?section_id=26787311 https://www.etsy.com/shop/ligninandlight?section_id=26787311
- ampdepolymerase 5y ago
  How much are the delivery fees for this sort of products?
- 55555 5y ago
  > My merchant account is cheap (interchange plus 0.1% or so) and the gateway they set me up on is Authorize.net It's crazy most people don't know you can get this. Seems like every popular merchant account provider is a bad deal in comparison. For those curious, you get it from banks. Open a company account at a major conventional bank then ask them for a merchant account. The default they offer you is interchange + 0.2% or so. Many debit cards have an interchange rate of about 1%. When you pay 30 cents + 3% or 2.9% or whatever you're sortof being screwed.
  - dd36 5y ago

neximo64 5y ago

Now square has access to basically a checkout page for a good proportion to the online web out there.

SV_BubbleTime 5y ago
If anyone was following the news about PayPal working with ADL to stop wrong thinkers having accessing payments/receipts, erm “Fight Extremism” (great until your views are considered extreme, and if you don’t think that’s possible consider a talk with your 10 year ago self about vaccine passports or forced vaccination or trans athletes or border/immigration or canceling comedians or ending the filibuster, etc)… I don’t think I can support anyone having even remotely strong market dominance anywhere for payments. [0] Maybe Stripe can just process payments, but who knows because “silence is violence” now. They did ban the Trump Store after the 11/6 fiasco [1] despite nothing on the store breaking any TOS or referencing the capital riot, just a broader “This guy is bad news!” condition they could/would/should have used at any time. [0] https://thefederalist.com/2021/07/26/paypal-is-conspiring-with-the-anti-defamation-league-to-decide-which-political-views-are-acceptable-in-finance/ https://thefederalist.com/2021/07/26/paypal-is-conspiring-wi... [1] https://www.wsj.com/articles/stripe-stops-processing-payments-for-trump-campaign-website-11610319116 https://www.wsj.com/articles/stripe-stops-processing-payment...
- __float 5y ago
  This story is about Square, not Stripe.

chrisseaton 5y ago

Anyone know the difference between Afterpay and Clearpay? Two brands for the same thing? Why?

interesting22 5y ago
Trademark issues in Europe
robin_reala 5y ago
That confused me as well (I’ve previously worked a little on Arvato’s AfterPay) but it was cleared up by https://www.smh.com.au/business/companies/afterpay-forced-to-change-name-for-uk-launch-by-dutch-rival-20190506-p51kix.html https://www.smh.com.au/business/companies/afterpay-forced-to...

mberning 5y ago

Horrible. People ought to know enough to not use these products in the first place, but people will use it anyway. They should be required to show the long term effects before being used, much like the gore packaging used on cigarettes in some places. What’s the financial equivalent of lung cancer or having a stoma?

chrisseaton 5y ago
The long-term effects of a zero-interest loan? What are those?
- version_five 5y ago
  The OP is onviously using hyperbole, but there are certainly long term effects from encouraging people to spend beyond their means. For example, it makes people's financial position more precarious: if your income is mostly committed to monthly payments, you are in more danger of getting into trouble from a layoff, illness, etc. If a big portion of society is in this position (and they are) this is a concern. I think people should be allowed to make their own choices, but I don't believe it's harmless to promote living beyond one's means.
  - mberning 5y ago
    Right. Afterpay, Affirm, Klarna, etc. are generally not used by well off and financially literate/prudent people. Just like gambling and lotteries. They are generally used by people that don’t need help screwing up their finances. While I do agree that people should be free to do what they want I think it should be presented with some realistic and frankly harsh warnings.
- phist_mcgee 5y ago
  You sound like a BNPL marketer. The loan has late fees, the app is branded as a easy POS way to buy things with money you don't have. There is no credit check. You can sign up to a dozen of the services at once. It is credit, it has the same negative effects as credit. BNPL is as bad for people as 20% apy credit cards are.

pylon 5y ago

As a customer are there any downsides to using these BNPL platforms when I'm buying something? I generally never buy anything online that I can't afford to pay for it outright so I have never used them before.

benmanns 5y ago
You might miss out on some credit card rewards or protections (chargebacks, extended warranties, extended return periods, etc).
- phist_mcgee 5y ago
  Trickily, BNPL is pushed as 'not credit', which I find deeply disingenuous. The product they push is utilised by compulsive spenders, or poorer people. These people have always used credit, much to their collective disadvantage. Branding it as 'like lay-by, free up your cashflow' is in my opinion a dangerous option for many people.
  - wonnage 5y ago
    It's rather paternalistic to assume poor people can't handle credit.
    - jokethrowaway 5y ago
      They would definitely be less poor if they could
    - phist_mcgee 5y ago
      Are you kidding? Poor people of course cannot handle credit, because they don't have the cashflow or savings to prevent the use of credit in disadvantageous situations. I am not saying poor people shouldn't have credit, I am saying credit is most destructive for poorer people, and so any service that targets that market is exploitative of their misfortune.
      - 5y ago

treelovinhippie 5y ago

Square is buying a loan shark service. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also warned 15 per cent of users, and half under 29, had taken out an additional loan to pay for the services, while 55 per cent of consumers paying late had used at least two different buy now, pay later providers in the past six months." https://www.afr.com/companies/financial-services/one-in-five-buy-now-pay-later-users-are-missing-payments-20201116-p56evk https://www.afr.com/companies/financial-services/one-in-five...

AussieWog93 5y ago
Are Afterpay really to blame for this? Credit cards have been around since the 80s and are far more predatory. Pawnbrokers have been around for centuries. Even without debt, so many people have an impulse to spend as much as they can and put themselves in a financially precarious situation where one emergency bowls them over. I'm not saying Afterpay are ethical, but I'm sure you'd find a similar amount of people foregoing necessities to make dumb impulse purchases regardless of payment method.
- Andys 5y ago
  The problem is their target market is people who don't have (or can't get) a credit card. If you already have a credit card, whats the point of Afterpay?
  - AussieWog93 5y ago
    > The problem is their target market is people who don't have (or can't get) a credit card. Are you sure? Pretty much anyone with a job can get a ridiculously high credit limit. >If you already have a credit card, whats the point of Afterpay? Capped late fees, for one. Afterpay lets you impulse purchase things you can't afford but doesn't trap you on a neverending treadmill of servicing debt.
5y ago

interesting22 5y ago

Very sad to see this. I seriously expected Afterpay to become Australia's first $1t tech company.

sydthrowaway 5y ago
Uh a payments company having Apple level value??
- b3n 5y ago
  Apple has a vastly bigger market cap than $1t.
deleted 5y ago
[deleted]
madeofpalk 5y ago
Is Afterpay a tech company in a way that any other bank, or Qantas, isn't a tech company?

hn_throwaway_99 5y ago

I've just come to accept that I'll never understand corporate finance. Based on the data I could find, this works out to a sales price of about 76 times revenue for Afterpay. Even for a fast growing company, how can they ever grow into that valuation? Of course, it's an all stock deal, so perhaps it's better to just consider what percentage of Square they're giving to Afterpay stockholders, but I still just can't wrap my head around these prices given the revenue numbers.

chrisseaton 5y ago
Acquisitions are priced on speculated future potential after acquisition, and thinking about the potential cost of acquisition by someone else, not revenue today.
version_five 5y ago
We're in a gigantic bubble
- babesh 5y ago
  There have been tens of trillions of dollars and other currencies created from thin air the last year and a half. And more is being created currently. This isn’t just the US government. It’s basically all governments in the world. EDIT: Fed has been purchasing 120b of assets per month https://cheddar.com/media/federal-reserve-to-keep-up-asset-purchases-despite-seeing-some-economic-progress https://cheddar.com/media/federal-reserve-to-keep-up-asset-p... Federal government has spent at least 3.5 trillion on COVID-19. EDIT2: More like 8.6 trillion. 2 trillion added by the bills passed early 2021. https://datalab.usaspending.gov/federal-covid-funding/ https://datalab.usaspending.gov/federal-covid-funding/ That is the US. Then add all the other countries in the world. That much extra money chasing the same amount of the goods and services, investments, etc… So either we are in a bubble or currency has been devalued. EDIT3: Fed spending is about 25k per person in the US.
  - Clewza313 5y ago
    > So either we are in a bubble or currency has been devalued. ¿Por qué no los dos? Seriously, to me it looks like we were in a bubble even before COVID, and that has now been juiced up by all the newly printed money sloshing around.

jtsiskin 5y ago

“Shop now. Pay over 6 weeks.” How is this technically different from a credit card? Just a longer timer period?

dangrossman 5y ago
No interest, no credit check, late fees are capped, and it won't ever ding your interest rate or credit history if you do miss a payment.
- mcintyre1994 5y ago
  At least in the UK they do reserve the right to file missed/late payments with credit reference agencies FWIW.

sillysaurusx 5y ago

I got hopeful when I read "Scheme Implementation," but unfortunately lisp for financial services doesn't seem to be the goal. Maybe someday.

jmeister 5y ago
Brazil’s Nubank is all-in on clojure: https://www.finextra.com/newsarticle/36297/nubank-buys-firm-behind-clojure-programming-language https://www.finextra.com/newsarticle/36297/nubank-buys-firm-... Sweden’s Klarna seems to be using Clojure along with other FP languages: https://news.ycombinator.com/item?id=23379264 https://news.ycombinator.com/item?id=23379264
- sillysaurusx 5y ago
  This is awesome! Thank you for pointing out some cool finance-related companies that use lisp.

pdog 5y ago

$29B is a pretty significant, even for an all-stock acquisition and a company of Square's size. It would be interesting to see the motivation for this beyond a "shared mission" or "economic empowerment."

BugsJustFindMe 5y ago

Every time I see one of these announcements, the valuations go up and up and up and up. I remember not long ago being wowed by a 1B acquisition. That was called a unicorn because of how incredible it was. And now we're at 29B. Is this just because money is all a joke?

vmception 5y ago
Kind of? If you follow monetary policy circles, you would know that we are only close to the predicted level of fantastic market distortions that should be expected. It is fantastic to see it play out, such as valuations much larger than before, as well as the unexpected areas of speculation and shifts in market tolerances for worse deals. But we aren't even done yet! And this comes with a pretty clear agreement on the limitations of monetary policy, like we know massive central bank balance sheet increases don't accomplish their [stated] goals well. But we also expect central bank balance sheets to increase by further distorting the market. When central banks purchase things, whoever they bought it from now has money that didn't exist before the transaction. This money doesn't "trickle down" into the economy, instead it more so pools with these people that are active in the capital markets, and they are trying to figure out how to make more of that money faster than the central bank buys and creates more. So the only way to do that is to attempt greater and greater deals. Because there is nothing else to buy - the central bank already bought the "good investments" (bundles of mortgages, treasuries, investment grade corporate bonds, even some junk bonds) and is also looking for more just like you are! So now you have to take greater risks, maybe this $29 Billion deal that the central bank won't try to get in on! The conundrum is that now the capital markets are expecting the central bank to buy everything, especially the dips. (most central banks don't buy stocks, but when they buy fairly illiquid bonds from people those people often buy stocks. in US a lot of the stimulus money came directly from the central bank after Congress modified its charter to give currency directly to people in exchange for nothing, and the recipients also bought stocks. the same sentiment is distributed in all socioeconomic classes even the top 0.01%.). So if the central bank gives a hint at reducing purchases (called "tapering"), the markets crash, and the central bank is strongly advised to continue! The stated purpose is to get people to invest in "main street", instead of just the same small collection of assets. Turns out, it doesn't matter and nobody wants to invest in random entrepreneurs. The market is signaling that it would rather pay to not invest in randoms (in many parts of the world, government bonds have a negative yield, which means people are paying to own a bond while also further losing on inflation). So if you do have access to the capital markets due to your pedigree or network or net worth, the stuff you sell - your company's shares that you typed up on a sheet of paper, or whatever - will have a much higher valuation because other people have nothing else [eligible] to buy and need to put their money somewhere! The US is the strongest hold out on negative interest rates, and is the largest market too, so the anticipation of the "season finale" is that the US gets to that territory as well, and then we really get to see some fireworks in the market as it is a major psychology barrier as well. Watch the 2 year and the 10 year treasury rates, as they are seen as having the most liquidity and trading activity. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield https://www.treasury.gov/resource-center/data-chart-center/i... As you can see they are really close to 0% right now, for a prolongued period of time. Getting to this negative stage requires SOOOOooooo much infathomable amounts of money, hoarding government bonds. But the central bank is the main purchaser of these bonds, from both the treasury and private owners on the secondary market, as they buy they push the yields closer to zero. (bond price increase = lowers yield) fun times ahead! expect greater valuations and quick!

gillytech 5y ago

I don't like Jack Dorsey.

shell0x 5y ago

As a foreigner in Australia, I can't help but to think that Australians really don't know how to handle finances and are too irresponsible to use a credit card, so Afterpay and Zip stepped in. Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.

robertwt7 5y ago
Actually, the biggest afterpay's market is in US.
- shell0x 5y ago
  Oh wow, I didn't know that :)
siquick 5y ago
I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit card debt, a mortgage covering 60% of a salary, and a leased car seem to be fairly standard for a lot of my peers. It feels like they’re all 3 missed months of salary away from having absolutely nothing. Obviously all anecdotal but still astounding and probably not too uncommon here in Sydney.
- catmanjan 5y ago
  Other than mortgage (and HECS) nobody I know uses debt - Australians love second hand cars
  - Tehdasi 5y ago
    So basically it's 90+% of debt for housing (scroll down to the pie chart): https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world https://www.finder.com.au/australias-personal-debt-reported-... I'm including 'Investment debt' cause who are we kidding? It's all investment properties.

moneywoes 5y ago

Why couldn't they roll out their own competitior? Wouldn't that be a lot cheaper? I guess much more difficult to expand in the Aus market?

notatoad 5y ago
definitely cheaper to build the tech, but possibly more expensive by the time they've convinced all the stores include a "pay later with square" button. as always with these things, they're buying the market not the product.
paxys 5y ago
Easy for them to build something technically equivalent, impossible to guarantee that it will get the same usage. There's a reason why companies like Google, Amazon, Apple do hundreds of acquisitions every year despite having enough money and talent to build it all on their own.

robertwt7 5y ago

I guess this is one of the move by Afterpay higher up to fight the competition after knowing Apple and Paypal going into BNPL game as well

xyst 5y ago

Like the payment networks, payment gateways will soon be dominated by a few big players: Stripe, Square I really wish digital currency (ETH, BTC) would take off in the main stream world. The amount of silent middlemen involved in paying a merchant with a credit/debit card is nauseating to say the least.

toomuchtodo 5y ago
https://www.pymnts.com/news/faster-payments/2021/five-banks-test-fednow-real-time-payments-system/ https://www.pymnts.com/news/faster-payments/2021/five-banks-... https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-service/ https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
granzymes 5y ago
There is room for far more than 2 large players. https://2c2p.com/ https://2c2p.com/ https://adyen.com/ https://adyen.com/ https://checkout.com/ https://checkout.com/ https://braintreepayments.com/ https://braintreepayments.com/

jordemort 5y ago

How many installments are they splitting paying the acquisition over?

geekpowa 5y ago

Afterpay's business model relies on high merchant fees which merchants, under their merchant agreement, are not allowed to pass onto their customers. So from customers point of view, afterpay often appears to be cheaper than other payment channels such as credit card / paypal. Afterpay roll into a new merchant, cannibalise existing payment systems and at leat for the low margin merchants I work with, who are not savvy enough to look at their own sales data, their business becomes less profitable. Their whole business model is deeply unethical IMO, harms merchants and harms customers who do not use Afterpay as merchants have to amortize cost of business across all their customers. The Australian regulator dropper the ball last year when considering legislation to align Afterpay with credit card instruments on this issue. Eventually regulators will realise this is harmful behaviour and align things correctly.

judge2020 5y ago
> which merchants, under their merchant agreement, are not allowed to pass onto their customers. Is this audited by Afterpay perhaps? A company might just increase prices due to quarterly losses and not specifically because of this fee, even if it does contribute to a large amount of margin loss.
- geekpowa 5y ago
  Merchants are not allowed to add a surcharge line item for using Afterpay. Instead they have to increase base pricing across the board to cover their increased costs. Afterpay are quite happy for merchants to do this, what they don't like, and what they actively police, is merchants adding a line item passing Afterpay costs onto the consumer. The macroeconomic impact is potentially enormous. Your mission is to capture an entire generation of consumers (millennials) to use your payment mechanism, and embedded in that is a hidden cost which is comparable to consumer VAT (called GST in Australia) that the sovereign nation also levies. Eventually regulators will take notice of this massive some of money. A comment I once read of HN as while back resonates deeply with me, that is how broken and unsolved the problem of paying for things electronically remains, in terms of costs, reliability, security and ease of access. Inspite of all the incredible transformation that has occurred over the past 30 years. You think about all the money that moves around for electronic payments, in an ideal world, the net levy should be a fraction of a %, not the 1.5%-3.0% that is charged by credit cards or the 6-8% that BNPL charge.

Khaine 5y ago

In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mechanism. Banks have also responded and offer credit cards that don’t act like normal credit cards[1] [1] https://www.commbank.com.au/credit-cards/commbank-neo.html https://www.commbank.com.au/credit-cards/commbank-neo.html

ZephyrBlu 5y ago
I'm an early 20s Kiwi zoomer, so somewhat similar demographic. I don't have a credit card and see no point in it. I use a debit card for everything. I don't think most of my friends have credit cards either, but maybe they do and I don't notice.
- xenihn 5y ago
  I've received roughly $3000 in rewards from my credit card usage over the past six years. Not a life-changing amount, but not completely insignificant, either. I think the biggest thing that I've lost is data privacy, but I would think that debit cards incur the same cost. I've never used any of the benefits like extra insurance/warranty, but it's nice to know they exist. Chargebacks on debit cards are also much more painful than on credit.
  - distances 5y ago
    Assuming NZ is like Europe, the are no rewards thanks to fees being low due to regulation. Chargebacks exist but are not as strongly defaulting on consumer side; to succeed, you need real proof of merchant not holding up their side.
  - jlangenauer 5y ago
    You do realise that you have paid that $3000 in higher prices, right? The credit card companies and banks are not giving you free money.
    - etempleton 5y ago

pjg 5y ago

Seems like a simple value proposition here: BNPL is growing like crazy. Square doesn't have a strong product in BNPL space. Add to that it will get a presence in AUS/NZ and it becomes a good value to Square expanding product and global footprint. Paying about 20-25% of it's market cap to acquire a company at appx 20X multiple of it's revenue with a growth rate of 1X. Seems like a fair deal in today's hot market. Is there anything else to it ?

andymoe 5y ago

Interesting that square is making this kind of large purchase. I’ve not been following them too closely but what I have noticed recently is a ton of local (SF) merchants switching from square to Toast.

indigodaddy 5y ago

Does Square have anywhere near this kind of cash or stock value, for a 29B acquisition? I just don’t really get this stuff..

leodriesch 5y ago
They seem to have a market cap of 112B, so 29B seems like a big chunk. But I'm not an expert in this finance stuff.

kart23 5y ago

I've seen the afterpay button when shopping online. Hate to say it, but this is absolutely taking advantage of people with poor spending & saving habits. I see it mostly at overpriced/luxury/hype online stores, where the desire to own a product doesn't come from a place of need, but from society & marketing. I buy some of this stuff, so I'm not hating on that. But some people are truly addicted to shopping, and enabling that is morally wrong.

greenbeans1991 5y ago
How is it different than credit cards?
- kart23 5y ago
  You can get afterpay without having credit. You can get afterpay even if you owe $7k on your maxed-out credit cards. Bank of America doesn't have a shiny button turning those $200 dollar pants into '4 payments of $50' on a website. It's like asking 'hows flavored vape juice different from cigarettes'. Both bad, but they appeal to different markets and one takes advantage in a more sinister manner. No doubt there are people that can use it in a healthy manner, but overall it's a net negative. Credit cards can be just as predatory in my view though.
- equinoxmist 5y ago
  Just easier. I use credit cards, but also have a Klarna account. If the shop uses Klarna, I will often use that because it is to well integrated, and then pay off Klarna with my CC, which in turn is paid a month later. Essentially I don't pay for something for over 2 months.
deleted 5y ago
[deleted]

say_it_as_it_is 5y ago

Curious about the Scheme Implementation Deed. What are the benefits of this arrangement?

deleted 5y ago

[deleted]

fb03 5y ago

For a brief moment, I thought: "Damn, what a game company wants to do absorbing a payment company?' ... heh it was the other Square.

qeternity 5y ago

Given the relative sizes of the businesses and the all stock transaction, this should really be termed a merger instead of an acquisition.

nikolay 5y ago

This is crazy - 10% of Mastercard for a lame service! The existence and success of Afterpay and Quadpay (now Zip) prove one thing - people don't have money enough cash or credit and this is sad!