Square to buy Australia fintech Afterpay for US$29b

Sydney

JACK Dorsey's Square unveiled a record US$29 billion deal to snap up Australia's fast-growing buy-now, pay-later firm Afterpay, in a major bet on the burgeoning sector, sending its share price soaring on Monday.

The Australian fintech was founded six years ago and allows consumers to buy everything from laptops to flights in staggered payments without interest.

"Square and Afterpay have a shared purpose," Mr Dorsey - who made his billions through Twitter - said announcing the deal on Sunday. "We built our business to make the financial system more fair, accessible and inclusive."

Afterpay makes money by taking a commission from retailers and charging fees to late-paying customers. It currently boasts 16 million customers in Australia, Britain, Canada and the United States.

The Square-Afterpay deal is expected to close in the first quarter of 2022, and at A$39 billion (S$38.8 billion) would be the largest deal in Australian corporate history.

Afterpay's share surged more than 20 per cent on Monday as Sydney's ASX stock market rallied to an all-time high.

Afterpay's shareholders will own 18.5 per cent of the new company.

The deal will create one of the world's largest digital payments companies, and set Mr Dorsey up to challenge established rival PayPal, as well as Apple, Amazon, Google and other tech behemoths who are eyeing the sector.

In Australia, less than half of all retail transactions under US$10 are made in cash, according to the latest figures from the country's central bank, and the pandemic has only accelerated the shift towards mobile payments worldwide.

Square plans to integrate Afterpay into its existing Seller and Cash App products, making Afterpay available for in-person transactions. Cash App has around 70 million active users per year. AFP