Jack Dorsey, CEO of Twitter and Co-Founder and CEO of Square, speaks during the Bitcoin 2021 Convention cryptocurrency conference at the Mana Convention Center in Miami, Florida on June 4, 2021.

Marco Bello | AFP | Getty Images

Square plans to buy Australian fintech company Afterpay to further expand into the booming installment loan market.

Jack Dorsey’s payments company announced the $ 29 billion deal on Sunday evening. The price tag marks a surcharge of around 30% on the last closing price of Afterpay.

“Square and Afterpay have a common purpose,” said Dorsey, Square CEO. “We built our business to make the financial system more equitable, accessible and inclusive, and Afterpay has built a trusted brand that is aligned with those principles.”

Square pointed out that consumers eschew traditional credit, especially younger shoppers. The San Francisco-based payment company already offers installment loans, which have proven to be a “strong growth vehicle” for Square’s core business with sellers. The company plans to integrate Afterpay into both its seller and cash app ecosystem.

With Afterpay, customers can pay in four interest-free installments and pay a fee if they miss an automated payment. Its 16 million customers will in future be able to manage installment payments directly via the Cash app. The deal is expected to close in the first quarter of 2022.

So-called installment loans have existed for decades, which were used in the past for large purchases such as furniture. Online payment providers and fintechs are competing to launch their own version of “Pay Later” products for online items in the low hundred dollar range.

Affirm is one of the better known public companies that offers the option of funding items in smaller monthly payments. PayPal, Klarna, Mastercard and Fiserv, American Express, Citi and JP Morgan Chase all offer similar credit products. Apple plans to launch installment loans in partnership with Goldman Sachs, Bloomberg reported last month.

Square also announced its second quarter results on Sunday, ahead of the previously scheduled release on Wednesday.

Gross profit increased 91% year over year, representing a record rate of growth for the payment company for the quarter. The cash app’s profit increased 94% while the seller increased 85% year over year. Net sales excluding bitcoin were $ 1.96 billion for the quarter, up 87% year over year.

The company’s Venmo competitor, Cash App, now has 40 million active customers making monthly transactions.

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