As its name suggests, the Buy Now Pay Later (BNPL) model allows a customer to order items or services now and pay for them later.
For years, this model enjoyed little recognition, but it seems like everybody wants a piece of the cake now that it’s hot and flourishing.
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The Square-Afterpay Merger Deal
One promising contestant is Square Inc., who made her intentions clear when she announced an ongoing takeover deal targeting Afterpay Limited.
The payment company hopes incorporating Afterpay into its service will give Square a competitive edge in the new flourishing BPNL market. Ideally, this move will allow easy integration into consumer and retailer applications and ultimately be an immediate gamechanger in Buy Now Pay Later.
Afterpay is a global platform serving customers from various markets in Canada, the US, the UK (under Clearpay), and New Zealand. Now, a recent announcement will see Square take over the company for $29 billion in a deal scheduled to mature by Q1 or 2022.
Afterpay will give Square a Competitive Edge
According to June figures, Afterpay boasts an active user base of 98 000 retailers and 16.2 million consumers. This was a significant jump from Dec. 2020, when it served only 75,000 retailers and 13.1 million consumers.
“The move is Square Inc. ‘s strategy to fortify its presence in a growing market that’s becoming more competitive without needing to engineer an application from the ground up,” says Sheridan Trent, a payment analyst at The Strawhecker Group. “This is a competitive edge for Square thanks to Afterpay’s large and loyal user base.”
Fueled by a pandemic, The BNPL space has gained a foothold in the previous year as customers migrate to online and POS credit offers amid a challenging economy. Some known examples are offerings from Klarna AB and a collaborative service Shopify Inc. & Affirm Inc.
According to projections by FIS inc, the sector is anticipated to flourish at an annual rate of 33 percent over the coming three years and makeup 4 percent of all e-commerce payments, to double its 2020 market share.
More findings from the study show BNPL is the fastest-flourishing online-payments model in the UK and US, expected to grow from 5 percent to 10 percent and 2 percent to 5 percent in the respective regions between 2020 and 2024. Nevertheless, its performance may exceed these estimates with more payment leaders getting on board and more customers using the model.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of Square payments. He also writes non-fiction on subjects ranging from personal finance to stocks to Cryptopay. He enjoys eating pie with ice cream on his backyard porch, as should all right-thinking people.