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Here's Why Square Has Won the Fintech Race With Afterpay's Acquisition

By Neil Rozenbaum – Sep 20, 2021 at 11:00AM

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It's all about adding value to the ecosystem and creating a fully working closed-loop network.

In this video, I will be talking about Square's (SQ -1.43%) acquisition of Afterpay and how that instantly made Square the favorite to become the biggest fintech company of them all. You can find the video below.


Afterpay, unlike Affirm, which I covered last week, does not charge customers any interest, but it does charge late fees. However, those are usually capped so customers can't rack up big debts. When Square reported Q2 earnings, it announced the acquisition of Afterpay for around $30 billion. Questions were raised about the price and whether Square should have built a buy-now-pay-later product in-house like Paypal. My reasoning, which I explain in the video, is that Square didn't want to waste time building a product only to find itself playing catch-up once it was done. By buying Afterpay, it's buying the best player in that industry and one that will add tremendous value to Square's ecosystem. 


Square's presence is mainly in the U.S., but Afterpay has a more global presence. This means Square could leverage Afterpay's presence in Europe, Australia, and New Zealand to integrate Cash App and Square Seller. On the other hand, Square's U.S. presence will help Afterpay's continued growth in that market and attract more small and medium-size businesses because the majority of Afterpay's GMV comes from enterprises. Afterpay will be integrated with Square Seller and Cash App, which will create an incredible synergy among all three areas of the business. 

For full insights, do watch the video below.

*Stock prices used were the closing prices of Sept. 17, 2021. The video was published on Sept. 19, 2021.

Neil Rozenbaum owns shares of Square. The Motley Fool owns shares of and recommends AFTERPAY T FPO, PayPal Holdings, and Square. The Motley Fool recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Block Stock Quote
$68.18 (-1.43%) $0.99
PayPal Stock Quote
$74.66 (-4.93%) $-3.87
Afterpay Limited Stock Quote
Afterpay Limited

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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