A scheme that can replace classic loans and credit cards is gaining popularity in the world. The largest companies are developing installment payments. Fintech company Square, owned by Twitter CEO Jack Dorsey, has agreed to buy Australia's Afterpay, which promotes new payment services to the younger generation.
The company, co-founded by Jack Dorsey, is set to pay $ 29 billion for Afterpay, which already has its own 16 million user base. On the background of the news, Afterpay shares soared by tens of percent, but their rate remains unstable.
Square and Afterpay have a common goal, Dorsey said. “We have built our business to make the financial system more honest, accessible and inclusive, and Afterpay has built a trustworthy brand that lives up to these principles,” the businessman said.
Square is targeting consumers avoiding classic loans. The company is already offering small, interest-free installment loans, which are expected to be a "powerful growth tool" for Square's core business of all kinds of electronic payments and transfers, as well as cryptocurrency transactions. The company intends to integrate Afterpay services into both the Cash App client application and merchant software.
Now Afterpay allows customers to buy goods in installments without interest, paying in four equal installments. Additional commission is charged only if the payment is overdue. After the deal, 16 million Afterpay users will be able to manage payments using the Cash App (the application itself already has 40 million active users). The deal is expected to close in the first quarter of 2022.
So-called interest-free “installment purchases” have been practiced and supported by sellers for decades, but in the past they were mainly used for large purchases. Companies like PayPal, Klarna, Mastercard and Fiserv, American Express, Citi and JP Morgan Chase are now offering financial products that allow you to buy in installments and cheaper items. Apple is planning a similar service with Goldman Sachs.
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