Lisa Ellis, MoffettNathanson partner and senior equity analyst, joins ‘Power Lunch’ to discuss Square’s acquisition of Afterpay and if the ‘buy now, pay later’ space could see further consolidation. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

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#Square #Afterpay #Klarna
Square has announced it will acquire Afterpay in a $29 billion deal. Klarna CEO Sebastian Siemiatkowski joins Yahoo Finance’s Akiko Fujita and Zack Guzman to discuss.
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Amrita Ahuja, chief financial officer at Square, and Nick Molnar, Afterpay Holdings co-founder and U.S. CEO, joins “Squawk on the Street” to discuss Square’s $29 billion acquisition of the company. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

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

Jack Dorsey’s payments company announced the $29 billion, all-stock deal on Sunday evening. The price tag marks a roughly 30% premium to Afterpay’s last closing price.

“Square and Afterpay have a shared purpose,” said Square’s CEO Dorsey in a statement. “We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”

Shares of Afterpay in Australia surged on that news, and closed nearly 19% higher on Monday.

Square pointed to consumers eschewing traditional credit, especially younger buyers. The San Francisco-based payments company already offers installment loans, which said it has been a “powerful growth tool” for Square’s core seller business. It plans to integrate Afterpay into both its seller and Cash App ecosystems.

In an interview with CNBC’s “Squawk on the Street” Monday, Square CFO Amrita Ahuja said the company sees the acquisition as an opportunity to create a “more powerful ecommerce platform” that appeases growing consumer interest in “transparent buying opportunities” and offers new ways for merchants to serve their customers.

“We see a real opportunity to enable the next gen consumer that’s looking for different ways and, in this experience, an interest free way of expanding the purchase potential,” Ahuja said. “What that ends up doing is merchants pay for the Afterpay experience but they get higher average order volumes, they get greater conversion, they get greater frequency and lower returns and they get a marketing channel from Afterpay… which is ultimately helping those merchants grow there business and that’s what Square is all about.”

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

So-called installment loans have been around for decades, and were historically used for big-ticket purchases such as furniture. Online payment players and fintechs have been competing to launch their own version of “pay later” products for online items in the low hundreds of dollars.

Affirm is one of the better-known public companies offering the option to finance items in smaller, monthly payments. PayPal, Klarna, Mastercard and Fiserv, American Express, Citi and J.P. Morgan Chase are all offering similar loan products. Apple is planning to launch installment lending in a partnership with Goldman Sachs, Bloomberg reported last month.

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Learn about Afterpay features, benefits, and fees.

0:00 Intro
0:30 Agenda
1:03 What is Afterpay?
2:06 Why Afterpay?
3:15 Afterpay fees
4:02 Enable/disable Afterpay
4:28 Afterpay FAQ

Transcript

Hello everyone, and welcome to our webinar: Using Afterpay with Square Online! Afterpay is automatically enabled as a payment method on all eligible Square Online sites. To learn more about Afterpay eligibility criteria, visit squareup dot com forward slash help and search Afterpay.
Agenda

Here’s a quick preview of our agenda

First, we’ll give a brief overview of Afterpay, what your customers can expect, and the benefits of using Afterpay for your business.
Then, we’ll talk about fees for using Afterpay as a payment method.
After that, we’ll talk about how you can enable and disable Afterpay as a payment method.
Finally, we’ll give answers to the top frequently asked questions for using Afterpay.

With that, let’s jump right in!

\What is Afterpay?

Afterpay is a digital Buy Now, Pay Later wallet that allows buyers to pay for online orders between $1 – $2,000 in four interest-free payments.

With Afterpay enabled on your website, customers will be able to select Afterpay as their payment option during checkout — they’ll just need to sign in to Afterpay to complete their order. All installment payments are interest-free. At the time of purchase, you’ll get paid the full amount minus the Afterpay processing fees.
Afterpay doesn’t charge application or setup fees. If you or your customers have any questions about using Afterpay with Square Online, they should contact Afterpay through the Afterpay app or on afterpay.com/help.
Why use Afterpay?
Here are a few of the most exciting reasons to use Afterpay for your business:

Drive Incremental Sales:
Sellers see a 20% increase in cart conversion on average and more repeat customers when they offer Afterpay as a payment option.
Increase Average Order Value:
Afterpay lets customers get what they want, when they want it, increasing the average order value by up to 40%. Afterpay customers also have lower return rates.

Attract New Customers
Merchants find that 30% or more of customers who use Afterpay are new to their brand. You’ll also gain access to a large and growing segment of shoppers who prefer not to incur credit card debt or interest, or who wouldn’t have been able to afford a purchase without an instalment option.

Access funds fast
The full payment, minus the processing fee, is deposited and available to you almost instantly, just like other Square payments.
What is the processing fee for Afterpay?
Sales made using Afterpay carry a 6% + 30¢ (excluding GST) processing fee on the total purchase. There are no processing fees charged on the remaining instalments, and no other monthly fees or activation costs. This fee is the standard buy now, pay later rate that Afterpay charges all merchants.

How do I disable or enable Afterpay?
Eligible Square Online Sellers will have Afterpay automatically enabled as a payment option on their Square website. However, you can turn this feature on and off at any time. Enabling and disabling the Afterpay payment option on your Square Online site is simple:
1. Sign in to your Square Dashboard.
2. Select Online to open the Square Online Overview page.
3. If you have a single website, select Settings then Checkout. If you have multiple websites, select Shared Settings then Checkout.
4. Toggle the Afterpay option on or off depending on your preference.
Afterpay Frequently Asked Questions
Now let’s answer some frequently asked questions about Afterpay.
How do I manage refunds for orders paid with Afterpay?
You can refund orders through the Order manager in your Square Online Overview page just like any other order. Your customers will receive an email from Afterpay confirming the details of the refund. However, a refund can only be processed for a payment taken within the last 120 days.

What are the risks of using Afterpay?
The platform is set up so Afterpay takes on the risk of fraud for you so you can focus on growing your business..

What if my customer is late on their payments?
You’ll get paid the full amount at the time of purchase, minus the processing fee on the total order. Payments are handled entirely by Afterpay, so if your customer is late or misses a payment, it does not affect your business. If your customers ask about making payments, you can direct them to speak with Afterpay either through the Afterpay app or on afterpay dot com slash help.

Why is Afterpay a good payment solution for my business?
There are many “Buy now, pay later” providers, but what sets Afterpay apart is their one transparent solution to shoppers with no interest, no hidden fees, and no catch. Afterpay is already integrated with Square eCommerce products, so you can start offering this payment option in minutes.