Square, the payments firm of Twitter co-founder Jack Dorsey, will purchase buy now, pay later pioneer Afterpay for $29bn (€24.4bn), creating a global transactions giant through its biggest-ever acquisition.
The takeover, also the biggest buyout of an Australian firm, underscores the popularity of a business model that has upended consumer credit by charging merchants a fee to offer small point-of-sale loans which their shoppers repay in interest-free instalments, bypassing credit checks.
The pandemic has also fueled the boom in the buy now, pay later (BNPL) sector as tech-savvy consumers, stuck at home, spend money online to buy everything from coats to expensive phones.
Over the past year, Melbourne-based Afterpay signed up millions of users in the United States, which is now among the fastest-growing markets for the sector.
The deal also locks in a remarkable share-price run for Afterpay, whose stock has surged over the past two years.
"Acquiring Afterpay is a 'proof of concept' moment for buy now, pay later, at once validating the industry and creating a formidable new competitor for Affirm Holdings Inc, PayPal Holdings Inc and Klarna Inc," Trust Securities analysts said.
Dorsey said in a statement:
Afterpay also competes with unlisted Sweden-based Klarna Inc as well as new offerings from US veteran online payments provider PayPal.