Wondering who’s behind the popular “buy now, pay later” service that lets shoppers split purchases into four payments? Afterpay has transformed how many people shop online and in stores since its founding in 2014 by entrepreneurs Nick Molnar and Anthony Eisen in Australia.
Afterpay is currently owned by Block, Inc. (formerly known as Square, Inc.), which completed its acquisition of the company in 2022.
The journey of Afterpay’s ownership is an interesting one. What started as an innovative fintech startup became so successful that it caught the attention of payment giant Square (now Block). Block is led by Twitter co-founder Jack Dorsey, who saw potential in adding Afterpay’s services to Square’s ecosystem of financial products. After the acquisition, Afterpay’s co-founders joined Block to continue leading aspects of the business they built.
Key Takeaways
- Afterpay is owned by Block, Inc. (formerly Square) following an acquisition completed in 2022.
- The company was founded in 2014 by Nick Molnar and Anthony Eisen, who continue to work with Block after the acquisition.
- Afterpay serves approximately 24 million users worldwide as part of Block’s expanding financial technology ecosystem.
Overview of Afterpay
Afterpay is a popular “buy now, pay later” (BNPL) service that has changed how many people shop online and in stores. It lets customers split their purchases into four equal payments over six weeks with no interest.
The company was founded in Australia in 2014 and quickly grew popular with younger shoppers. Afterpay’s simple payment model appealed to millennials and Gen Z consumers who wanted flexibility without traditional credit card debt.
Today, Afterpay works with thousands of merchants worldwide. Shoppers can use the service at major retailers like Target, Old Navy, and Sephora.
As of 2022, Afterpay is owned by Block, Inc. (formerly Square). Block completed the acquisition to strengthen its financial services offerings.
How Afterpay Works:
- Shop at participating stores
- Choose Afterpay at checkout
- Pay 25% upfront
- Make three more payments every two weeks
- No interest fees (only late fees if payments are missed)
Afterpay makes money by charging merchants a small percentage of each sale. This business model has helped the BNPL sector grow rapidly across global markets.
The company also offers an app where users can browse stores, track payments, and find special deals. This convenience has helped Afterpay build a loyal customer base who appreciate the interest-free payment option.
Ownership of Afterpay
Afterpay changed hands in a major business deal that reshaped the buy-now-pay-later industry. This acquisition brought the company under the umbrella of a larger financial technology organization led by a well-known tech entrepreneur.
Acquisition by Square
Afterpay is now owned by Block, Inc., formerly known as Square, Inc. The acquisition was completed in early 2022, making Afterpay a wholly owned subsidiary of Block.
This business move was quite significant in the financial technology world. Square acquired all issued shares in Afterpay through a court-approved Scheme of Arrangement.
The deal aimed to help Block deliver better financial products and services to customers. By joining forces, both companies could reach more people and businesses.
Afterpay officially joined the Block family with excitement about future opportunities. The buy-now-pay-later service continues to operate under the Afterpay brand, maintaining its identity while benefiting from Block’s resources.
Role of Jack Dorsey
Jack Dorsey, as the co-founder and CEO of Block (formerly Square), played a key role in the acquisition of Afterpay. His vision for financial inclusion helped drive this strategic business decision.
Dorsey saw Afterpay as fitting perfectly with Block’s mission to make the economy more accessible. He believed the buy-now-pay-later model could help customers avoid debt and interest payments.
Under Dorsey’s leadership, Block maintained Afterpay’s core services while integrating them into Block’s existing products. This included connecting Afterpay with Block’s Cash App and Seller ecosystems.
Dorsey’s background as Twitter co-founder brought additional attention to the acquisition. His focus on financial innovation has continued to shape how Afterpay develops as part of the larger Block organization.
The Buy Now, Pay Later Industry
Buy Now, Pay Later (BNPL) services have transformed how consumers shop online and in stores. These platforms let shoppers split payments into smaller installments, usually without interest if paid on time.
Competitors in the Market
Afterpay, now owned by Block (formerly Square), has become one of the largest BNPL providers. Block acquired the Australian company for a whopping A$39 billion (approximately US$29 billion).
Klarna, based in Sweden, offers similar services and has expanded globally. They’ve added features like shopping directories and loyalty programs to stand out.
Affirm has grown in popularity, especially through partnerships with major retailers. Their model sometimes includes interest-bearing options for larger purchases.
According to market data, Afterpay held the largest market share in the U.S. during the second quarter of recent reporting periods. Other notable players include PayPal’s “Pay in 4” and Apple’s newer BNPL offering.
Growth Amidst the Pandemic
The BNPL industry saw explosive growth during the COVID-19 pandemic. As people shifted to online shopping, these flexible payment options became increasingly attractive.
Consumer spending through Afterpay alone has reached $72 billion since Block’s acquisition. This reflects the massive adoption of BNPL services worldwide.
Many providers expanded from purely online offerings to in-store options. Afterpay reports that in-store commerce represents over 30% of their business in Australia, showing the format’s versatility.
The pandemic accelerated several years of digital payment adoption into just months. Young consumers particularly embraced BNPL as an alternative to traditional credit cards, appreciating the transparency and simplicity of the installment model.
Afterpay’s Business Model
Afterpay operates using a “Buy Now, Pay Later” (BNPL) model that has revolutionized how people shop online and in stores. This Australian-based company lets shoppers split their purchases into four equal payments over six weeks, with zero interest.
The main way Afterpay makes money is through merchant fees. When a store partners with Afterpay, they pay a fee of around 4-6% on each transaction plus a small fixed fee.
For shoppers, Afterpay is completely free to use if payments are made on time. However, late fees are charged when payments are missed, creating a secondary revenue stream for the company.
Benefits for Merchants:
- Higher conversion rates
- Increased average order value
- Access to Afterpay’s young customer base
- No risk of non-payment (Afterpay takes on this risk)
Benefits for Shoppers:
- Interest-free payments
- No credit check required
- Easy-to-use app for managing payments
- Option to shop with thousands of retailers
Small businesses can especially benefit from offering Afterpay as it helps them compete with larger retailers by providing the same payment options customers expect.
Afterpay has grown quickly since its founding and was acquired by Block (formerly Square), making it part of a larger financial services ecosystem that serves both merchants and consumers.
Consumer Experience with Afterpay
Customers have widely embraced Afterpay as a popular “buy now, pay later” service. The platform offers a simple way to split purchases into four equal payments with no interest.
Many shoppers use Afterpay as a budgeting tool to manage their finances better. Younger consumers particularly love using the service and have been strong supporters of small and medium businesses through the platform.
Afterpay encourages responsible spending by helping users avoid credit card debt. The company runs initial checks but doesn’t perform hard credit checks, making it accessible to more people.
The user experience is quite seamless. Shoppers can:
- Split payments over 6 weeks
- Get automatic payment reminders
- Use the service at thousands of retailers
- Track all their purchases in one place
Since Block, Inc. (formerly Square) acquired Afterpay, integration with Cash App has created new opportunities for users. Many customers appreciate how the services work together in the digital payment ecosystem.
Unlike traditional credit options, Afterpay doesn’t charge interest. Late fees may apply if payments are missed, but the company caps these fees to prevent excessive charges.
Some users also appreciate the flexibility of alternating between Afterpay, Apple Pay, and other payment methods depending on their financial situation at the time of purchase.
Afterpay’s Role in E-commerce
Afterpay has become a major player in the e-commerce world by offering a simple “buy now, pay later” service that appeals to shoppers, especially millennials. The company allows customers to split payments into four interest-free installments, making purchases more manageable.
For many online retailers, partnering with Afterpay has proven beneficial. According to a company report, the average Australian small business sees a 13% revenue increase when they team up with Afterpay.
Small businesses have especially benefited from this partnership. Afterpay’s payment option helps these merchants compete with larger retailers by offering flexible payment options without taking on additional risk.
The COVID-19 pandemic dramatically accelerated Afterpay’s growth. As people turned to online shopping during lockdowns, Afterpay was perfectly positioned to capitalize on this shift. What started as an experiment in 2014 eventually grew into a $29 billion global company that Square acquired in 2021.
During the pandemic, e-commerce boomed and became a surprising benefit for Afterpay. As government stimulus payments hit bank accounts, many shoppers used Afterpay for their online purchases.
To expand their reach, Afterpay launched their first global marketing campaign, leveraging their e-commerce success and featuring celebrity Rebel Wilson. This multi-million dollar effort helped strengthen their brand recognition worldwide.
Technological Integration
Since Block (formerly Square) acquired Afterpay, the company has focused on integrating the buy now, pay later service across its technology platforms. These integrations have created a more seamless payment ecosystem for users while competing with other digital payment solutions.
Partnership with Cash App
Afterpay’s integration with Cash App was one of the first priorities after Block completed the acquisition. This partnership allows Cash App users to discover merchants and make Afterpay purchases directly within the app.
The integration helps Cash App users:
- Browse Afterpay merchants
- Split payments into four interest-free installments
- Track upcoming payments
- Manage their buy now, pay later spending
This connection benefits both customers and merchants. Shoppers get more flexible payment options without leaving their familiar Cash App interface. Merchants reach Cash App’s large user base, which includes many younger consumers who prefer alternative payment methods.
Comparison with Apple Pay
While Afterpay focuses on installment payments, Apple Pay offers a different approach to digital transactions. Here’s how they compare:
Payment Structure:
- Afterpay: Four interest-free installments over 6 weeks
- Apple Pay: Immediate full payment from linked card/account
Integration with Merchants:
| Feature | Afterpay | Apple Pay |
|---|---|---|
| In-store use | Limited availability | Widely accepted |
| Online checkout | Integrated button | Instant tap-to-pay |
| Fee structure | Free for users, merchant fees apply | No user fees |
Afterpay provides more flexibility for budget management compared to Apple Pay’s convenience-focused approach. Both services aim to simplify the checkout experience, but they serve different customer needs.
Afterpay continues to expand its technological capabilities to compete with Apple Pay’s ease of use while maintaining its unique installment payment value proposition.
Market Position and Strategies
Afterpay has established itself as a dominant player in the Buy Now, Pay Later (BNPL) market, especially in Australia. Its strategic partnerships and innovative approach have helped it maintain a competitive edge despite facing rivals like Klarna in the global marketplace.
Collaborations with PayPal and Other Platforms
Afterpay’s market strategy includes forming strategic alliances with major financial platforms. While PayPal operates its own BNPL service, Afterpay has focused on creating a distinctive ecosystem through integration with Square (now Block, Inc.), its parent company since the 2022 acquisition valued at US$29 billion.
In Australia, Afterpay maintains market dominance while facing tougher competition in the U.S. from giants like Klarna. Its approach includes:
- Data-driven decisions: Afterpay leverages Square’s analytics capabilities to understand consumer behavior.
- Retailer partnerships: The company expands its presence through strategic retail collaborations.
- Market adaptability: Afterpay adjusts strategies for different regional markets.
What started as an experiment for a struggling jewelry business in 2014 has transformed into a global fintech disruptor with innovative payment solutions.
