In an all-stock $29 billion deal last week, digital payments firm Square acquired buy now pay later (BNPL) platform Afterpay. The BNPL service has enjoyed an explosion in popularity in recent months, boasting 100,000 participating merchants and 16 million customers. What’s more, it seems that BNPL is the new favorite payment strategy of younger generations.
It’s no surprise that Afterpay and other BNPL services are gaining steam with Millennial and Gen Z consumers. Unlike credit cards, BNPL platforms are widely seen as convenient, low-risk, and inexpensive, with monthly payments for a purchase automatically deducted from a connected bank account.
Afterpay is hardly the only BNPL service to attract major attention. Bringing in a multimillion funding round led by Softbank earlier this year, Swedish fintech and purchasing platform Klarna was recently valued at $45 billion. Apple has also pursued installment purchasing options for Apple devices in some regions with up-and-comer PayBright, Affirm Holdings’ BNPL platform.
It’s becoming increasingly clear that BNPL is quickly becoming a major part of how young people make major purchases. According to a study by Adobe, Affirm and similar platforms experienced over 200% year-over-year growth in the first two months of 2021 alone.