APT Afterpay Limited

   By Stuart Condie 
 

SYDNEY--Square Inc.'s US$29 billion acquisition of Afterpay Ltd. could create one of the world's most important payments network, an early investor in the Australian buy-now-pay-later provider said.

The addition of installment payment functionality to Square's Cash App should help integrate the U.S. company's merchant payment network and its consumer service, said Dana Stalder, general partner at U.S.-based venture-capital firm Matrix Partners.

"I've never seen a combination that has such potential to deliver extraordinary value to both consumers and merchants. Even more so than eBay + PayPal," Mr. Stalder said in a post on Matrix's website following the deal's announcement.

Mr. Stalder, a PayPal Holdings Inc. senior vice president from 2004 to 2008, has been an Afterpay board member since 2018, when Matrix invested US$15.0 million in what was then known as Afterpay Touch. The cash helped fund the Australian company's expansion into the burgeoning U.S. payments market, which now accounts for 65% of Afterpay's users and 46% of its underlying sales volumes.

Matrix this year waived 35% of the underlying interest it held in Afterpay's U.S. unit for about 373 million Australian dollars (US$273.9 million) in cash, while the 0.9% stake it holds in the overall company is valued at A$343.0 million by Square's offer of A$126.21 a share.

Mr. Stalder said Matrix had been thrilled but unsurprised by Afterpay's meteoric rise, which has made it Australia's largest locally listed technology company by market capitalization. He said Afterpay had executed on younger consumers' desire to avoid interest-accruing debt, such as through traditional credit cards.

"Afterpay and Cash App each have double-digit millions of consumers, and Square's seller ecosystem and Afterpay's merchant network both do double-digit billions of payment volume per year," Mr. Stalder wrote.

"From the offline register to the online checkout flow to sending money to a friend in just a few taps, Square and Afterpay will tell a complete story of next-generation economic empowerment."

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

August 02, 2021 01:19 ET (05:19 GMT)

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