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Square to acquire Afterpay for $29B

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Re: Square to acquire Afterpay for $29B

#51

Post by version_five »

chrisseaton wrote: post #21
mberning wrote: post #18

Horrible. People ought to know enough to not use these products in the first place, but people will use it anyway. They should be required to show the long term effects before being used, much like the gore packaging used on cigarettes in some places. What’s the financial equivalent of lung cancer or having a stoma?

The long-term effects of a zero-interest loan? What are those?

The OP is onviously using hyperbole, but there are certainly long term effects from encouraging people to spend beyond their means. For example, it makes people's financial position more precarious: if your income is mostly committed to monthly payments, you are in more danger of getting into trouble from a layoff, illness, etc. If a big portion of society is in this position (and they are) this is a concern.

I think people should be allowed to make their own choices, but I don't believe it's harmless to promote living beyond one's means.

Re: Square to acquire Afterpay for $29B

#53

Post by makeitdouble »

hn_throwaway_99 wrote: post #26

I've just come to accept that I'll never understand corporate finance. Based on the data I could find, this works out to a sales price of about 76 times revenue for Afterpay. Even for a fast growing company, how can they ever grow into that valuation? Of course, it's an all stock deal, so perhaps it's better to just consider what percentage of Square they're giving to Afterpay stockholders, but I still just can't wra…

Hopefully they don’t intend to let Afterpay’s market stagnate in complete isolation, otherwise acquiring would make less sense.

If they can take Afterpay’s product and scale it to their customer base and beyond, that should be worth it.

Re: Square to acquire Afterpay for $29B

#54

Post by phist_mcgee »

chrisseaton wrote: post #21
mberning wrote: post #18

Horrible. People ought to know enough to not use these products in the first place, but people will use it anyway. They should be required to show the long term effects before being used, much like the gore packaging used on cigarettes in some places. What’s the financial equivalent of lung cancer or having a stoma?

The long-term effects of a zero-interest loan? What are those?

You sound like a BNPL marketer. The loan has late fees, the app is branded as a easy POS way to buy things with money you don't have. There is no credit check. You can sign up to a dozen of the services at once. It is credit, it has the same negative effects as credit.

BNPL is as bad for people as 20% apy credit cards are.

Re: Square to acquire Afterpay for $29B

#55

Post by phist_mcgee »

wonnage wrote: post #31
treelovinhippie wrote: post #17

Earlier quoted context omitted.

Afterpay is a buy now, pay later scheme. It's literally a loan shark service. 25% of their revenue comes from late fees. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also war…

How is a zero-interest payment plan loan shark-esque? Total late fees appear to be capped at the lesser of 25% or $68, which also seems less predatory than any credit card.

Because it is integrated POS, and is even more frictionless than credit. You don't need a credit check, you can sign up to many BNPL providers at once, and you are presented with options in store and online to buy with 'x' right now and not pay a cent. It drives impulsive spending behaviours. It is all bad.

Re: Square to acquire Afterpay for $29B

#56

Post by Gatsky »

pdog wrote: post #45
Gatsky wrote: post #38

Earlier quoted context omitted.

> I generally never buy anything online that I can't afford to pay for it outright so I have never used them before. They are designed to let people buy impulsively without annoying restrictions like not having enough money. Who would have though this was either an addressable market or a good idea. I don't get why they are so popular either, or worth this much. They also don't have any moat - any payment provider ca…

Isn't that what a credit card is for? Or is it somehow different?

It is interest free, and also has a repayment plan baked in. The credit card user is incentivized to pay it off each month, but the Afterpay user is incentivized to buy more stuff now.

Re: Square to acquire Afterpay for $29B

#57

Post by mberning »

version_five wrote: post #51
chrisseaton wrote: post #21

Earlier quoted context omitted.

The long-term effects of a zero-interest loan? What are those?

The OP is onviously using hyperbole, but there are certainly long term effects from encouraging people to spend beyond their means. For example, it makes people's financial position more precarious: if your income is mostly committed to monthly payments, you are in more danger of getting into trouble from a layoff, illness, etc. If a big portion of society is in this position (and they are) this is a concern. I think…

Right. Afterpay, Affirm, Klarna, etc. are generally not used by well off and financially literate/prudent people. Just like gambling and lotteries. They are generally used by people that don’t need help screwing up their finances. While I do agree that people should be free to do what they want I think it should be presented with some realistic and frankly harsh warnings.

Re: Square to acquire Afterpay for $29B

#58

Post by shell0x »

As a foreigner in Australia, I can't help but to think that Australians really don't know how to handle finances and are too irresponsible to use a credit card, so Afterpay and Zip stepped in.

Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.

Re: Square to acquire Afterpay for $29B

#59

Post by chrisseaton »

phist_mcgee wrote: post #54
chrisseaton wrote: post #21

Earlier quoted context omitted.

The long-term effects of a zero-interest loan? What are those?

You sound like a BNPL marketer. The loan has late fees, the app is branded as a easy POS way to buy things with money you don't have. There is no credit check. You can sign up to a dozen of the services at once. It is credit, it has the same negative effects as credit. BNPL is as bad for people as 20% apy credit cards are.

Being more charitable, I think it's marketed as a way for people who budget monthly to spread their charges.

Re: Square to acquire Afterpay for $29B

#60

Post by ampdepolymerase »

dangrossman wrote: post #30
chirau wrote: post #11

I have noticed that there isn't a lot of chatter on HN about Square. But on closer inspection it is a fascinating success story. They are building and cornering a whole ecosystem there. And their valuation is remarkable. Not just hype, but execution. Kudos to them. Between them and Stripe, it's nice to have something in payments to admire and be excited about. I remember a time when we had to deal directly with Autho…

My merchant account is cheap (interchange plus 0.1% or so) and the gateway they set me up on is Authorize.net. Still using it after 17 years or so, although indirectly via Spreedly. If you go to a craft show or popup market or anything like that, every vendor has a Square reader to take cards. They're super successful with "offline solopreneurs" -- the independent one-person small businesses. One of my many side gigs…

How much are the delivery fees for this sort of products?
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