Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Square to acquire Afterpay for $29B

squareup.com

Post reply on HN
Print view View original

101–110 of 360 posts

Re: Square to acquire Afterpay for $29B

#101

Post by systemvoltage »

chrisseaton wrote: post #59
phist_mcgee wrote: post #54

Earlier quoted context omitted.

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.

The point is that if they're stretching payments over multiple weeks/months then they can't afford it.

Re: Square to acquire Afterpay for $29B

#102

Post by AussieWog93 »

systemvoltage wrote: post #100
AussieWog93 wrote: post #49

Earlier quoted context omitted.

Just to expand upon what the parent said, their fee is significantly higher than the companies that just process credit cards (around 6% compared to the industry standard rate of 2.9%). I believe they eat the loss when the customer defaults, though.

Oh boy...so this 6% fee is then indirectly passed onto consumers.

Yep. To be fair, so are the (lower, but non-zero) fees from Visa/MasterCard/Amex/PayPal.

It's a textbook example of an externality.

Re: Square to acquire Afterpay for $29B

#103

Post by riatin »

mustardo wrote: post #81
kevindong wrote: post #80

Earlier quoted context omitted.

The acquisition is entirely in stock, so very little actual cash is changing hands. According to the Afterpay investor relations site, Afterpay's gross revenue for FY21 (ended June 30, 2021), assuming constant currency exchanges rates, was $978 million AUD [0]. If you subtract out the first half of FY21's revenue ($385.2 million AUD) [1], we arrive at an implied revenue of $592.8 million AUD for the second half of FY…

The profit margin per "Revenue" dollar is so small for a payment processor it always seemed like a strange metric to value a payments company on for me, as they are essentially just a middle man for this "Revenue" taking it from the customer and giving it to the merchant. Afterpay does typically have higher merchant fees than a regular CC gateway tho

Afterpay aren't really a payments processor in the typical sense though, their business model is nothing short of genius tbh. They've set up a non-traditional 2-sided market connecting consumers + merchants, allow consumers to pay the MERCHANTS back over 4 installments and collect a 5% fee on the way through as well as any late fees (remember they're not taking on the risk here either)

Re: Square to acquire Afterpay for $29B

#104

Post by phist_mcgee »

wonnage wrote: post #82
phist_mcgee wrote: post #50

Earlier quoted context omitted.

Trickily, BNPL is pushed as 'not credit', which I find deeply disingenuous. The product they push is utilised by compulsive spenders, or poorer people. These people have always used credit, much to their collective disadvantage. Branding it as 'like lay-by, free up your cashflow' is in my opinion a dangerous option for many people.

It's rather paternalistic to assume poor people can't handle credit.

Are you kidding? Poor people of course cannot handle credit, because they don't have the cashflow or savings to prevent the use of credit in disadvantageous situations. I am not saying poor people shouldn't have credit, I am saying credit is most destructive for poorer people, and so any service that targets that market is exploitative of their misfortune.

Re: Square to acquire Afterpay for $29B

#105

Post by boring_twenties »

interesting22 wrote: post #19
treelovinhippie wrote: post #12

Earlier quoted context omitted.

~25% of their revenue comes from late fees to consumers. 75% from merchants. They're your standard loan shark predator disguised with flashy marketing and bankrolled by VCs.

Given that: - their late fees are capped - there is zero interest charge - they have a policy of never taking legal action to pursue payment - non-payments don't affect your credit rating On what is your argument based? There is literally nothing in common.

> they have a policy of never taking legal action to pursue payment - non-payments don't affect your credit rating

Wait a minute, what incentive do we have to ever pay them back?

Re: Square to acquire Afterpay for $29B

#106

Post by danielmarkbruce »

Clewza313 wrote: post #74
shell0x wrote: post #58

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.

Australia has gone 20+ years without a recession, meaning many people have grown up without ever seeing anything except full employment and house prices going up up up. It's thus been a "safe bet" to leverage yourself up to your eyeballs to get on that "property ladder", and while many (including myself) thought this would finally pop last year with COVID, nope, after the briefest hiccup the property market has gone…

If you look at interest rates from 1990 to now, and average household debt, it's easy to see why the economy has been up up up up. People have been spending way more money than they make for 30 years in Australia. That will make any economy boom.

The difficult thing is... when does it stop? The above could have been said 10 years ago, just replace the 3 with a 2. Should it have stopped then? Now? In 10 more years?

Re: Square to acquire Afterpay for $29B

#107

Post by 55555 »

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…

> My merchant account is cheap (interchange plus 0.1% or so) and the gateway they set me up on is Authorize.net

It's crazy most people don't know you can get this. Seems like every popular merchant account provider is a bad deal in comparison.

For those curious, you get it from banks. Open a company account at a major conventional bank then ask them for a merchant account. The default they offer you is interchange + 0.2% or so. Many debit cards have an interchange rate of about 1%. When you pay 30 cents + 3% or 2.9% or whatever you're sortof being screwed.

Re: Square to acquire Afterpay for $29B

#108

Post by [deleted] »

girvo wrote: post #94
jokethrowaway wrote: post #83

Earlier quoted context omitted.

That's likely a combination of extra money being printed, maybe people doing more remotes and looking for better houses, government schemes to prop the house prices up (eg. by slashing taxes on property). There is still time for a pop once governments decide things are normal again after covid.

> There is still time for a pop once governments decide things are normal again after covid. While thats true on its face, in practice trying to make that bet is a fools errand at this point. People have been telling me that for a decade plus, now. It still hasn't happened, and the Australian economy (and household wealth) is inextricable intertwined with real estate -- I can't see any government deciding to let it "…

[deleted]

Re: Square to acquire Afterpay for $29B

#110

Post by ivirshup »

softveda wrote: post #92
toomuchtodo wrote: post #4

Earlier quoted context omitted.

Merchant fee (same as paid by a merchant when accepting a CC) which subsidizes the zero percent financing payment plan to the consumer.

They are in a regulatory blackhole, in Australia merchant fees are tightly regulated, cannot be more than actual processing cost. Many companies here charge more to pay bills by credit card or shops have minimum amount before credit cads are accepted. Moreover since Afterpay technically doesn't give consumer credit they are not bound by national credit rules as well. They don't and can't do credit checks

Presumably this extends beyond Australia though, right? As Square paying $1,000 per Australian would be a bit high.
Post reply on HN