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

131–140 of 360 posts

Re: Square to acquire Afterpay for $29B

#131

Post by daniel-grigg »

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.

Being responsible is a tough call give that institutions in Australia charge enormous interest rates on credit cards, typically 20%+. I find it staggering that they can get away with it actually. Regardless, many (less ‘responsible’) consumers get burnt by this and spend years paying down debts, so I’m not surprised these BNPL players have seen such success. Also they’ve done well appealing with younger consumers. How though I’m not sure exactly, is it a mix of attributes like mobile first product and the simplicity of accessing credit compared to traditional banks or is there something more overarching?

Re: Square to acquire Afterpay for $29B

#132

Post by Khaine »

In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mechanism. Banks have also responded and offer credit cards that don’t act like normal credit cards[1]

[1] https://www.commbank.com.au/credit-cards/commbank-neo.html

Re: Square to acquire Afterpay for $29B

#133

Post by pjg »

Seems like a simple value proposition here: BNPL is growing like crazy. Square doesn't have a strong product in BNPL space. Add to that it will get a presence in AUS/NZ and it becomes a good value to Square expanding product and global footprint. Paying about 20-25% of it's market cap to acquire a company at appx 20X multiple of it's revenue with a growth rate of 1X. Seems like a fair deal in today's hot market. Is there anything else to it ?

Re: Square to acquire Afterpay for $29B

#134

Post by nl »

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 "…

People need to be much stricter on what they mean my "pop".

Australian property prices are cyclic with an upward trend. There are (substantial) cyclic decreases in prices, especially in Sydney[1].

But people who talk about "popping" property prices seem to believe there will be a massive (50%+?) fall in prices.

But there are fundamental reasons why this is unlikely. The 2008 GFC causes a 16% decrease in prices in Australia[2], and it's hard to imagine something being worse. Prices recovered 10% the next year, because Australia avoided a recession and there is fundamental demand for living areas in out major cities.

The GFC caused a 18% decreases in prices in the US[3]. Given that Australian mortgage rules are different (there is no ability to walk way from a mortgage in Australia, unlike the US) it's unlikely a bubble in Australia will "pop" worse than that.

But 10% decreases occur relatively often. For some reason these are ignored, but the truth is these are the "pops" that take the froth out of the market.

[1] https://cdn.propertyupdate.com.au/wp-content/uploads/2021/03...

[2] https://www.theguardian.com/money/2009/jan/06/house-prices-f...

[3] https://money.cnn.com/2008/12/30/real_estate/October_Case_Sh...

Re: Square to acquire Afterpay for $29B

#135

Post by ZephyrBlu »

Khaine wrote: post #132

In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mechanism. Banks have also responded and offer credit cards that don’t act like normal credit cards[1] [1] https://www.commbank.com.au/credit-cards/commbank-neo.html

I'm an early 20s Kiwi zoomer, so somewhat similar demographic.

I don't have a credit card and see no point in it. I use a debit card for everything. I don't think most of my friends have credit cards either, but maybe they do and I don't notice.

Re: Square to acquire Afterpay for $29B

#136

Post by judge2020 »

geekpowa wrote: post #128

Afterpay's business model relies on high merchant fees which merchants, under their merchant agreement, are not allowed to pass onto their customers. So from customers point of view, afterpay often appears to be cheaper than other payment channels such as credit card / paypal. Afterpay roll into a new merchant, cannibalise existing payment systems and at leat for the low margin merchants I work with, who are not savv…

> which merchants, under their merchant agreement, are not allowed to pass onto their customers.

Is this audited by Afterpay perhaps? A company might just increase prices due to quarterly losses and not specifically because of this fee, even if it does contribute to a large amount of margin loss.

Re: Square to acquire Afterpay for $29B

#137

Post by nl »

jeeeb wrote: post #126
siquick wrote: post #70

Earlier quoted context omitted.

I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit card debt, a mortgage covering 60% of a salary, and a leased car seem to be fairly standard for a lot of my peers. It feels like they’re all 3 missed months of salary away from having absolutely nothing. Obviously all anecdotal but still astounding and probably…

The flip side of this is that: 1. As long as your LVR isn’t too high your interest payments on a home loan will probably come in well below what renting an equivalent house would cost. Further rent will generally rise over time with inflation, whereas your interest will decrease to zero over time as you pay down the loan. 2. If you’ve got a home loan with a 100% offset account (very, very common in Australia) then a…

These are all entirely correct.

The thing worth pointing out that explains how both this, and the person you are replying to are correct is that in Australia we haven't had an unemployment crises since the 1990s.

If you have never seen unemployment, and can't imagine not having a job then arranging your affairs for tax efficiency makes perfect sense, even if it means you are carrying more debt.

Re: Square to acquire Afterpay for $29B

#139

Post by mtlynch »

55555 wrote: post #107
dangrossman wrote: post #30

Earlier quoted context omitted.

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 +…

As one of the people who doesn't know about this, what does the merchant account do? For an online retailer, does the merchant account replace Stripe/PayPal?

Re: Square to acquire Afterpay for $29B

#140

Post by thiscatis »

Khaine wrote: post #132

In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mechanism. Banks have also responded and offer credit cards that don’t act like normal credit cards[1] [1] https://www.commbank.com.au/credit-cards/commbank-neo.html

And the merchant get fleeced even more
Post reply on HN