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

151–160 of 360 posts

Re: Square to acquire Afterpay for $29B

#151

Post by hboon »

mtlynch wrote: post #139
55555 wrote: post #107

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 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?

You need a merchant account to accept card payments.

> For an online retailer, does the merchant account replace Stripe/PayPal?

It's the other way around. Each retailer needs a merchant account to accept card payments. Without Stripe etc, you'd need to go through the (often tedious) route of getting a merchant account (paperwork, proof of business health, etc) and negotiating rates before you can start integration (using traditionally quite horrible APIs) using it. Stripe is just the middleman which provides their own merchant account with a nice API to accept payments through it.

The question is interesting, not because you don't know, but because it reflects how much things and perception changed so that we think:

> does the merchant account replace Stripe/PayPal?

It shows how successful Stripe has been.

Re: Square to acquire Afterpay for $29B

#152

Post by judge2020 »

geekpowa wrote: post #147
judge2020 wrote: post #136

Earlier quoted context omitted.

> 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.

Merchants are not allowed to add a surcharge line item for using Afterpay. Instead they have to increase base pricing across the board to cover their increased costs. Afterpay are quite happy for merchants to do this, what they don't like, and what they actively police, is merchants adding a line item passing Afterpay costs onto the consumer. The macroeconomic impact is potentially enormous. Your mission is to captur…

BNPL is a seemingly a separate situation since it requires the company to front money to merchants with the risk of the person not making a payment and defaulting on the loan, but the merchant fee is indeed where it seems deceptive, even if it might mean more sales due to said customer deception of "0% APR".

Re: Square to acquire Afterpay for $29B

#153

Post by ZephyrBlu »

paxys wrote: post #146
ZephyrBlu wrote: post #135

Earlier quoted context omitted.

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.

This is obviously country specific and I don't know anything about the banking/payment environment in NZ, but here in the US credit cards offer a ton of benefit to consumers, so much so that it's almost always stupid to not use one.

None of the cards my bank offers seem that enticing: https://www.kiwibank.co.nz/personal-banking/credit-cards/rat...

Re: Square to acquire Afterpay for $29B

#154

Post by humanlion87 »

mikeryan wrote: post #129
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…

Even in the Release I was shaking my head. They have 100,000 merchants that seems tiny? I could understand buying market share but at some point don’t you think Someone could tell Jack “hey we can probably build this feature for a few bucks less than $1B. Might take a year or so but we can save a few bucks maybe” I mean at some point don’t you have t

I don't think building the feature/product is the challenge here. Signing up all those merchants and convincing them to on-board is going to be time and resource intensive. That is what they are buying.

Re: Square to acquire Afterpay for $29B

#155

Post by [deleted] »

ivirshup wrote: post #110
softveda wrote: post #92

Earlier quoted context omitted.

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.

[deleted]

Re: Square to acquire Afterpay for $29B

#156

Post by jeeeb »

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.

To play devil’s advocate though, if a 6% payment fee allows a merchant to make a sale they wouldn’t have otherwise made, then that might be a net win from their perspective. I.E. eating some decrease in profit is better than making nothing at all.

It’s basically the app version of offering interest free payments on a purchase.

Re: Square to acquire Afterpay for $29B

#157

Post by mcbridematt »

paxys wrote: post #146
ZephyrBlu wrote: post #135

Earlier quoted context omitted.

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.

This is obviously country specific and I don't know anything about the banking/payment environment in NZ, but here in the US credit cards offer a ton of benefit to consumers, so much so that it's almost always stupid to not use one.

In Australia (Afterpay's home market), credit card merchant fees are tightly regulated (Airline/Frequent Flyer point conversions similarly got nerfed, so much so it's better to cycle cards (credit worthiness permitting) every year to get a point bonus up front (e.g 200K points for spending $X000 in the first 3 months) than trying to earn that amount.

Re: Square to acquire Afterpay for $29B

#158

Post by jlamberts »

pjg wrote: post #149
azemetre wrote: post #125

Earlier quoted context omitted.

Oh man, I would have honestly said Square. Product development at Square seems to be way way better than Twitter, compare the last 3-years between the two. Twitter hasn't really done much with it's platform, they never really done much with monetization and other platforms are eating into their space (patreon, onlyfans, substack). I mean they literally invented tiktok before tiktok with Vine and that acquisition just…

Credit Karma ? It was acquired by Intuit, not Square

As part of the Intuit purchase Credit Karma had to sell off their tax service, which Square bought. I'm guessing that's what OP is referring to.

Re: Square to acquire Afterpay for $29B

#159

Post by trissylegs »

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…

I worked on some of Spotlight's rollout of Zip. I can see why they would prefer that. Spotlight go to a lot of effort to make sure every expense is accounted for. Also given their enthusiasm for it they definitely negotiated a good deal for it. (interest rates on Zip can get higher than most CC's, its only worth it if you pay off in the interest free period).

Re: Square to acquire Afterpay for $29B

#160

Post by systemvoltage »

jeeeb wrote: post #156
systemvoltage wrote: post #100

Earlier quoted context omitted.

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

To play devil’s advocate though, if a 6% payment fee allows a merchant to make a sale they wouldn’t have otherwise made, then that might be a net win from their perspective. I.E. eating some decrease in profit is better than making nothing at all. It’s basically the app version of offering interest free payments on a purchase.

Totally agree - I was just poiting out that just like 2.9% credit card fees that get ammortized over the total sales by the means of higher prices (meaning even if you use cash, you don't get a discount[1]), the 6% has to come from somewhere.

[1] Some gas stations have a different cash rate to pass the savings on to the customer

Post reply on HN