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Square to acquire Afterpay for $29B

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Re: Square to acquire Afterpay for $29B

#171

Post by robertwt7 »

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…

Actually the fee is not far higher than Amex. Depends on the business, it can be a blessing or a curse.

Re: Square to acquire Afterpay for $29B

#172

Post by paxys »

version_five wrote: post #66
treelovinhippie wrote: post #7

Ok so Square has opted to engage in predatory practices. Noted.

I see you have a few posts on this thread and are obviously not a fan. I had not heard of afterpay before this thread, but I checked them out and I agree they are a predatory lender. Some people obviously feel differently, but I don't see (other than a bit of nice branding) how they are different than Money Mart or Easy Home or anyone else that gives you money you don't have, but makes sure to collect it one way or a…

Does this also apply to Visa, Mastercard, Apple Pay? Giving out a loan is by itself not predatory. It's the interest rate and other collection practices which make it so. Afterpay looks to have basically the most consumer friendly terms in the industry right now, so I'm not sure what exactly classifies them as predatory?

Re: Square to acquire Afterpay for $29B

#173

Post by ec109685 »

systemvoltage wrote: post #165
mcbridematt wrote: post #157

Earlier quoted context omitted.

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.

That's not the main benefit of using a credit card. The primary benefit of a CC is decoupling it from your bank account - if there is an issue, CC company will fight the charge for you and almost always side on your side. I bought a pair of speakers costing $2500. I tried to reach to the company for a return but no one would answer. No phone, no email, nada. 1 month return deadline was coming up and I called American…

That customer service is also paid for by the credit card fees they charge merchants in the United States.

Re: Square to acquire Afterpay for $29B

#174

Post by ZephyrBlu »

hnick wrote: post #164
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.

Insurance, points, cashback, chargebacks. It's also a one month interest free float of your funds if you pay in full each month, meaning you earn some interest. I know some debit cards are getting closer to credit cards in these areas but at least when I first got one, they were just plastic cash. You spend it you lose it, the bank won't support you with clawing it back.

> Insurance, points, cashback, chargebacks

The first 3 don't really seem to exist in relation to CCs in NZ, and wanting/needing to do a chargeback seems unlikely.

There are probably mild benefits to me having a CC over a debit card in NZ, but it doesn't seem to be anything like the US.

Re: Square to acquire Afterpay for $29B

#175

Post by ec109685 »

riatin wrote: post #103
mustardo wrote: post #81

Earlier quoted context omitted.

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)

This feels similar to the United States credit card market where there’s a 3% fee paid for by the merchant and thus a lot of opportunities to “reward” customers, and an incentive to keep things status quo.

Re: Square to acquire Afterpay for $29B

#176

Post by paxys »

BugsJustFindMe wrote: post #47

Every time I see one of these announcements, the valuations go up and up and up and up. I remember not long ago being wowed by a 1B acquisition. That was called a unicorn because of how incredible it was. And now we're at 29B. Is this just because money is all a joke?

Back when 1B acquisitions were considered incredible most of the world did not know what the internet was. If the size of the pie grows 30X the amount of money in it will as well.

Re: Square to acquire Afterpay for $29B

#177

Post by siruncledrew »

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 +…

Are there any resources you looked at for this stuff?

This is like some kind of hidden gem I just found out about.

Is this ~1.2% total rate only for processing debit cards or credit cards as well?

Re: Square to acquire Afterpay for $29B

#178

Post by InvertedRhodium »

ZephyrBlu wrote: post #174
hnick wrote: post #164

Earlier quoted context omitted.

Insurance, points, cashback, chargebacks. It's also a one month interest free float of your funds if you pay in full each month, meaning you earn some interest. I know some debit cards are getting closer to credit cards in these areas but at least when I first got one, they were just plastic cash. You spend it you lose it, the bank won't support you with clawing it back.

> Insurance, points, cashback, chargebacks The first 3 don't really seem to exist in relation to CCs in NZ, and wanting/needing to do a chargeback seems unlikely. There are probably mild benefits to me having a CC over a debit card in NZ, but it doesn't seem to be anything like the US.

They do, although it's not a common feature for a basic credit card - for example, the BNZ Platinum Visa card comes with travel insurance, and you can either earn points or get a 1% cashback, depending on which reward scheme you choose.

Re: Square to acquire Afterpay for $29B

#179

Post by Clewza313 »

nl wrote: post #134
girvo wrote: post #94

Earlier quoted context omitted.

> 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 Aus…

By "pop", people mean something like the impact of the GFC on many parts of the US, where houses were underwater on their mortgages and getting repossessed left and right.

There's also reason to believe that the Australian property market has decoupled from the rest of the economy, and that's because tax breaks like negative gearing incentivize buying properties even when it makes no financial sense otherwise. This could change overnight with the stroke of a pen, but it would take an awfully bold politician to do it.

Re: Square to acquire Afterpay for $29B

#180

Post by yardstick »

ZephyrBlu wrote: post #153
paxys wrote: post #146

Earlier quoted context omitted.

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...

It’s a shame the NZ market hates credit cards so much. In the UK they are widely accepted - as in I struggle to think of a shop that didn’t accept them. Including dairies and food trucks (thanks Square!).

Btw I find it weird that EFTPOS cards have no annual fee, but debit cards do, but some credit cards don’t (eg ASB Visa Light has no ongoing fees).

I sometimes have to pay £1 via card when in a shop activating a service like a monthly phone plan. The £1 is just to validate the card details I gave. They then give me a £1 coin back. I always pay with the credit card, even for such a small amount- because it’s the banks money, not mine, and the bank will always take care of their money more carefully than your own.

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