(2) BNPL is attractive financially - generating much higher margins, even after accounting for credit risk. Comparing Square and Afterpay, we see a 1.4X net margin upside with BNPL
However, Square could have targeted the above benefits with an organic BNPL product launch too. So, why did it have to acquire Afterpay?
(3) Afterpay has grown 10X is US market over the last 2 years. With Afterpay's superior BNPL offering, without this acquisition, Square risked losing its customers and merchants to Afterpay. This possibly is the biggest strategic reason why Square went for the acquisition
(4) Lastly, Square got the deal at a reasonable valuation - roughly the same as Afterpay's average listed stock price over the last 3 months.