Square goes after pay-later

Jack Dorsey’s Square is looking to buy now so it doesn’t have to pay later for missing out on one of fintech’s hottest subsectors.

The Twitter chief’s separate payments company has reached a deal to acquire Australian “buy now, pay later” provider Afterpay in a US $29bn all-stock transaction that would be the largest takeover in Australian history.

Melbourne-based Afterpay allows retailers to offer customers the option of paying for products in four instalments without interest if the payments are made on time. Afterpay said its 16m users regard the service as a more responsible way to borrow than using a credit card. Merchants pay Afterpay a fixed fee, plus a percentage of each order.

Adoption of buy now, pay later services had tripled by early this year compared with pre-pandemic volumes, according to data from Adobe Analytics, and were particularly popular with younger consumers. Rivalling Afterpay is Affirm of the US and Sweden’s Klarna, which increased its valuation by 50 per cent in three months to $45.6bn, after receiving investment from SoftBank’s Vision Fund 2 in June. PayPal offers its own service, Pay in 4, while it was reported last month that Apple was looking to partner with Goldman Sachs to offer buy now, pay later facilities to Apple Pay users.

Lex says Square has emerged as one of the big winners of the pandemic. Its share price has nearly tripled in the past two years thanks to a broader land grab in payments, making stock-based acquisitions easier. It released its second-quarter earnings ahead of schedule on Sunday, reporting it had handled $42.8bn in payments for a $204m profit on revenues of $4.7bn.

The Internet of (Five) Things

1. Robinhood’s rock-strewn IPO road
Robinhood’s rise has been pockmarked by crisis and scandal, reports The Big Read. The stock trading app has suffered outages. Customers have been locked out of accounts, with little access to support. It has been fined heavily and regulators have ramped up investigations into how it makes money and whether its game-like features have crossed the line. Its stock market debut was meant to start a new chapter for the broker. Instead, with shares falling 8.4 per cent from the $32bn market capitalisation set by the company just hours earlier, it represented one of the worst ever starts for an IPO of its size.

2. Grab growth slows
Grab, the south-east Asian company behind the world’s biggest merger with a “blank cheque” group, has reported slower growth as it grapples with continued coronavirus-related disruption ahead of its delayed $40bn New York listing. The Singapore-based company’s quarterly update revealed the total value of transactions on Grab’s platform increased just 5 per cent to $3.6bn.

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3. Bezos loses lunar legal appeal
A US government watchdog has rejected an appeal from Jeff Bezos’s space company, Blue Origin, over Nasa’s decision to award a lunar landing contract to Elon Musk’s SpaceX. Rejecting the protest, the Government Accountability Office said the space agency “did not violate procurement law or regulation” when it handed SpaceX the $2.89bn deal to help send Americans back to the Moon, possibly as soon as 2024.

4. Streaming demand prompts studio deal
US investment groups Blackstone and Hudson Pacific Properties are to build one of Europe’s biggest television and film production hubs on a site 20 miles north of central London in a deal expected to be worth about £700m. It represents the latest example of the boom in UK studio development that is being driven by surging global demand for streamed video content.

5. Battery recycling in the search for a circular economy
“In the future, we’ll replace the car, but not the battery,” says Gene Berdichevsky, chief executive of battery materials start-up Sila Nano, who foresees electric vehicle batteries lasting 30 years. The Big Read looks at the search for greater longevity and sustainability through attempts to recycle the metals and parts used in batteries.

Tech week ahead

Monday: European chipmaker NXP and video game publisher Take-Two report earnings after the market close.

Tuesday: China’s tech sector crackdown started with Alibaba and sister company Ant Group, so investors will be eager to hear from management about the impact of the clampdown on the country’s top ecommerce platforms in their June quarter. Chipmaker Infineon, ride-hailing service Lyft and video game publisher Activision also report quarterly earnings. A final round of hearings is scheduled in Canada over whether to extradite Huawei’s finance chief Meng Wanzhou to the US. Her lawyers will argue in the three-week session that US allegations used as the basis to detain Meng in Vancouver in 2018 contained misstatements and misleading information.

Wednesday: June quarter earnings are due from Japan’s SoftBank and Sony, while Uber reports in the US, along with games publisher EA and online marketplace Etsy.

Thursday: Nintendo will report earnings, with the video game company forecasting a 29 per cent drop in net profit for the year ending March 2022, as the pandemic-fuelled gaming boom eases and the popular Switch console faces a slowdown in sales. An improved Switch with a larger, better screen and more internal memory is expected to hit stores this October. In the US, the DEFCON hacker convention begins in Las Vegas. In India, the Supreme Court is due to start hearing a case demanding an independent probe into NSO’s Pegasus spyware being discovered on phones of an opposition political strategist and high profile journalists.

Friday: Epic Games’ Rift Tour concert series within its Fortnite game begins with an Ariana Grande show.

Tech tools — Windows 365

Microsoft makes available to business the new cloud version of its operating system from today. Windows 365 “securely streams your personalised Windows desktop, apps, settings, and content from the cloud to any device”, it says. Companies pay a monthly fee per user “and can choose whether a PC, with its locally installed OS, or a Cloud PC, with its cloud-based OS, is the best fit for a particular user or role in the organisation”. Presumably, this means you could easily run Windows on a Chromebook as well as a Mac, as the Faq page says users can connect to their Cloud PC on any platform that has the Microsoft Remote Desktop app (Windows, iOS, macOS, and Android) or on any device with an HTML5-capable browser to access the web client.