Square wants you to spend more money

Buy now pay later services have seen a serious boom in the last few years. A combination of more time to shop and easier online shopping tools is leading many to find ways to spend money they don't (yet) have.

Square wants to join the wave, and they're doing that by acquiring AfterPay, an Australian company that does just that.

I've looked at the buy now pay later market before when Klarna announced a big raise back in 2020, so this announcement was a good time to see how the landscape is looking in 2021.

Klarna, Affirm, and AfterPay lead the way in this industry.

Affirm used to be the go-to solution back in the day, but Klarna took over in 2019 and hadn't looked back since. AfterPay has had its growth sprout in 2020, and has overtaken Affirm—and as of last week, Klarna—in downloads.

In 2020, the three recorded a combined total of 13M downloads. Klarna lead with 6.4M followed by AfterPay with 4.2M, and Affirm with 2.7M, according to our estimates.

While Klarna's growth continues in a fairly stable fashion, both AfterPay and Affirm are already seeing more downloads in 2021, which is nowhere near done, than in all of 2020. Expect massive growth for AfterPay this year both because it's a part of Square and also because it was on that path anyway!

Thinking out loud. Is this type of borrowing good overall? As adoption of BNPL apps rises, so is spending. While installments can make the difference between buying something you really need now vs. having to wait, it could lead to overspending. I bring this up because that sounds like something regulators are not going to like, and seeing as apps are the gateway, the battle will likely play on mobile.