Afterpay owner Block supports US bank’s support package as it plans to expand in Australia
Afterpay was bought by Block in a record-breaking all-share deal completed early last year, and since the merger was first announced, valuations of rival BNPL operators, including Klarna and Zip Co, have fallen sharply. The slump partly reflects the rise in interest rates that has hit the entire tech sector.
Despite the bleak outlook for BNPL companies, Ahuja stressed that Block didn’t buy Afterpay as a short-term bet, stressing his role in linking Square to Block’s consumer-facing cash app. “We’re not focused on a two-year ROI [return on investment]we are focused on a 10-year ROI,” said Ahuja.
For the Australian market, where Block employs 1,200 people, Ahuja said continued growth remains a key priority, and she reiterated Block’s plans to eventually launch its cash app here after the company launched Afterpay’s Westpac-powered banking app last year had closed.
Ahuja didn’t specify when Cash App would be coming to Australia, but she argued that the app is unique compared to traditional banking apps because it adds “social aspects” by using peer-to-peer payments alongside a Include trading platform.
“We are building a trading platform with Afterpay, a trading engine that over time will allow you to actually see the interesting opportunity to buy something in the app,” she said. “So this kind of linking of social, financial and commercial services is something that we are uniquely able to achieve with the Cash App.”
Afterpay and other BNPL firms have seen rapid growth during the pandemic as online shopping soared, but as interest rates soared in 2022, market concerns shifted to the risk of rising bad debt, fierce competition and of slower growth.
Ahuja said Block’s loss rates improved late last year, and she argued that credit quality is another area where Block has a “unique” advantage over peers in the US because of its extensive customer data, which the company feeds into its credit insurance models have the USA.
“This is where we believe we can be unique, also compared to the industry, because we have so much data on consumers with Cash App, of course especially in the US and small businesses,” Ahuja said.
https://www.smh.com.au/business/banking-and-finance/block-says-us-bank-bailout-critical-as-it-plots-australia-expansion-20230314-p5cs11.html?ref=rss&utm_medium=rss&utm_source=rss_business Afterpay owner Block supports US bank’s support package as it plans to expand in Australia