Afterpay and Square team up to see buy now, pay later dinners, coffees and massages

Square’s physical point-of-sale systems are now fully integrated with Afterpay, letting the buy now, pay later (BNPL) juggernaut reach further out of retail and into the hospitality and service sector.

Square and Afterpay — both of which exist under the Block umbrella after Afterpay’s $39 billion sale last year — launched the integration Wednesday in Australia and the US.

Buyers can now tap to pay at physical Square POS systems, using an Afterpay card stored on their digital wallet. Users will then repay the purchase in four installments, as they would for an online Afterpay purchase.

Square merchants will receive their full earnings on the spot, minus a transaction fee — typically between 4% and 6% of the total transaction value.

A trial of the in-person Afterpay integration more than doubled the average order value of participating businesses, Square claimed.

But its expansion into hospitality and service suggests the fintech giant is keen to move beyond retail, a sector now totally immersed in BNPL options — and at risk of decreased discretionary spending if the cost of living clamps down on household budgets.

Beyond retail sales processed through Square POS systems, the new integration extends to Square Appointments, which provides payment services to hairdressers, beauty services, personal trainers, music tutors, and more.

Australian beauty and personal care businesses which offer Afterpay through their Square e-commerce platforms have already notched a 26% increase in sales to date, Square claimed, suggesting a strong appetite for BNPL options at the physical checkout.

Afterpay now reaches Square’s restaurant services, too, giving diners another method of paying their bill — and restaurateurs another chance to reach guests accustomed to pay-in-four options.

While Square does not disclose market-by-market merchant numbers, it claims the new integration will open “millions” of merchants to Afterpay across Australia and the US.

Afterpay to become opt out feature for Square sellers

Square merchants who opt in to the new Afterpay integration will face a temporary transaction fee of 1.6%, with transaction fees reverting to normal levels after September 10.

But merchants looking to avoid the eventual higher fees incurred by Afterpay transactions will need to take action.

The integration will become opt out in the coming weeks, Square said, meaning Square merchants will provide Afterpay by default unless they proactively disable the feature.

The decision to make Afterpay an opt out feature cuts against the concerns of consumer advocates, who say the BNPL sector already has too great a reach in Australia.

Financial Counselling Australia, Financial Rights Legal Centre, and the Consumer Action Law Centre, last week joined more than 100 organisations calling for the winner of the upcoming federal election to clamp down on the largely unregulated sector.