Core Factors That Make Afterpay’s Success

Abstract

The outbreak of Covid-19 has contributed significantly to the growth of e-commerce and the boom in the Buy Now Pay Later (BNPL) market. This was accompanied by increased purchasing power and financial flexibility for consumers through "zero interest" installment plans. In 2022, Afterpay, as a leading BNPL company, was acquired by Square, another large digital payment company, at A$39 billion. This is the most high-profile M&A deal in the global fintech sector to date. This paper provides a comprehensive analysis to explain how Afterpay has achieved success since there are only six years after its launch in Australia. From the business model perspective, Afterpay's business model of not making money from its customers combined with the first-mover advantage of its rapid expansion is one of the keys to Afterpay's success. Meanwhile, after analyzing the company’s capabilities, the result indicates that Afterpay is backed by its strong technological capabilities, which effectively reduces its credit risk and allows it to keep up with its rapid international expansion. That analysis can provide references for fintech companies’ business models or technical support systems.