I started off this thread with a post about Square. Square (now Block upon the merger of Square and Afterpay), remains a formidable industry competitor IMHO. They provide payment processing, SME finance and now with Afterpay, they provide short term consumer finance. So, they can provide payment processing and finance through the supply chain through to the end consumer. So now, with Afterpay, Block extends the Square eco-system to the consumer with Afterpay driving consumers to Square merchants and integrating consumer payments into the ecosystem through CashApp.
The purpose of Square's acquisition of Afterpay was to drive consumer sales to Square merchants and attract more merchants onto Square. Without having any deep knowledge of the Square business, it remains the largest threat to Spenda IMHO because of its size (already established in several markets such as USA and AUS), brand recognition, and scale.
Square is the elephant in the room. Their merchant terminals are loss leaders. At August 2021 they were carrying over US$5.6b in debt, with the vast majority of that debt being long dated and their debt to asset ratio of 0.41 implies more room to expand the debt to finance growth.
There is an article on Block in today's AFR. Some highlights relevant to Block as a competitor to Spenda:
"Square offers direct lending to merchants for capital spending in the US and in Australia, assessed on payment data. Now with Afterpay, it also can fund customers’ short-term instalment loans inside the retailing experience."
"Australia is Square’s largest market after the US, and it began offering SME business loans last year. Banks are worried Square will pinch business customers and potentially offer them more banking services. (Square is a bank in the US.)"
"Nick Molnar, now the Afterpay lead at Square, said the company’s software offers Australian retailers a unique product that is focused on growing their business by funding both working capital and customer purchases.“In beta testing, we have seen a meaningful uplift in the order value when Afterpay is available on Square, and Square has seen the value in sellers scaling when they are provided with working capital,” Mr Molnar said.“Now it all comes together in a fully integrated platform that can drive scale at pace.”"
"In Block’s third-quarter earnings call last November, analysts probed Mr Dorsey’s thinking about potential network effects putting the retail and business sides of Square and Cash App together. He said he wanted Cash App to become a tool for digital and physical commerce.
" Afterpay Money, its banking offer with Westpac, is being used to inform strategies to beef up Cash App, which is used by about 40 million Americans."
"Block also said Afterpay customers will be able to manage instalment payments directly in Cash App, while Cash App customers will be able to discover sellers and buy now, pay later offers directly within the app. This is similar to the wildly popular Afterpay shop directory which drove app users to retailers."
I am interested to hear of others views of Block as a competitor.
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