More specifically, Afterpay is frequently described as the missing piece to add to the spectacularly successful consumer Cash App strategy.ДЄs one investor describes it, the deal is designed to bring Square closer to вЂњneo-bank nirvanaвЂќ, a state where the customer almost never has to leave the fintechвЂ™s transaction ecosystem, transacts daily, adopts new products and uses embedded loyalty and merchant discovery programs.

Square wants AfterpayвЂ™s active users, which it will use to help it get closer to its goal of becoming the most frequently used app on your mobile phoneвЂ™s home screen. That might be mitigated by the strength of SquareвЂ™s own network. However, cynics вЂ“ who, it must be pointed out, have been consistently proved wrong on their view that the Afterpay model lacks barriers to entry and much more вЂ“ say the sale was also perfectly timed by Afterpay, just as competition in the sector heated up, potentially weighing on growth. SquareвЂ™s reason for buying Afterpay has been well explained and centres on its fast-growing Cash App product. ItвЂ™s hard to guess if there will be a lot of selling, or whether local investors вЂ“ many of whom have proven to be loyal holders of the controversial stock вЂ“ will hang onto their Afterpay shares once it is merged into Square, a more complex beast than the buy now, pay later juggernaut that once divided the market.Д«ut whatвЂ™s certain is that virtually every investor in Afterpay will be having a much closer look at Square, which has a market capitalisation of $US123 billion ($168 billion). If the deal goes through early next year as expected, Square plans to have a secondary listing on the ASX. But itвЂ™s less clear what most of AfterpayвЂ™s 60,000 investors вЂ“ many of whom are long-term retail investors, holding 1000 shares or fewer вЂ“ will do. ThereвЂ™s at least one portion of the register that is likely to take the money and run when this deal goes through. So right now, the hedge fund trade is buy Afterpay and short Square. Shares in Jack DorseyвЂ™s US-listed payments giant are trading below the implied 0.375 Square shares for each Afterpay share, which is not surprising as thereвЂ™s always a degree of completion risk. For those who track merger and acquisition arbitrage, SquareвЂ™s $39 billion scrip takeover of Afterpay has delivered a neat and well-trodden trade.

The square app