Block (2009-2024): how Square + Cash App + Afterpay built a fintech platform spanning merchants, consumers, and BNPL

The Square build (2009-2021)

Square was founded in 2009 by Jack Dorsey and Jim McKelvey. The founding product was a small white plastic dongle that attached to a smartphone's headphone jack and let small merchants accept credit-card payments. The thesis was that small merchants (food trucks, farmers-market vendors, hairdressers, contractors) were underserved by traditional merchant-services providers who required large fixed monthly fees and complex contracts. Square's flat per-transaction fee (originally 2.75% plus $0.15 per transaction) was simple, fast to set up, and worked at any small-merchant scale.

Through 2010-2021 Square expanded the merchant platform substantially: point-of-sale hardware (Square Register, Square Stand), Square for Restaurants, Square Online (e-commerce), Square Capital (working-capital loans to merchants), Square Payroll, Square Appointments. Square IPO'd in November 2015 at $9/share. The company also launched Cash App in 2013 (originally Square Cash) as a peer-to-peer payment app that grew rapidly through 2017-2021 into a broader consumer financial-services platform.

The Cash App pivot to broader consumer fintech

Cash App started as peer-to-peer payment but expanded substantially through 2017-2021. The product added a Cash App debit card with cashback rewards, Bitcoin buying and selling, stock investing, banking features (direct deposit, bill pay), and tax filing (after the Cash App Taxes acquisition). By 2020 Cash App had become one of the largest consumer fintech products in the US, with over 30 million monthly actives and growing rapidly.

The strategic position by 2021 was distinctive. Square owned the merchant side (small-business POS, e-commerce, financing, payroll). Cash App owned the consumer side (peer-to-peer payments, banking, stock investing, Bitcoin). The two ecosystems operated relatively independently but the combined Block platform was effectively the largest US fintech outside of the traditional banks. The strategic question was how to deepen the two-sided integration — specifically, how to monetise the connection between merchants and consumers in ways that pure-merchant or pure-consumer fintech competitors could not.

The August 2021 Afterpay deal and 2022 close

On August 1, 2021 Square announced a $29 billion all-stock acquisition of Afterpay, the Australian-founded BNPL platform with substantial scale in the US, Australia, UK, and other markets. The strategic intent was specific: Afterpay BNPL would integrate into Square checkout for merchants (giving Square merchants a BNPL option to offer customers) and into Cash App for consumers (giving Cash App users the ability to manage Afterpay installment payments inside Cash App). The two-sided integration would make BNPL a Block ecosystem feature rather than a standalone offering.

The deal closed on January 31, 2022. By close, the deal value had declined to approximately $13.5 billion due to Block stock decline during the 6-month pendency — an unusual feature of all-stock M&A deals where the consideration depends on the acquirer's stock price at close. Post-acquisition, Afterpay was integrated and eventually rebranded as Cash App Afterpay. The integration produced operational benefits for Block but did not produce the breakthrough growth the August 2021 deal valuation had assumed; the broader BNPL category faced regulatory and credit-quality challenges in 2022-2024 that affected all major BNPL platforms.

How RGM thinks about two-sided fintech platforms

When clients ask about two-sided fintech platform integration, the Block case is the defining recent example of building substantive merchant-and-consumer scale and then attempting to deepen the integration through M&A. Three structural lessons. First, the two-sided platform position is rare and valuable — most fintech companies operate on one side (merchant-focused: Stripe, Adyen; or consumer-focused: Robinhood, Chime). Block's combination of Square (merchant) and Cash App (consumer) at scale is structurally distinctive. Second, the Afterpay acquisition was strategically reasonable but faced category-level challenges that no acquisition could solve — BNPL economics deteriorated through 2022-2024 due to rising credit losses, regulatory pressure, and competitive intensity. Acquiring into a deteriorating category at a high multiple is structurally difficult even when the strategic logic is sound. Third, the all-stock deal structure exposed Block to substantial value-of-consideration risk during the pendency — the $29B announcement value declining to $13.5B at close was a real cost of the deal structure that cash deals would have avoided.

The pattern is hard to copy without comparable two-sided scale at start. Most fintech companies attempting comparable two-sided expansion (consumer-side companies building merchant capabilities, or merchant-side companies building consumer capabilities) have struggled to reach Block's combined scale. We tell clients in fintech to think about whether their starting position can support two-sided expansion or whether they should focus on depth in their existing side. Block's 2009-2024 build remains the structural reference for the two-sided path even though specific elements (BNPL category timing, all-stock deal structure) produced mixed results.

Frequently asked questions

Related