[News Inside] The Man Who Became a Billionaire at 31 by Targeting the MZ Generation

Nick Molnar, Founder of Afterpay

▲Afterpay Founder Nick Molnar

[Asia Economy Reporter Kwon Jae-hee] The youngest self-made billionaire in Australia. This is the story of Nick Molnar, co-founder of 'Afterpay,' a company that drew attention as the largest merger and acquisition (M&A) deal in Australian corporate history.

On the 1st (local time), the U.S. fintech company Square announced that it would acquire all shares of Afterpay for about $29 billion (approximately 33.4 trillion KRW). The deal is expected to be completed in the first quarter of 2022. Square stated that it plans to integrate Afterpay into its 'Seller and Cash App' business unit to enable more retailers to offer Afterpay's Buy Now, Pay Later (BNPL) payment system.

Nick Molnar, one of Afterpay's co-founders, played a significant role in the company's success. Molnar graduated from the University of Sydney and joined venture capital firm MH Carnegie. At MH Carnegie, he was responsible for investing in technology companies and developed his business acumen by using eBay to assist his family’s jewelry sales business.

In 2014, he co-founded Afterpay with Anthony Eisen, former Chief Investment Officer (CIO) of Australian investment firm Guinness Peat Group.

Afterpay rapidly grew with its motto of "Buy now, pay later," a BNPL payment system. Afterpay's payment system allows users to pay only part of the price upfront and purchase the item immediately, then pay the remainder in four interest-free installments. Customers only pay fees if they miss automatic payments, and there is a cap on accumulated late fees to prevent debt from increasing. However, to filter out customers with a high likelihood of default, Afterpay uses big data to reject a significant number of payment requests.

Afterpay grew into Australia's most valuable fintech company by targeting the MZ generation, who, having experienced the global financial crisis, fear increasing debt from financial services like credit cards. Molnar himself is a millennial who experienced the global financial crisis at age 18 and recognized this generation's fear of debt mismanagement. In fact, the average age of Afterpay users is 33. Currently, Afterpay offers services in Australia, the United States, Canada, New Zealand, the United Kingdom, France, Italy, Spain, and other countries, with over 16 million users worldwide.

Afterpay's demand surged especially during the COVID-19 pandemic. People, increasingly interested in cost savings during the pandemic, chose Afterpay's interest-free installment financing over credit cards, which impose high fees for late payments. According to a survey conducted in Australia by Swiss bank UBS in May, 20% of respondents reported using credit cards less than before, and 13% said they use BNPL systems instead of credit cards.

▲Afterpay Founder Nick Molnar

The background of Square's acquisition of Afterpay is also interpreted as an effort to secure a leading position in the rapidly growing BNPL market centered on the MZ generation. In fact, BNPL demand surged during the COVID-19 pandemic. According to Adobe Analytics, BNPL system usage tripled as of early 2021 compared to before the pandemic. It is especially popular among young consumers who do not have much cash on hand but want to receive goods first and pay in installments. Users are rapidly increasing in countries like Australia and Europe, where credit card issuance is difficult.

Neil Saunders, GlobalData Retail Director, explained, "Considering the very rapid growth of the BNPL market, which is Afterpay's system, it is a natural step for Square to acquire Afterpay."

The approximately $29 billion deal is expected to be the largest in Australian corporate history. The largest deal in Australian corporate history was the 2017 acquisition of shopping center operator Westfield Group by European real estate giant Unibail-Rodamco for $20 billion, and the Square-Afterpay M&A is expected to surpass this.

Meanwhile, Molnar stepped down as Afterpay CEO last year and currently serves as the global Chief Revenue Officer (CRO).