This would ultimately help connect Block’s ecosystems, and “by strengthening those connections, we see a lot of power and a lot of value being created for our customers, both in the seller space and in the individual space,” Mr. Dorsey said.
“We’re just starting to integrate Afterpay into Cash App,” he said, while admitting that the integration of Afterpay into Square has been awkward.
“We are still very early in this integration. It’s the greatest thing our company has ever done.
Block will host a virtual Investor Day on May 18 where it will provide more details on how Afterpay will connect Cash App users – who can currently spend, deposit, buy bitcoin or pay their taxes within the app – with its network of merchants, who use Square retail terminals and software to accept payments and manage businesses.
Mr Dorsey said one idea was to refer customers walking in a particular suburb or using social media to nearby shops via smartphone geolocation technology, or to providers of goods or services relevant to them. Cash App will create a store directory similar to the one that helped Afterpay become the number two lead referrer for many retailers after Google.
Investor Day could also provide more details on how Block plans to add social media components to its app. “Absolutely, payments are inherently social,” Dorsey said, responding to a Citi analyst who asked the former Twitter CEO about social media plans.
“We think there are a lot more discoveries with Afterpay, another step. We believe there are social networks on the vendor side, the vendor employee base, within Cash App and within Tidal [a music service also owned by Block].
“We recognize that payments are something people do at least once a week and it’s a very social thing. We want to make sure we reflect that in the app, in the architecture, and in how we provide service to customers around the world. »
Comments about a more deliberate focus on social media come as Elon Musk buys Twitter, after Jack Dorsey quit as CEO last year to focus on Block, where he dabbled in bitcoin along with payments and e-commerce.
He said Cash App and Square will continue to expand globally and offer a similar set of features in each country.
Block’s gross profit of $1.3 billion rose 34% as Cash App posted the highest quarterly inflows ever in the first quarter.
With the US Federal Reserve and Reserve Bank of Australia raising interest rates and signaling more to come, Afterpay’s credit models will be tested considering the entire buy now, pay category. later that Afterpay created never existed in a rising rate environment.
Block said losses on transactions, loans and trade receivables were $91 million in the first quarter of 2022, up 347% year-over-year due to losses related to Afterpay. Block released first-half Afterpay accounts last month, showing the total provision for expected credit losses had risen to $151 million from $99 million.
Ms. Ahuja said Afterpay’s gross loss for the first quarter was 1.17% of Afterpay’s sales, matching the level of the second half of last year and prior periods. Previous Afterpay disclosures report 1.5% of sales as losses in FY18, 1.1% in FY19, 0.9% in FY20 and 0.9% in of FY21.
“We continue to see healthy consumer repayment behavior with 95% of installments being paid on time,” she said.
“It’s a competitive market and we’re holding our own. Our goal, in the short term, is to attract quality customers to our platform, deliberately manage our dropout rates and increase user frequency.
“We are onboarding these consumers responsibly and maintaining discipline here. When you manage loss rates you are deliberately compromising on growth, but we think that’s the right thing to do in this environment.
Afterpay grew to 144,000 merchant customers, up 68% year-over-year, with nearly 13,000 Square merchants adopting Afterpay BNPL in Q1, increasing the overall number of Afterpay by 10%.
Afterpay now has 20 million active consumer users, up 37% year-on-year, Ms Ahuja said.
Mr Dorsey pointed to a desire to get into online referrals to retailers, a business dominated by Amazon and Google. He said there have already been 350,000 leads from the Cash app to Afterpay sellers “and we expect that to continue to grow.”
“Over time, Cash App will be one of the best ways to discover product companies and businesses around the world – and also around you,” he said.
“The discovery aspect is one of the main reasons we made this acquisition and why we believe it is so strategic to our entire business. This will enable the entire Cash App ecosystem – all of our customers – to discover products and sellers online and offline, Square sellers and merchants in the neighborhood This lead generation is very important and we believe it can grow quite massively.
“It will allow people, for the very first time in Cash App, to explore all of these products and merchants and of course we want to make it as smooth as possible.”
Analysts are pushing Block to expand its credit offering beyond the short-term interest-free installment offering launched by Afterpay. In the United States, other buy-it-now and pay-later providers, including Klarna and Affirm, offer a variety of credit options to users.
Morgan Stanley said in a recent report that it “still believes Cash App/Afterpay will need a broader set of credit offerings beyond Afterpay’s interest-free model to fully capture the market opportunity. brought to you by the large Gen Z/Millennial demographic.” He believes growth is priced in Block’s stock price and said in March he preferred Affirm.
On bitcoin, Block said 10 million Cash App accounts have purchased bitcoin, and Mr. Dorsey is now using the Bitcoin Lightning Network to enable bitcoin to be used for small daily transactions, with instant, free settlement.
Offering bitcoin would “improve the likelihood and speed of serving a more global customer base,” he said.