Payments firm Square has agreed to buy Australia’s Afterpay in a $29 billion deal that reflects the boom in “buy now, pay later” lending to consumers.

Afterpay, which was founded in 2014, pioneered BNPL services in Australia, charging merchants a fee to offer small point-of-sale loans that shoppers typically repay in four interest-free instalments, bypassing credit checks.

The acquisition of Afterpay is Square’s largest ever and according to Reuters, it will create “a transactions giant that will battle banks and tech firms in the financial sector’s fastest-growing business.”

Square plans to integrate Afterpay into its existing Cash App and Seller businesses, making it possible for small merchants in its network to offer BNPL purchases.

“Buy now, pay later has been a powerful growth tool for sellers globally,” Alyssa Henry, lead of Square’s Seller business, said in a news release. “We are thrilled to not only add this product to our Seller ecosystem, but to do it with a trusted and innovative team.”

The BNPL sector took off during the pandemic, with Afterpay now being offered by nearly 100,000 retailers worldwide and serving more than 16.2 million customers.

The company has “signed up millions of users in the United States in the past year, making it one of the fastest-growing markets for BNPL and spurring broad interest in the sector,” Reuters said.

Afterpay’s stock was worth just A$10 in early 2020. Under the terms of the deal announced on Sunday, its shareholders will get 0.375 of Square class A stock for every share they own, implying a price of A$126.21 per share based on Square’s Friday close.

Square’s shares jumped 10.2% to $272.38 in trading Monday. The company founded by Twitter CEO Jack Dorsey faces competition in the BNPL space from Swedish payments firm Klarna and U.S.-based Affirm but such loans still only account for 2% of the overall payments market, an executive at a BNPL firm told Barron’s.

“Square and Afterpay have a shared purpose,” Dorsey said. “We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”

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