What Is Afterpay and Why Does Shopify Want Its Business?

Five years ago, a tiny company from Canada, Shopify (NYSE: SHOP), went public on the American markets. It's been an amazing stock and a Fool favorite since then, running up in value 3,700%. History might be repeating itself with a fintech superstar from Australia, Afterpay (OTC: AFTPF). It went public on the Australian exchanges in 2017, and the stock has soared almost 3,000% in three years.

Afterpay offers consumers a new way to shop without signing up for a credit card. Say you want some boots from Jimmy Choo. A pair will run you about $1,000. But maybe you don't want to or aren't able to pay the retail price all upfront. This company allows you to afterpay your purchase. With the service, you just pay $250 at checkout. Afterpay pays the rest (minus a fee for the retailer). Then you owe Afterpay $750, which you pay back in three installments over the next six weeks.

For consumers, it's the equivalent of an interest-free loan. As Cosmopolitan put it in a recent article, "Your credit card just might be replaced." It's no surprise that Visa (NYSE: V) wants to enter this market. And now Shopify wants to compete in it as well. Does that mean the party is over for Afterpay?

Source Fool.com