"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," said Dorsey in the statement. Image Credit: Reuters

Sydney: Square Inc. said it has agreed to buy Afterpay, an Australian-based company, in an all-stock transaction for $29 billion (A$39 billion), to expand into consumer lending. The deal is the San Francisco-based company's largest acquisition.

Afterpay lets consumers purchase items on credit and pay later with a series of installments. The Australian company had a market value of about A$27.9 billion at Friday's close. The purchase is expected to close in the first quarter of 2022, the companies said in a statement.

Square recently launched its banking operations, including checking and savings accounts for small businesses, and offers loans. The addition of Afterpay gives the digital payments company a chance to expand into consumer lending, which it doesn't currently offer.

Afterpay was founded in 2015 in Sydney, and now has more than 700 employees globally, according to its website. The company lets consumers buy things on credit, and pay back the loan over four payments. There are no fees or interest on the loan assuming people pay on time, according to the website.