Could Block's BNPL Moves Reshape Its Financial Ecosystem?

Block, Inc. XYZ is broadening its Buy Now, Pay Later (“BNPL”) offerings via Afterpay by integrating installment payment features directly into the Cash App. This allows qualified users to manage BNPL transactions seamlessly within the app. Additionally, Afterpay has enhanced its merchant ecosystem by partnering with retailers like StitchFix, PetMeds and Mejuri, expanding Block’s reach at checkout.

Block’s BNPL business continues to be a growing component of its Cash App and Square ecosystems. In the first quarter of 2025, BNPL helped drive 10% year-over-year gross profit growth for Cash App. Moreover, revenues generated from the BNPL platform were $312.9 million for the first quarter of 2025, up from $283.5 million reported in the year-ago period, indicating its growing contribution to Block’s financial services portfolio.

One of the key developments was the rollout of retroactive BNPL functionality for Cash App Card purchases, which was launched in February 2025. This feature allows customers to split past purchases into installments, offering added flexibility and control. Early results indicated strong adoption rates, reflecting user demand for more adaptive payment tools.

Additionally, the integration of Afterpay into Cash App in March exposed Block’s BNPL offerings to its full base of 57 million monthly active users. This move significantly broadened access and provided cross-platform synergies, enhancing customer engagement across payments, lending and commerce. Block reported that 96% of installments were paid on time, and 98% of purchases incurred no late fees, demonstrating the platform’s responsible user behavior.

From a strategic standpoint, BNPL aligns with Block’s goal of expanding access to banking and credit services, particularly for middle-income consumers. By embedding BNPL deeply into Cash App’s financial stack and scaling lending via in-house infrastructure, Block is positioned to grow responsibly and profitably. Overall, Block’s BNPL efforts reflect a disciplined expansion strategy, balancing user growth, healthy repayment behavior and monetization potential.

How Are PayPal and Affirm Growing in the BNPL Space?

PayPal PYPL is expanding its BNPL business through strong user growth, improved checkout integration and global outreach. In the first quarter of 2025, BNPL volume rose more than 20%, and monthly active users grew 18%. Enhanced visibility in its modernized checkout, AI-driven personalization and targeted international campaigns are boosting adoption. 

Affirm Holdings, Inc. AFRM is expanding its BNPL business by strengthening long-term funding partnerships and diversifying capital sources. It extended its alliance with Moore Specialty Credit through 2027, securing continued support from a partner that has invested nearly $5 billion in its assets. Affirm also launched a $3 billion revolving loan facility with PGIM Fixed Income, enhancing funding flexibility, liquidity and scalability.

Block’s Price Performance, Valuation and Estimates

Shares of Block have declined 21.6% year to date, underperforming both the broader industry and the S&P 500 Index.

Block shares are overvalued, as suggested by the Value Score of D. In terms of forward 12-month Price/Earnings (P/E), Block is trading at 22.57X compared with PayPal’s 13.74X.

Estimates for Block’s EPS for 2025 have been southbound over the past 30 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

At present, Block carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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