Block is rolling out Afterpay on its Cash App card this week after a year of testing the buy now, pay later service.

San Francisco-based Block, which rebranded from Square in 2021, acquired buy now, pay later (BNPL) service provider Afterpay that same year for $29 billion.

Cash App Pay volumes for 2024 grew more than fourfold year over year to $4 billion, Block said in its fourth-quarter letter to shareholders on Feb. 20. Cash App card monthly active users also reached 25 million compared with 23 million in Q4 2023, fueled by Gen Z users, the company said.

THE BIG PICTURE: Block plans to expand access to its Cash App Borrow BNPL option this year, with borrowed funds accessible through the Cash App Card, Chief Operating and Financial Officer Amrita Ahuja said during Block’s Feb. 20 earnings call.

“We see this product as another way for customers to manage their money and to drive increased spending through Cash App Card,” Ahuja said.

Financial institutions are teaming up with BNPL providers like the recent JPMorgan and Klarna partnership provide additional digital payment options to their clients as the market grows, according to Klarna’s Feb. 11 release.

Gen Z users are demanding more digital payment solutions, Dheeraj Maken, practice director at consulting firm Everest Group, told Bank Automation News.

“Their preference for seamless transactions has fueled the rise of mobile wallets, peer-to-peer payments and buy now, pay later options,” Maken said, adding that 70% of Gen Z users opt for cashless pay.

BY THE NUMBERS: Block reported in Q4:

• Total gross profit increased 14% YoY to $2.3 billion;
• Cash App gross profit increased 16% YoY to $1.4 billion;
• Cash App inflows increased 12% YoY to $71.1 billion;
• Square gross profit increased 12% YoY to $924 million.

OF NOTE: Despite Cash App’s growth in 2024, Block on Jan. 16 was ordered by the Consumer Financial Protection Bureau to pay $175 million in refunds and fines for failing to thoroughly investigate thousands of unauthorized transactions. Block plans to use AI and machine learning models to improve fraud detection on Cash App, the company shared with BAN last month.

“Security is crucial, with Gen Z favoring payment methods that protect their data,” Maken said, adding that security is a key reason Gen Z users opt for digital payment solutions.

Block is focused on maintaining a balance of speed and security, Co-founder and Chief Executive Jack Dorsey said during the earnings call.

“We want people to trust that if they put 100% of their paycheck into Cash App’s direct deposit and utilize it, that … they can do everything that they want without restriction, and that it just works,” he said.

FORWARD LOOK: Increasing automation is also among Block’s 2025 product goals, the fintech said in its letter to shareholders.

Block last month rolled out an AI-powered agent called “codename goose” to assist its engineers with repetitive tasks like code generation. The agent has already increased productivity and efficiency, and the company plans to expand its uses this year, Dorsey said.

“We now have a pretty sizable ecosystem of developers building extensions for it,” he said.

Shares of Block [NYSE: XYZ] were trading down 17.9% from market open to $68.20 as of market close. The company has a market capitalization of $47.2 billion.

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