American First Finance is a tech-driven POS payments platform that offers flexible payment solutions to underserved customers.

FirstCash, Inc (NASDAQ: FCFS) operates more than 2,800 retail pawn stores in the U.S. and Latin America and is a retailer and provider of financial services to underserved customers. It announced Thursday its $1.17 billion acquisition of American First Finance (AFF), a financial technology firm, in a bid to enter the buy-now-pay-later (BNPL) business. Apart from offering flexible payment solutions to patrons who have poor or no credit standing, AFF also has a significant presence in the retail point-of-sale payments market, being the fourth-largest and hosting 6,500 merchants and e-commerce platforms across the US. (Dallas Innovates)

FirstCash will pay for the acquisition by issuing about 8.05 million shares of common stock and $406 million in cash. Based on achievement milestones an additional $300 million may be payable by the first half of 2023.

FirstCash is eyeing its potential entry into a large and growing point-of-sale and BNPL payment space, which is estimated to have a $600 billion total addressable market.

Serving the underserved and credit-challenged

As mentioned, both companies have a history of catering to an underserved, and cash and credit constrained, retail clientele.

“Building on the complementary strengths of FirstCash and American First Finance, this transaction diversifies us beyond our core pawn business with the addition of a fast-growing segment that significantly expands our customer base and introduces a scalable, technology-driven product set into our organization,” said Rick Wessel, FirstCash Chief Executive Officer and Vice-Chairman of the Board of FirstCash.

“We believe there are opportunities to utilize American First Finance’s platform to bring flexible payment options to our pawn stores to drive even faster inventory turns and supplement our existing retail layaway product,” he added.

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Image Credit: FirstCash