Goldman Sachs Group Inc. is spending approximately $2.24 billion to acquire GreenSky Inc., a financial technology company that competes in the rapidly growing “buy now, pay later” market.

Under the transaction terms announced on Wednesday, GreenSky’s investors will receive 0.03 Goldman Sachs shares for every share of the fintech company they own. The deal values GreenSky at a more than 50% premium to its Tuesday closing price on the Nasdaq. Goldman Sachs expects to complete the deal by early 2022 at the latest.

The buy now, pay later segment in which GreenSky competes is one of the fast-growing parts of the fintech market. GreenSky and its rivals’ business model is to give consumers the ability to purchase an item and pay for it at a later date without having to use a credit card.

Another pay now, buy later provider called Afterpay Ltd. was bought by Square Inc. earlier this year in a $29 billion deal. PayPal Holdings Inc. last week disclosed that it too is joining the fray by acquiring buy now, pay later startup Paidy Inc. for approximately $2.7 billion.

GreenSky launched earlier than many of the segment’s other players, having been founded in 2006. The company provides a cloud platform that enables businesses such as retailers to provide buy now, pay later features for their customers. Consumers can make purchases with financing provided by GreenSky’s partner banks and pay later. 

Whereas some of these firms focus on small transactions, GreenSky mainly supports larger purchases such as rooftop solar panels. Goldman Sachs says that about four million consumers have used GreenSky’s platform to date to make purchases from about 10,000 retailers and other businesses.

Goldman Sachs’ goal with the acquisition is to add GreenSky’s features to its Marcus consumer banking app. The investment firm, which historically had a limited presence in consumer banking, set out to enter the segment a few years ago to address the fast-growing market for app-based financial services. Marcus stands at the center of Goldman Sachs’ effort.

GreenSky’s capabilities mark the latest addition to the app’s steadily expanding lineup of features. Goldman Sachs previously added an automatic investment tool to Marcus. Earlier, the app was updated with personal finance tools that help users track their spending.

“GreenSky and its talented team have built an impressive, cloud-native platform that will allow Marcus to reach a new and active set of merchants and customers and provide them with an expanding set of solutions,” Goldman Sachs Chief Executive Officer David Solomon said in a statement.

The sale of Afterpay, Paidy and now GreenSky may encourage venture capital firms to up their investments in buy now, pay later startups to increase their chance of buying into the industry’s next billion-dollar exit. Investment activity in this segment is already on the upswing.

Klarna Bank AB, one of the largest buy now, pay later companies to have not yet been acquired, increased its valuation to $45.6 billion in June when it raised a $639 million round of funding. Two other market players, Wisestack Inc. and Scalapay Ltd., have both announced funding rounds of their own in the past two weeks, the latter company at a $700 million valuation.

The success of consumer fintech providers is also driving growth for another set of startups that specialize in providing the fintech ecosystem with software development tools. One such startup, Solarisbank AG, closed a $224 million investment at a $1.65 billion valuation in June and acquired a competitor on the occasion.

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