US payment company PayPal has agreed to acquire Japanese fintech Paidy, a buy now, pay later (BNPL) startup for JPY 300 billion ($2.7 billion). The recent acquisition came after Square took over the BNPL provider AfterPay for $29 billion, making it the largest acquisition in Australian history.
The BNPL market gained popularity last year when the COVID-19 was at its peak and people required easy methods to make online purchases.
Expanding capabilities as demand for digital payment solutions booms
PayPal said the acquisition of Paidy will strengthen its position in Japan, which is the world’s third-largest e-commerce market in the world. It will also complement the company's existing cross-border e-commerce business in the country.
With the acquisition, it will expand PayPal’s capabilities, distribution and relevance in the domestic payments market in Japan.
Peter Kenevan, vice president and head of business in Japan at PayPal said, "Paidy pioneered BNPL solutions tailored to the Japanese market and grew to become one of the leading service providers, developing a sizable two-sided platform of consumers and merchants".
"Combining Paidy's brand, capabilities, and talented team with PayPal's expertise, resources, and global scale will create a strong foundation to accelerate our momentum in this strategically important market," he added.
Russell Cummer, Paidy founder and executive chairman said, “Together with PayPal, we will be able to further achieve our mission of taking the hassle out of shopping”.
PayPal will receive a huge boost in Japan’s payments and BNPL spaces as Japan’s market has always been dominated by cash payments. Japanese consumers have embraced digital payments and the Japanese government has committed to boost cashless payment penetration to 40%, up from 20% earlier this year.
Acquiring Paidy, which has more than six million users, enables PayPal to push further into Japan’s budding BNPL space and gain an advantage, as Japan’s digital transformation takes shape.
Riku Sugie, president and CEO of Paidy said, “Paidy is just at the beginning of our journey and joining PayPal will accelerate our plans to expand beyond e-commerce and build unique services as the new shopping standard. PayPal was a founding partner for Paidy Link and we look forward to working together to create more value”.
Paidy provides payment services that allow Japanese shoppers to make purchases online, and pay for them each month at a convenience store or via bank transfer.
Paidy, backed by Soros Capital Management, Visa Inc, and Japanese trading house Itochu Corp, will continue to operate its existing business and maintain its brand.