PayPal acquires Japanese buy-now-pay-later (BNPL) fintech startup Paidy for $2.7 billion
Just last month, Jack Dorsey’s payments company Square acquired Australian buy now pay later (BNPL) fintech company Afterpay for $29 billion. The acquisition brings together two of the fastest-growing global fintech companies to advance the shared mission of economic empowerment and financial inclusion.
As the BPNL race heats up, PayPal just announced this morning said it would acquire Japanese buy now, pay later (BNPL) fintech startup Paidy in a $2.7 billion largely cash deal. In an investor presentation, PayPal said the acquisition of Paidy will enable the company to expand its footprint in Japan where online shopping volume has more than tripled over the last 10 years to some $200 billion, but more than two-thirds of all purchases are still paid for in cash.
The BNPL market currently accounts for only a small portion of overall card spending. However, with the coronavirus pandemic-fueled e-commerce boom, this alternative model of financing may be poised to disrupt the $8 trillion US payment card industry.
“The acquisition will expand PayPal’s capabilities, distribution, and relevance in the domestic payments market in Japan, the third-largest eCommerce market in the world, complementing the company’s existing cross-border e-commerce business in the country,” PayPal said in a statement on Tuesday.
We covered Paidy back in July 2018 after the fintech startup raised $55 million to let customers shop online without a credit card. The round was led by Japanese trade conglomerate Itochu Corporation, with participation from Goldman Sachs
Founded in 2008 by Russell Cummer, Paidy is a new way for consumers to pay at online stores using only their name and email address. Optimized for mobile and instant checkout, Paidy allows consumers to buy online quickly and safely and does not require a credit card or pre-registration.
Paidy started Japan’s first instant post-pay credit service for eCommerce consumers in October 2014. Paidy requires no pre-registration or credit card to use; Paidy consumers purchase products online using only a mobile phone number and email address (verification is established through a four-digit code via SMS or voice pin-code) and settle a single monthly bill for all their purchases, either at a convenience store, by bank transfer or auto-debit. Paidy also supports multi-pay installments and subscriptions. There are currently over 1,400,000 Paidy accounts in use (June 2018).