PayPal Holdings, a U.S. fintech firm, announced the acquisition of Paidy (a Japanese buy-now, pay later (BNPL), service platform) for $2.7 billion (300 Billion yen). This was mostly in cash to increase its Japanese business.
The fourth quarter of 2021 will see the transaction complete and receive regulatory approval.
The Japan-based company will continue operating its existing business and maintaining the brand, while Riku Sugie, Paidys president, CEO and founder of Paidy Russel Cummer keep their positions.
Japan is the third-largest e-commerce market worldwide. This is why PayPal is making a major move to increase its market share in Japan and in the region.
PayPal is a long-standing partner with payment cards. Users can upload their card details to PayPal to use it as a digital wallet to manage how much they pay online. However, it was originally created as a payment platform that allowed people to pay into and out PayPal accounts. Paidy, in this sense, is a strengthening PayPal's first-party rails. It allows PayPal to control the flow of money through its own infrastructure and not involve card networks.
Paidy acts as a middleman between Japanese consumers and Japanese merchants. It uses machine learning to determine the creditworthiness and risk of a customer in relation to a purchase. Then it underwrites transactions in seconds, guaranteeing payment to merchants. The consumer then makes a deferred payment for the goods to Paidy.
The Paidys platform offers a monthly installment service called 3-Pay. It allows shoppers to shop online and then pay each month via bank transfer or in a consolidated bill at convenience stores.
Paidy was the first to offer buy now, pay soon solutions for the Japanese market. It quickly rose to be the top service and developed a large two-sided platform of merchants and consumers, according to Peter Kenevan (VP, Japan at Paypal).
Paidy currently has over 6 million users. The plan is to add PayPal and other digital or QR wallets to Paidy Link, which will allow for further online and offline merchant connections.
Paidy Link was launched by the Japan-based company in April 2021. It allows users to link their digital wallets with Payidy accounts. PayPal was the first digital wallet provider to integrate with Paidy Link.
PayPal was a founding partner of Paidy Link, and we look forward looking together to create more value, Sugie stated in a statement.
Japan has provided a stimulating environment for our growth so far. We are grateful to the global leader for recognizing our team's hard work and potential. Cummer stated that we can further accomplish our mission to take the hassle out shopping with Paypal.
