PayPal Acquires Paidy for $2.7B: BNPL Expansion in Asia

PayPal Acquires Japanese BNPL Platform Paidy for $2.7 Billion

PayPal Holdings, a leading U.S.-based fintech corporation, has announced the acquisition of Paidy, a prominent Japanese buy now, pay later (BNPL) service. The transaction is valued at approximately $2.7 billion, equivalent to 300 billion yen, and will be primarily funded through cash reserves.

Transaction Details and Timeline

The completion of this acquisition, contingent upon fulfilling all necessary regulatory requirements, is anticipated during the fourth quarter of 2021. Following the acquisition, Paidy will continue its operations under its existing branding.

Key leadership figures, including Paidy’s President and CEO Riku Sugie, and Founder and Executive Chairman Russell Cummer, are expected to remain in their respective positions.

Strategic Importance of the Japanese Market

Japan represents the world’s third-largest e-commerce market, making this acquisition a strategically significant move for PayPal. It aims to bolster the company’s market presence within Japan and the broader region.

Specifically, PayPal intends to expand its offerings in the realm of deferred payment solutions, providing consumers with an alternative to traditional credit card usage.

Strengthening PayPal’s Payment Infrastructure

While PayPal has historically facilitated payments through integration with payment cards – allowing users to store card details within their digital wallets – its origins lie in functioning as a standalone payment platform.

The acquisition of Paidy is viewed as a reinforcement of PayPal’s direct payment capabilities, enabling greater control over the financial transaction flow and reducing reliance on external card networks.

How Paidy Operates

Paidy functions as a two-sided payment intermediary, connecting consumers and merchants within Japan. Utilizing advanced machine learning algorithms, the platform assesses consumer creditworthiness for individual purchases.

This allows for rapid underwriting of transactions, guaranteeing timely payments to merchants. Consumers then remit deferred payments to Paidy for the acquired goods.

Paidy’s “3-Pay” Installment Service

Paidy’s core offering, the “3-Pay” monthly installment service, empowers shoppers to make online purchases and settle their balances through consolidated monthly bills.

Payment options include convenient methods such as local convenience store payments and direct bank transfers.

PayPal’s Perspective on the Acquisition

“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizable two-sided platform of consumers and merchants,” stated Peter Kenevan, Vice President and Head of Japan at PayPal.

Paidy’s User Base and Integration Plans

Currently, Paidy boasts a registered user base exceeding 6 million. Plans are underway to integrate PayPal and other digital and QR wallets with Paidy Link.

This integration will further connect online and offline merchants to a wider range of payment options.

Paidy Link and Initial Partnerships

Launched in April 2021, Paidy Link allows users to seamlessly link their digital wallets to their Paidy accounts. PayPal was the first digital wallet partner to integrate with Paidy Link.

Statements from Paidy’s Leadership

“PayPal was a founding partner for Paidy Link and we look forward to looking together to create even more value,” said Riku Sugie, CEO of Paidy.

Russell Cummer, Founder and Executive Chairman of Paidy, added, “Japan has been a vibrant environment for our growth to date and we’re honored to have our team’s hard work and potential recognized by a global leader. Together with PayPal, we will be able to further achieve our mission of taking the hassle out of shopping.”