BY Richard Summerfield
Payment behemoth PayPal Holdings Inc has agreed to acquire Japanese ‘buy now, pay later’ firm Paidy in a deal worth $2.7bn.
Completion of the transaction, following regulatory approval, is expected in the fourth quarter of 2021. Under the terms of the agreement, Paidly will continue to operate its existing business and maintain the brand while the company’s leaders, Riku Sugie, president and chief executive, and Russel Cummer, founder and executive chairman, will keep their respective positions.
The ‘buy now, pay later’ market has grown significantly of late – likely as a result of the coronavirus (COVID-19) pandemic – with companies including Paidly, Klarna and Afterpay all increasing in prominence. The industry has also begun to see some consolidation, with Square Inc announcing in August that it was to acquire Afterpay Ltd for $29bn.
Paidly has more than 6 million registered users. It plans to integrate PayPal and other digital and QR wallets with Paidy Link – a service it launched in April 2021 which allows customers to link digital wallets to their Paidly account – to connect further online and offline merchants.
While Paidly has a considerably smaller customer base, Japanese consumers are beginning to move away from cash payments, which at present account for 70 percent of payments in the country. As such, there is considerable room for growth in the ‘buy now, pay later’ segment of the Japanese e-commerce space. The acquisition will see PayPal increase it’s foothold in Japan - the world’s third-largest e-commerce market - where it currently has around 4.3 million active users.
“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,” said Peter Kenevan, vice president and head of Japan at PayPal.
“There is no better home for Paidy to continue to grow and innovate than PayPal, which has been removing friction from online shopping for more than 20 years,” said Mr Cummer.
PayPal is already active in the buy now, pay later space. In August 2020, the company introduced a new instalment credit option for PayPal users called ‘Pay in 4’.
News: PayPal's $2.7 bln Japan deal heats up buy now, pay later race