As part of a new trend toward online deferred payment, the American group PayPal will acquire Paidy, specialised in Internet credit purchases in Japan, for $ 2.7 billion, a significant acquisition in the online payments industry.
Paidy, an online merchant payment solution founded in 2008 in Tokyo, lets customers pay online on credit and in installments.
Six million clients now use the service, which has already raised $400 million from investors, including Goldman Sachs and PayPal Ventures. The latter is willing to pay 300 billion yen, or about $2.7 billion, mainly in cash, according to a statement released Tuesday.
Regulatory approvals permitting, the deal is expected to close in the fourth quarter of 2021. Following the acquisition, Paidy will retain its brand and continue to operate under its name. The two companies entered into a partnership earlier this year that allowed Paidy users in Japan to make purchases on credit at all e-merchants that accept PayPal as a payment service.
The operation announced Tuesday confirms the growth of credit payments in electronic transactions. Towards the end of August, Amazon announced a partnership with Affirm Holdings, which allows customers to spread the payment of a purchase from 50 dollars.
PayPal in-house “Buy Now, Pay Later”.
In late 2020, PayPal rolled out its own “buy now, pay later” service before the announcement of Paidy’s buyout.
In view of the fact that the pay-now (BNPL) providers are yet to break even, PayPal’s vice president of global payments, Greg Lisiewski, predicted it will perform better financially.
In contrast to pure-play BNPL providers, Lisiewski explained that PayPal does not invest capital in acquiring merchants. PayPal’s main priority is to maintain its payment network, which has some 32 million merchants. This translates into a key financial metric for PayPal stock, total payment volume.
PayPal charges no service fees to merchants for the purchase and subsequent payment in contrast with Affirm, Klarna, and others. As of August, PayPal no longer charges consumers fees.
“We’re a global, multi-product payments company with payments at our core,” Lisiewski said. “Payments is about scale. It’s not about making a lot of money on ‘buy now, pay later’ transactions. It’s about having more payment volume on our network.”
PayPal has been active in Japan since 2010. There are more than 4.3 million active accounts.