Paypal acquires Japanese BNPL giant Paidy

Karthik Subramanian

Paypal continues its push in the buy-now-pay-later space with the acquisition of the Japanese BNPL company Paidy for a sum of $2.7 billion in what is largely a cash deal and this shows the intentions of Paypal to push into Asia.

paypal

The BNPL space has really heated up over the last few months as many global giants are looking to capture a large part of the major surge in this market which has been fuelled by the pandemic and the need for the users to avoid and lessen their risk exposure as much as possible. Investors also seem to be pouring money into this sector as they view this quite similar to the credit card industry with the companies looking to make money more through the defaulters of the payments rather than those who repay them at the right time.

“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,” Peter Kenevan, vice President and head of Japan at Paypal, said.

Paypal has been one of the strong contenders in this market over this period with it already having launched this service in a few countries like Australia and now it has shown its intent in Asia through this acquisition.  Paidy is reported to have over 6 million customers and also has partnerships with several major brands and currently, easily integrates with Paypal and other QR wallets. So, its full integration with Paypal following the acquisition is expected to be quick.

“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 Russell Cummer, founder and executive chairman of Paidy.

This acquisition should also be a good challenge to the likes of Klarna and Square-Afterpay and their growth could have accelerated this deal for both companies. Also, for Paypal, it fits right into their payments strategy though the growth of this venture in Japan could be difficult as generally, the Japanese users are prompt with their payments and unlike to default on them which means that the BNPL companies would not get their major source of revenue which are late fees and defaults. It remains to be seen how Paypal is going to tackle this in the future.

 

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