PayPal’s $ 2.7 billion Japanese deal heats up Buy now, pay later Race


PayPal Holdings Inc, a major U.S. payments company, has taken a new step towards taking the top spot in an industry experiencing a pandemic-led boom, with most of the $ 2.7 billion in cash transactions now. Announced acquisition of Japanese purchase, later pay (BNPL) company Paidy.

The deal tracks last month’s agreement with rival Square Inc to acquire Australia’s BNPL Success Story Afterpay Ltd for $ 29 billion, and experts could be the beginning of a merger of the sector. It says it is expensive.

“This acquisition expands PayPal’s capabilities, distribution and relevance in Japan’s domestic payments market, the world’s third-largest e-commerce market, and the company’s existing cross-border e-commerce, PayPal said in a statement Tuesday. The business is complemented. “

Purchasing Paidy helps PayPal grow in countries where online shopping volume has more than tripled to about $ 200 billion in the last decade, but more than two-thirds of all purchases are still It’s paid in cash, PayPal said in a presentation to investors.

With over 6 million registered users, Paidy offers a payment service that allows Japanese shoppers to purchase online and pay monthly at convenience stores or bank transfers.

Japanese consumers have traditionally preferred cash, but in recent years it has changed primarily in cities, said Eiji Taniguchi, a senior economist at the Japan Research Institute, Limited.

“One of the notable points of the Japanese BNPL market compared to the US and Europe is that most users settle their outstanding balances by the end of the month with a single payment. In Japan, debt accumulation is more I’m hated. “

Backed by federal stimulus, BNPL’s business model has been very successful during pandemics, especially in Western countries. These companies make money by bypassing credit checks and charging merchants for a small point-of-sale loan that shoppers pay in installments without interest.

Paypal, already considered a leader in the BNPL market, also entered Australia last year to raise shares in small businesses such as Sezzle Inc.

US payment companies are one of the big winners of the pandemic, with more people using the service to shop online and pay invoices to avoid step-outs. Companies that were forced to move their stores online also flocked to PayPal, increasing the customer base of active accounts to more than 400 million worldwide.

Paidy, which sponsors Soros Capital Management, Visa Inc, and Japanese trading company ITOCHU, will continue its existing business and maintain its brand after the acquisition. Founder and Chairman Russell Kammer and CEO Riku Sugie will continue to play a role in the company.

The Financial Times reported last month that Paidy is considering an initial public offering.

The transaction is expected to close in the fourth quarter, minimizing the dilution of PayPal’s adjusted earnings per share in 2022.

BofA advised PayPal on the transaction and Goldman Sachs advised Paidy. White & Case was the Chief Legal Counsel of PayPal and Cooley LLP, and Mori Hamada & Matsumoto was the Chief Legal Counsel of Paidy.

By Sayantani Ghosh and Tim Kelly