On Tuesday night, U.S. payments giant PayPal announced that it would be acquiring Japanese startup Paidy, which is a buy-now-pay later firm with a stronghold among millennials and Generation Z in Japan. The deal is mostly a cash one and will be worth 300 billion Japanese yen which is approximately 2.7 billion dollars. The acquisition is expected to be completed by the fourth quarter of 2021, by which it is hoping to get regulatory approval.
PayPal is following in the footsteps of other major financial firms who have been exploring the buy-now-pay-later market that is growing by leaps and bounds. Two other payments giants have also acquired similar companies. Earlier, Jack Dorsey led Square said that it would acquire Afterpay, an Australian company that allows users to pay in installments. The acquisition has been reported to cost Square more than $29 billion, the highest ever paid by the fintech firm.
In August, Amazon announced a partnership with Affirm to deliver a flexible payment solution. The e-commerce giant had said that that it had entered into the partnership with Affirm as another payment option, other than credit cards, for increased choice as well as flexibility was what its consumers wanted.
In April 2021, the Japanese startup debuted a link called the Paidy link. It allowed users to link digital wallets with their accounts in Paidy. PayPal integrated with Paidy and became its first digital wallet partner. It has now strengthened its relationship with the pioneer in buy-now-pay later firm by acquiring it.
In a statement, Paypal said that buying Paidy would extend its “capabilities, distribution and relevance” in Japan. The domestic market in Japan is the third largest e-commerce market in the world. This move by PayPal will help it to gain a larger market share in Japan as well as in Asia.
CB Insights said that Paidy’s evaluation in March was $1.2 billion, and PayPal had doubled its value. On Tuesday, PayPal has also said that the startup could continue operations in Japan and its management team will also remain in place.