US FinTech company PayPal is buying Japanese payments platform and provider of buy now, pay later solutions Paidy for $2.7 billion, mostly in cash.
The deal, which is expected to close in the last quarter of the year, will help PayPal strengthen its foothold in the Asian market and expand in Japan, the third largest e-commerce market.
"Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizeable two-sided platform of consumers and merchants," Peter Kenevan, vice president and head of Japan at PayPal, said.
“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.”
Founded in 2008, Tokyo-based Paidy has more than 6 million registered users. It enables Japanese shoppers to make online purchases and then pay for them each month in a consolidated bill at a convenience store through bank transfer. Paidy uses proprietary technology to score creditworthiness, underwrite transactions and guarantee payment to merchants.
Paidy claims it drives increased conversion rates, average order values and repeat purchases for merchants.
"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," Paidy’s founder and executive chairman Russell Cummer said.
In April, the company launched Paidy Link to allow users to link digital wallets with their Paidy account. PayPal was the first digital wallet partner to integrate with Paidy Link.
"Paidy is just at the beginning of our journey and joining PayPal will accelerate our plans to expand beyond ecommerce and build unique services as the new shopping standard," said Riku Sugie, president and chief executive of Paidy.
The Financial Times reported last month that Paidy was considering an initial public offering as it seeks to tap into the online shopping boom.
Bank of America Securities and Goldman Sachs are acting as financial advisers to PayPal and Paidy, respectively, with regard to the transaction.
Following the acquisition, Paidy will continue to operate its existing business, maintain its brand and support a wide variety of consumer wallets and marketplaces, the entities said.
PayPal added 11.4 million new active accounts in the second quarter to June 30.
But despite adding new customers, its net profit in the three months slumped to $1.2bn, about $346 million less than the same period a year earlier. Revenue during the quarter increased 19 per cent on an annual basis to $6.24bn, missing analyst expectations of $6.27bn.
In March, PayPal bought Israeli cryptocurrency security firm Curv as part of its push into digital tokens.