PayPal this week said it will acquire Paidy, a Japanese buy now, pay later (BNPL) technology provider, for $2.7 billion. BNPL, an online payment method that enables consumers to split online purchases into installments, continues to be one of the fastest-growing ways to pay for e-commerce purchases. PayPal’s bid for Paidy follows Square’s acquisition of Australian BNPL provider Afterpay by only a month.
According to a statement from Paidy, the company will continue to operate under its current name. Experts said the move was more of a bid for PayPal to increase market share in Japan than something that would affect its U.S. business.
"One of the notable things about Japan's BNPL market compared to the United States or Europe is that most users clear their outstanding balance by the end of the month in one payment,” Eiji Taniguchi a senior economist at think-tank Japan Research Institute Ltd., told Reuters. “In Japan accumulating debt is more frowned on."
While there are several models being employed by BNPL providers, Paidy requires a credit check and asks users to pay in three installments. Critics have charged that the unregulated nature of BNPL is a magnet for fraud, and the payment method is being targeted by criminals in innovative ways.
The companies expect the deal to close in the fourth quarter of this year.
