The news: PayPal signed an agreement to acquire Japan-based buy now, pay later provider Paidy for an estimated $2.7 billion (JPY300 billion), per a press release.

How Paidy works: Paidy lets customers pay for purchases in monthly installments via bank transfer (no fees) or at a network of convenience stores throughout Japan. The company also has products like short-term installment plan Paidy 3-Pay and Paidy Link, which lets customers connect their mobile wallet to their Paidy account—PayPal was the first wallet to integrate the solution.

PayPal’s opportunities: As Japan’s payments space evolves, PayPal sees a growth pathway through Paidy.

• Paidy might boost PayPal’s presence in Japan’s payments and BNPL spaces. Despite being a historically cash-heavy society, Japanese consumers embraced digital payments during the pandemic. And the Japanese government has committed to boosting cashless payments penetration to 40%, up from 20% earlier this year. Acquiring Paidy, which has more than 6 million users, lets PayPal push further into Japan’s budding BNPL space and gain an early mover advantage as Japan’s digital transformation takes shape.
• The Paidy acquisition also opens up cross-selling opportunities for PayPal. PayPal can use Paidy’s existing customers to grow its own user base, which recently hit 403 million. It can also be a pathway to bring offerings like its in-store payments solution Zettle into the Japanese market—helping sustain volume growth, which surged 36% year over year in Q2.

Related content: Check out the PayPal section of The Buy Now Pay Later Report for a deep dive into PayPal’s BNPL service and how it stacks up against incumbent BNPL players.