In five months, Japan's Paidy saw its valuation go from $1.3 billion to the $2.7 billion PayPal just shelled out today to buy the company $PYPL
PayPal snaps up Japanese buy-now-pay-later unicorn for $2.7 billion www.cnn.com/2021/09/08/tech/paypal-paidy-acquisition-intl-hnk/index.html
PayPal heats up buy now, pay later race with $2.7 billion Japan deal By Sayantani Ghosh and Anirudh Saligrama (Reuters) - U.S. payments giant PayPal Holdings datafloq.com/read/paypal-heats-buy-now-pay-later-race-27-billion-japan-deal/17671
I wish @PayPal would cut its fee in 1/2 for contributions to charitable organizations helping during catastrophes like hurricanes..wildfires etc.
Updated 4:09 AM ET, Wed September 8, 2021
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BNPL services let users divide purchases into multiple payments with paying any interest. Instead, PayPal and other providers make money by charging fees to merchants when a consumer buys a product, much as credit card providers do. PayPal's move follows Jack Dorsey's Square much larger acquisition of Australian BNPL firm AfterPay for $29 billion.
Paidy differs from other BNPL firms in that it allows Japanese consumers to purchase items online and then pay them off in person at local convenience stores. PayPal doesn't currently offer a BNPL service in Japan, so the acquisition will help it break into that market.
“Paidy pioneered buy-now-pay-later solutions tailored to the Japanese market,” said PayPal Japan chief Peter Kenevan. “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.”
08 September, 2021 - 02:54am
The transaction adds to a flurry of activity involving companies that let consumers pay for purchases in installments, as an alternative to traditional forms of credit. In August, Square Inc. said it would buy Australia’s Afterpay Ltd. for about $29 billion, while Affirm Holdings Inc. entered a partnership with Amazon.com Inc., sending the financial-technology group’s shares soaring.
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07 September, 2021 - 11:06pm
The acquisition will be “minimally dilutive” to adjusted earnings per share in 2022, PayPal said Tuesday in a statement. The deal, which is expected to close in the fourth quarter, will be paid for principally with cash, PayPal said.
Japan is home to the world’s third-largest market for online shopping but it is also one of the few developed markets where paper currency is still king. Nearly three-quarters of all purchases in the country are still paid for in cash, PayPal said.
Paidy, then, is unusual among the world’s buy-now-pay-later providers because it allows Japanese consumers to purchase items online and pay them off each month in person at local convenience stores. The firm, founded in 2010, has 4.3 million active accounts.
“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,” said Russell Cummer, founder and executive chairman of Paidy.
Read more: Ex-Goldman Trader Builds Unicorn After Being Denied Credit Card
PayPal said Cummer and Riku Sugie, president and chief executive officer of Paidy, will continue to lead the business. Paidy will also maintain its brand and operate its existing businesses.
Buy-now-pay-later (BNPL) options allow users to split purchases into smaller payments without charging any interest, and instead make most of their money by collecting a small amount from merchants each time a consumer uses the product. Their usage is surging worldwide amid the pandemic-fueled e-commerce boom.
The Paidy deal comes after Jack Dorsey’s Square Inc. agreed last month to buy Australian BNPL firm Afterpay Ltd. for $29 billion. Sweden’s Klarna Bank AB raised funds in June at a valuation of $45.6 billion, with SoftBank Group Corp. leading the funding round. PayPal itself began offering a BNPL service last year and customers have since used it to make $3.5 billion in purchases.
Read more: ‘Buy Now, Pay Later’ Installment Plan Is Having a Moment Again
Paidy’s backers include Soros Capital Management, Visa Inc. and Japanese trading house Itochu Corp. The startup raised $120 million in its most recent funding round in March, which research firm CB Insights said took its valuation to $1.2 billion.
Cummer, a Canadian, set up the firm after working as a credit trader at Goldman Sachs Group Inc. in Tokyo. Paidy began offering BNPL services in 2014. It can be used on Amazon.com Inc.’s Japanese site, and launched a tie-up with Apple Inc. in June for customers making purchases from Apple in Japan.
“Paidy pioneered buy-now-pay-later solutions tailored to the Japanese market,” said Peter Kenevan, head of Japan at PayPal. “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.”
Bank of America Corp. served as sole financial adviser to PayPal, and White & Case was its lead legal adviser for the deal. Goldman Sachs was Paidy’s sole financial adviser, while Cooley and MHN were its legal advisers.
(Adds details on industry, Paidy from eighth paragraph)
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U.S. payments giant PayPal Holdings Inc said it would acquire Japanese buy now, pay later (BNPL) firm Paidy in a $2.7 billion largely cash deal, taking another step to claim the top spot in an industry witnessing a pandemic-led boom.
The deal tracks rival Square Inc's agreement last month to buy Australian BNPL success story Afterpay for $29 billion, which experts said was likely the beginning of a consolidation in the sector.
The BNPL business model has been hugely successful during the pandemic, fueled by federal stimulus checks, and upended consumer credit markets.
These alternative credit firms make money by charging merchants a fee to offer small point-of-sale loans which shoppers repay in interest-free installments, bypassing credit checks.
Heavyweights like Apple Inc and Goldman Sachs are the latest heavyweights that have been reported to be readying a version of the service.
Paypal, already considered a leader in the BNPL market, also entered Australia last year, raising the stakes for smaller companies such as Sezzle Inc and Z1P.AX Co Ltd , stocks of which were down in midday trading on Wednesday.
"The acquisition will expand PayPal's capabilities, distribution and relevance in the domestic payments market in Japan, the third largest ecommerce market in the world, complementing the company's existing cross-border ecommerce business in the country," PayPal said in a statement on Tuesday.
After the acquisition, Paidy will continue to operate its existing business and maintain its brand. Founder and Chairman Russell Cummer and President and Chief Executive Riku Sugie will continue to hold their roles in the company, PayPal said.
The Financial Times had reported last month that Paidy was considering becoming a publicly listed company.
The transaction is expected to close in the fourth quarter of 2021, and will be minimally dilutive to PayPal's adjusted earnings per share in 2022.
BofA Securities was the sole financial adviser to PayPal on the deal, and White & Case was lead legal adviser. Goldman Sachs advised Paidy, and Cooley LLP and Mori Hamada & Matsumoto provided it legal counsel.
(Reporting by Anirudh Saligrama in Bengaluru; Writing by Sayantani Ghosh; Editing by Ramakrishnan M. And Kim Coghill)