PayPal said it has agreed to buy Japanese buy now, pay later firm Paidy for $2.7 billion in cash. The acquisition comes after rival Square agreed to pay $29 billion to buy Australia’s Afterpay.
Online payments have flourished during the Covid-19 pandemic. The buy now, pay later model business model–where companies offer small interest-free loans to consumers at the point of sale and charge merchants a small fee while bypassing traditional consumer lending platforms–has seen even more robust growth.
“The acquisition will expand PayPal’s capabilities, distribution and relevance in the domestic payments market in Japan, the third largest e-commerce market in the world, complementing the company’s existing cross-border e-commerce business in the country,” PayPal said in a statement.
Paidy has six million registered users in Japan. The volume of online shopping has tripped over the past decade to $200 billion, Reuters said, but most purchases are made in cash in Japan.