The United States sophisticated payment network PayPal is planning to acquire Japanese firm Paidy in $2.7 billion. Paidy is also a buy now pay later (BNPL) business model. Primarily cash is involved in this acquisition. The final transaction is expected to be completed by December. PayPal is stepping up in the recent popular industry led by the Covid pandemic.
The payment network firm announced that they are at the top position in this industry. PayPal is looking to strengthen its business in Japan by introducing new services in its cross-border payments related to e-commerce. Paidy will be responsible for its management after the acquisition, and it will remain the company. The paidy founder Russel Cummer and CEO Riku Sugie will stay in their position after the acquisition.
Today, PayPal has more than 400 million active accounts. 40% of them are operating outside the U.S. The reason for this enormous growth of fintech giants is the pandemic. And the pandemic fuelled buy now pay later business model. PayPal also marked its footprints in Australia last year, resulting in rising share prices of small-cap companies like Sezzle. Sezzle was down on Wednesday.
After the news erupted, there was a movement as PayPal is already in the top-notch layer of the BNPL market. Paidy had the potential to be listed publicly. Seeing this potential, PayPal has considered Paidy as a top payment firm in Japan. This acquisition is expected to fuel other payment engines and the fintech industry to develop more advanced services in the BNPL sector.
A U.S financial service-based company recorded 2.1% of global e-commerce payments in 2020, and this figure is expected to be more than 4% by 2024. There is fierce competition in the buy now pay later market. Because the model is popular among youth because of its convenience, one can easily take a small loan on interest-free instalments under the BNPL model. The individual should deposit the instalments under specific time constraints.
The BNPL model tests the capital strength. A company with more capital can easily offer better services associated with this industry. After the acquisition, Paidy plans to expand its services beyond e-commerce and set the new standard for shopping and fintech. This deal brings the clarity that BNPL has an excellent potential to thrive in future.