PayPal Buys Paidy For $2.7 Billion

The buy now, pay later race is heating up following reports of PayPal’s acquisition of Paidy in Japan; but can it outpace the competition?

As consumers, most of us have very simple motives: if we like something, we buy it.

And now, thanks to the rise of buy now, pay later (BNPL) services, we can, well, buy now and pay later… and PayPal (NASDAQ: PYPL) wants all the action.

Why has PayPal acquired Paidy?

The BNPL industry is very much in its infancy, expected to reach a market value of approximately $34 billion by 2027. Compare this to the global finance industry’s estimated worth of over $400 trillion, and there’s a lot of room for growth.

Hence, PayPal, one of the world’s leading digital payment platforms — and also considered a leader in BNPL — splashing $2.7 billion on Japanese BNPL business, Paidy. The move follows PayPal’s own BNPL expansions in Western countries, the recent IPO of pure-play Affirm, Square’s $29 billion acquisition of Afterpay, and Apple’s confirmation of its planned development in the space. 

This deal gives PayPal a foothold in the lucrative Japanese market, where online shopping volume has more than tripled over the last 10 years to some $200 billion, but more than two-thirds of all purchases are still paid for in cash. Analysts have seen this trend decreasing, leaving a lot of room for growth, and Paidy’s 6 million registered users will help build PayPal’s BNPL footprint in the region.

The BNPL space has exploded in popularity over the past two years, especially among younger consumers, whom PayPal will be hoping to turn into lifelong customers as traditional credit cards and interest rates continue to appeal less and less to the wider market.

So, let’s see how PayPal manages its latest takeover, and whether it can become the alpha in this ever-growing pack with more developments and acquisitions.

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