The U.S. fintech giant announced a mostly cash deal to acquire Japan’s buy now, pay later (BNPL) payments platform Paidy for ¥300 billion (about $2.7 billion) on Wednesday.
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.
According to an investor presentation, shopping volume in Japan more than tripled to around $200 billion in the last 10 years, with more than two-thirds of all purchases paid for in cash, thereby presenting a huge opportunity for BNPL to proliferate.
Founded in 2008, Paidy has 6 million users. PayPal already has stakes in other BNPL businesses, including Sezzle and Z1P.AX.
Under the BNPL model, unsecured loans are extended to online shoppers similar to a credit card, but these are smaller in amount and have a shorter repayment schedule. Such platforms have seen a boom in popularity over the past year, though critics see them as a debt trap.
In another major deal in the space, Square, run by Twitter CEO Jack Dorsey bought Australian Afterpay for $29 billion last month.