Paydy sees “buy now, pay later” listing spreading in Japan


Fintech updates

Paidy, the Japanese fintech ‘unicorn’, plans to become a publicly traded company through rapid growth driven by the ‘buy now, pay later’ trend at one of the world’s most money-obsessed companies. world, according to its founder.

The company, backed by trading house Itochu, PayPal and Goldman Sachs, is one of a handful of “unicorns” in Japan, with a valuation of $ 1.3 billion when it raised $ 120 million in March. .

Market players and investors expect Paidy to file an initial public offering in Tokyo this year, although the company insists there is no concrete timeline for a listing.

“We have access to capital. In our business it’s also important to have access to lines of credit, which we do, but at the same time every business matures and gets to the point where it also makes sense to be a public business ”, Russell Cummer, founder of Paidy, told the Financial Times.

According to the former Goldman Sachs credit trader who founded the start-up in 2008, BNPL was taking off in Japan, albeit at a slower pace than in the world where its popularity has exploded due to the buying boom. online caused by the pandemic.

“It’s still early days for us in this market,” Cummer said. “But for the very first time, Japan has a real BNPL service.

Since 2014, Paidy offers a post-payment service that allows buyers to pay for one month’s purchases the following month. In October, it launched a service that allows consumers to divide the cost of goods into three equal interest-free installments – the first in Japan without interest.

About half of Paidy’s 6 million account holders are women between the ages of 18 and 34, and the service is accepted by most ecommerce sites and merchants, including Amazon, Shopify, Apple, and Rakuten.

Globally, BNPL is a crowded market with big players such as Swedish Klarna, Affirm and PayPal, based in Silicon Valley. Payment firm Square has also joined the competition with its $ 29 billion deal to acquire Afterpay in Australia, while Apple is also exploring the market.

In Japan, however, the volume of transactions made through post-payment services was still relatively low at 882 billion yen ($ 8 billion) in fiscal year 2020, although the Yano Research Institute expects that this amount will more than double to 1.88 billion yen by fiscal year 2024.

The BNPL trend in Japan is based on a similar thesis globally that millennials and Gen Z consumers are wary of traditional credit but still want to borrow money to buy goods.

But reflecting the country’s reliance on cash, Japanese consumers have adopted distinct e-commerce habits in which they often own credit cards but choose to pay for their online purchases with cash on delivery or through convenience stores and retailers. Bank transfers.

The heavy reliance on cash on delivery has created a logistical nightmare for traders, also making refunds and returns of goods difficult.

Paydy has capitalized on this consumer behavior, allowing shoppers to instantly open their account and access short-term credit with just an email and cell phone number. Despite the simple credit check, the company says late fees represent less than 5% of its revenue, which is made up of merchant and settlement fees.

“Paidy is now a more fundamental part of the e-commerce infrastructure in Japan than a typical BNPL,” Cummer said.


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