PayPal heats up the purchase now, pays for the next race with a $ 2.7 million Japan deal

September 7 (Reuters) – US payment giant PayPal Holdings Inc (PYPL.O) said it would acquire the Japanese purchase now and later pay Paidy (BNPL) in a largely 2,700 cash deal million dollars, going one step further to claim first place in a pandemic boom industry.

The deal follows rival Square Inc’s (SQ.N) deal last month to buy the Australian success story from BNPL Afterpay Ltd (APT.AX) for $ 29 billion, which experts say is probably the beginning of a consolidation of the sector. Read more

“The acquisition will expand PayPal’s capabilities, distribution and relevance to 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,” he said. PayPal in a statement this Tuesday.

Driven by federal stimulus controls, the BNPL business model has been very successful during the pandemic and has endangered consumer credit markets. These companies make money by charging a fee to merchants to offer small point-of-sale loans that buyers pay in interest-free installments, bypassing credit checks.

Apple Inc. (AAPL.O) and Goldman Sachs (GS.N) are the latest heavyweights reported to be preparing their own version of the service. Read more

Paypal, which is already considered a market leader in BNPL, also entered Australia last year, increasing stakes for smaller companies such as Sezzle Inc and Z1P.AX Co Ltd (Z1P.AX), the shares of the which fell on Wednesday in the negotiation.

The U.S. payment firm has been one of the big winners of the COVID-19 pandemic, as more people used its services to shop online and pay bills to avoid going out. Companies, forced to move their online stores, also turned to PayPal, increasing their customer base of active accounts to more than $ 400 million worldwide.

Paidy’s purchase will help PayPal expand into Japan, where the volume of online shopping has tripled in the past ten years to $ 200 billion, but more than two-thirds of all purchases they are paid in cash, PayPal said in a presentation to the investor.

Paidy, with more than 6 million registered users, offers payment services that allow Japanese shoppers to shop online and then pay them each month at a convenience store or by bank transfer.

The Financial Times had reported last month that Paidy was considering becoming a listed company.

Paidy, among its sponsors, are Soros Capital Management, Visa Inc. (VN) and Japanese trading house Itochu Corp (8001.T), will continue to operate its existing business and maintain its brand after the acquisition.

Founder and President Russell Cummer and CEO Riku Sugie will continue to play their roles in the company, PayPal said.

The transaction is expected to close in the fourth quarter of 2021 and will be minimally dilutive for PayPal’s adjusted earnings per share in 2022.

BofA was PayPal’s sole financial advisor in the deal and White & Case was the lead legal advisor. Goldman Sachs advised Paidy, and Cooley LLP and Mori Hamada & Matsumoto provided legal advice.

Report by Anirudh Saligrama in Bengaluru and Sayantani Ghosh in Singapore; Edited by Ramakrishnan M., Kim Coghill and Lincoln Feast.

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