PayPal Takes Over Buy Now, Pay Later Firm Paidy for $2.7B

PayPal has announced the acquisition of Paidy, a Japanese internet payments company. The American e-commerce company will receive Paidy's buy-now-pay-later (BNPL) and credit-card-free payments offerings in exchange for $2.7 billion in cash.

Consumers can purchase for things online without using a credit card and subsequently pay for them in installments through BNPL players. They don't charge interest, but they do levy late fees if payments aren't made on time. These fees can be less expensive than credit card interest in some cases, but they can build up over time. Merchants pay a charge for each purchase made via the programs, therefore BNPL corporations win in either case.

Paidy's method differs from other BNPL products in that it allows users to earn money.

Investing in a large local player has obvious benefits for PayPal. However, the agreement hints that PayPal may be concerned that its own BNPL solution, which it hurried into development during the COVID-19 lockdowns in 2020, could struggle to deliver in Japan.

Square, the enfant terrible of credit card payments for small businesses, has purchased BNPL leader AfterPay and promised to incorporate it into point-of-sale technology, according to PayPal.