Japan’s Paidy secures $55M series C round to foray beyond cardless online payments

Russell Cummer pitching at RISE 2018 in Hong Kong on July 12
Image credit: Masaru Ikeda

See the original story in Japanese.

Tokyo-based cardless payments service provider Paidy announced on Thursday that it raised a total of $55 million dollars in a series C round. This round was led by Itochu Corporation with participating from Pocket Card, Goldman Sachs and one unnamed company. Itochu revealed that it has invested $42 million dollars (about 76%) in the startup at this time.

This follows Paidy’s (formerly Exchange Corporation or ExCo) series A round ($3.3 million US raised) conducted in July 2014, the follow-on of the series A round in May 2015 ($5 million dollars raised), the series B round ($15 million dollars raised) conducted in August 2016 and a capital and business alliance with Bank of Tokyo-Mitsubishi UFJ (now Mitsubishi UFJ Bank) in July 2017. The total amount raised so far is $80.83 million dollars.

Paidy was founded in 2008 by Russell Cummer, whose previous work experience includes Merrill Lynch and Goldman Sachs. It started with a P2P finance or social lending service called Aqush followed by the launch of Paidy back in 2014. Subsequently the management of Paidy shifted from ExCo to the operating company Paidy. As of the end of June 2018, the number of accounts exceeds 1.4 million.

Russell Cummer pitching at RISE 2018 in Hong Kong on July 12
Image credit: Masaru Ikeda

Even without a credit card, Paidy users can certify their identity using SMS (short message service) or IVR (interactive voice response), and then shop online and pay later at convenience stores or via bank transfers. For online businesses, it is possible to incorporate consumers who do not hold credit cards as customers, and in fact money transfers are confirmed by payment from Paidy at the time the order is made, so no accounts receivable risks arise. For customers, there is a level of comfort with e-commerce in that the payment can be made after the goods arrive.

As a result of this funidng, Paidy will become an equity-method affiliate of Itochu. Itochu has many retail chain businesses, including convenience stores and cafe chains under its umbrella, and it is thought that Paidy will develop systems of credit and face-to-face settlement that do not depend on credit cards at these stores. According to knowledgeable sources, it seems that the company is also looking for partnerships with a tablet-based payments platform for retail stores.

Translated by Amanda Imasaka
Edited by Masaru Ikeda