Visa makes a strategic investment in a Japanese start-up who developed a credit examination system backed by AI technology

Paidy is a Japanese company which offers young customers who do not have credit cards a post-pay credit service, using the startup’s customer database and credit examination system backed by artificial intelligence technology. It is believed that 55% of e-commerce deals in Japan are paid for by credit card, and 45% by other methods such as cash on delivery and auto debit. This is why Visa believes that „In Japan there is enormous opportunity to bring consumers more options to pay”.

Paidy Inc., an instantly-issued post-pay credit provider, announced an investment from Visa as part of the company’s Series C funding. Paidy is Japan’s first instantly-issued post-pay credit service for ecommerce consumers.

In addition, the two companies are partnering on new digital payment experiences that will give Japanese consumers more options when buying online and instore.

Paidy’s users only need a smartphone and email address to get started. They can buy goods on e-commerce sites in cooperating with Paidy by choosing it as a payment method. A four-digit code is sent to the user’s smartphone by SMS, which they enter to confirm the purchase. A system based on AI technology examines the user’s purchase history and makes a credit decision in moments. Users then pay their charges the following month either at a convenience store, by bank transfer or auto debit. Paidy also supports multi-pay installments and subscriptions.

There are currently over 1,500,000 Paidy users (august 2018), mainly women in their twenties.

Visa is working to develop and support new payment methods, as the world moves beyond plastic and towards digital credentials. In 2017, the scale of the domestic ecommerce market in Japan expanded by 9.1% to 16.5 trillion yen. Japan is among the world’s fastest growing ecommerce markets, but is also heavily reliant on cash.

„Visa and Paidy have a shared objective to offer consumers more convenient alternatives to current popular payment methods, like cash on delivery. The companies’ collaboration will also support Paidy’s expansion into new types of services for their customers.”, according to the press release.

“We have been following Paidy’s progress and the enhanced shopping experience they provide at the time of purchase,” said Chris Clark, Regional President, Asia Pacific, Visa. “In Japan there is enormous opportunity to bring consumers more options to pay, whether all at once or in instalments, especially when shopping across multiple channels. We look forward to this partnership to deliver these kind of new experiences.”

Russell Cummer, Founder and Executive Chairman of Paidy said, “We are extremely honoured that Paidy’s business concept was highly valued by the world’s largest payment network, Visa. Through this tie-up, we expect to deliver Paidy’s frictionless and intuitive transactional credit to a much broader audience. Furthermore, by adding new payment functions and diverse financial services, together with Visa, we can promote our vision of removing barriers and create unique consumer experiences for as many people as possible.”

Paidy was founded with the mission to create a world of “We remove the barriers, embrace simplicity”, offering its real-time monthly consolidated credit service all across Japan. Paidy started Japan’s first instant post-pay credit service for ecommerce consumers in October 2014.

Paidy has proved a powerful means of persuading first time buyers to transact online. Its proprietary models and machine learning mean that transactions are underwritten in seconds, with guaranteed payment to merchants. Paidy increases merchant revenues by reducing incomplete transactions, increasing conversion rates, boosting average order values, and facilitating easy repeat buying.