Paidy is a Japanese fintech startup that potentially will allow shoppers to shop online without a credit card! Instead, shoppers pay cash on delivery or at convenience stores, which function as combination logistics/payment centers in many Japanese cities.
This solution protects the customers from fraud as they do not have to enter their credit card information online and worry about where that data is being stored or where it goes. It is however inconvenient for businesses that often need to float cash for merchandise that hasn’t been paid for yet or deal with incomplete deliveries. The Paidy customers are able to check out by entering their mobile phone numbers and email addresses. A mobile authentication system is set in place; it authenticates the customer with a four-digit code sent through SMS or voice. The bill is settled at the end of the month at a convenience store or via a bank/auto-debits (installment and subscription plans are also available). The complete transaction history is included in the monthly bill.
Paidy raised a $55 million Series C. The round was led by Japanese trade conglomerate Itochu Corporation, with participation from Goldman Sachs. The Tokyo-based startup says this brings its total funding so far to $80 million, including a $15 million Series B announced two years ago.
The Japanese consumers may soon be able to enjoy their shopping online and without the need for a card as even though Japan’s credit card penetration rate is high, their usage rate is relatively low, even for online purchases. This type of payment system would be ideal for countries that are still reluctant to go cashless and still rely on physical currency.