Japanese startup Paidy, ExCo’s online payment service, announced a US$15 million Series B funding round led by SBI Holdings and Eight Roads Ventures Japan on Thursday. Other investors include Itochu and two returning funders: SIG Asia and Arbor Ventures.
Like every country, Japan‘s e-commerce landscape is growing, projected to go from US$89 billion in 2015 to US$122 billion in 2018, according to e-commerce portal PFSweb. Paidy is trying to develop a non-credit card payment network for Japanese e-commerce, already reaching 600,000 stores online that allow shoppers to check out with merely a phone number. That includes clients such as Adidas and Dean & Deluca, according to the company. The reasons to go that route have a lot to do with increasing credit card fraud in the country, which amounted to GBP43.1 million (US$56 million) in 2014 according to Accenture.
The company is the brainchild of Canadian investment banker Russell Cummer, who has led ExCo since 2008. With attention being paid to their payments app, it seems the company is undergoing a rebranding, though that wasn’t entirely clear. Other investors in the company have included 500 Startups, Juvo Capital, CyberAgent Ventures, Cherubic Ventures and Recruit Strategic Partners.
While fraud might be one motivation, Japanese consumers prefer cash in general. The same Accenture report points out only 60 per cent of payments in Japan are done by card.
“It isn’t because people don’t have a credit card,” Cummer told TechCrunch. “People just don’t use them when shopping online. That’s because the majority of purchases are made on a mobile device, that form factor plus the fact they are probably on the go, means paying without a credit card is easier.”
The payments subsector is getting noticed across Asia. Last week, Bangkok-based Omise raised US$17.5 million in Series B with investors from fintech-awash Singapore and Jakarta. Unlike fintech hubs Singapore and Hong Kong, Japan’s scene is still nascent, having seen only US$44 million in venture investments in the sector in the first three quarters of 2015.
The article Paying online without a credit card? Japanese startup Paidy just raised $15 million to push the effort first appeared on Geektime.