NEW YORK -- U.S. payment company PayPal Holdings on Wednesday announced that it will acquire the Japanese "buy now, pay later" provider Paidy for about 300 billion yen ($2.7 billion).

PayPal aims to strengthen its business in Japan by adding new services to its key cross-border e-commerce payments. The full-fledged entry of a major overseas company is expected to intensify competition in Japan's payments sector.

PayPal will make the acquisition in cash. The transaction is expected to be completed in the October-December period. Paidy's founder, Executive chairman Russell Cummer, and its president and CEO, Riku Sugie, will remain with the company after the acquisition and will be responsible for its management.

Founded in 1998, PayPal has established a strong position in online payments. The number of operating accounts exceeded 400 million by the end of June, about 40% of which are outside the U.S. There are 32 million member stores that accept payments via PayPal.

The total transaction volume for the April-June period of 2021 increased 40% year on year to $310.9 billion, a record high. Its market capitalization of about $300 billion is on a par with major U.S. banks.

So far, PayPal's focus for the Japanese market has been cross-border e-commerce payments for overseas products, and it has 4.3 million active accounts there. PayPal CEO Dan Schulman has listed Japan, the world's third-largest e-commerce market, as one of its key regions. Japan, where cash is used for 70% of payments, has a lot of room for growth. By acquiring Paidy, which has 6 million members, PayPal aims to increase its presence in the domestic payment market.

Paidy offers a buy now, pay later service that does not require a credit card. It is one of the few unlisted startups in Japan with a market capitalization of over $1 billion. In March, it raised a total of 13 billion yen from a fund run by U.S. investor George Soros' family. That generated attention as one of the largest fundraisings ever for a Japanese unlisted company.

Buy now, pay later services are installment payment services that charge no fees over limited periods of time. They are especially popular among young people and are rapidly expanding in Europe and the U.S. According to FIS, a U.S. financial services company, they accounted for 2.1% of global e-commerce payments in 2020, and that is expected to rise to 4.2% in 2024.

The competition in the buy now, pay later market is fierce, and it is becoming a game of capital strength. U.S. payment giant Square announced in early August that it would buy Australia's Afterpay for about $29 billion. Sweden's Klarna raised $639 million in June from SoftBank Vision Fund 2 and others, boosting its valuation to about $46 billion.