Japan Buy Now Pay Later Business and Investment Opportunities Databook - 75+ KPIs on BNPL Market Size, End-Use Sectors, Market Share, Product Analysis, Business Model, Demographics - Q1 2025 Update

Key Insights

Increased Adoption of BNPL by Younger Consumers

• The BNPL market in Japan is experiencing rapid adoption, particularly among Millennials and Gen Z, who are drawn to its flexible payment structures. Domestic players such as Paidy have emerged as leaders, offering zero-interest installment payments, which resonate well with this demographic. Partnerships with major platforms such as Amazon Japan have further accelerated the adoption of BNPL, integrating it into the everyday online shopping experience.
• Japan’s e-commerce market, has significantly increased adoption of BNPL services. Younger consumers who prefer alternatives to credit cards find BNPL appealing, as it aligns with Japan’s cultural preference for debt-averse financial products. The convenience and transparency of zero-interest installment options make BNPL a popular choice for high-frequency, small-ticket purchases.
• Over the next 2-4 years, BNPL adoption is expected to intensify as providers cater to the growing demand for flexible payment options among younger demographics. BNPL providers are likely to introduce innovative features such as loyalty rewards, cashback programs, and enhanced user experiences to maintain competitiveness. These advancements will solidify BNPL’s position in Japan’s payment ecosystem and encourage sustained growth in consumer engagement.

Integration of BNPL Services into E-commerce Platforms

• BNPL services in Japan are increasingly being integrated into major e-commerce platforms to streamline the checkout process and enhance the shopping experience. Domestic providers such as GMO Payment Gateway are embedding installment options with smaller retailers, while global players such as Klarna partner with larger e-commerce sites. This trend highlights the growing synergy between BNPL solutions and Japan's rapidly expanding e-commerce market.
• Retailers are adopting BNPL as a strategic tool to reduce cart abandonment rates and increase average transaction sizes. At the same time, consumers in Japan, accustomed to seamless digital payment solutions, are demanding more flexible and convenient options at checkout. The alignment of merchant objectives with consumer expectations is fueling the adoption of BNPL in the e-commerce sector.
• Over the next 2-4 years, integrating BNPL services into e-commerce platforms is expected to become a standard feature across large and small retailers. The competitive environment will likely drive providers to innovate with better terms, enhanced consumer experiences, and loyalty programs to capture market share. This integration will solidify BNPL as an essential component of Japan’s digital payment ecosystem while fostering growth in the e-commerce sector.

Entry of International BNPL Providers

• Japan's BNPL market is seeing a growing presence of global providers such as Klarna and Afterpay, which are entering the market to capitalize on the increasing demand for installment payment solutions. These international entrants are expanding partnerships with retailers to enhance their foothold, creating a competitive environment pushing domestic providers to innovate and refine their services. This influx highlights Japan’s appeal as a high-growth potential market for BNPL services.
• Japan’s relatively low credit card penetration compared to other developed economies presents a significant opportunity for BNPL providers. Many consumers, particularly younger ones, seek alternative payment solutions that align with their financial habits. Additionally, the country’s stable regulatory framework for financial services has attracted global providers looking to establish a presence in the Asian market without facing significant compliance challenges.
• Over the next 2-4 years, the entry of global BNPL providers is expected to intensify competition, resulting in more diverse and consumer-centric offerings. Domestic players may counteract this by leveraging local expertise, forming partnerships with regional retailers, and offering tailored solutions to maintain their market share. This heightened competition will benefit consumers through improved service quality and innovative payment options, further driving BNPL adoption in Japan.

Competitive Landscape and Regulatory Developments in Japan's Buy Now, Pay Later (BNPL) Market

Current State of the BNPL Market

• Japan’s BNPL market is experiencing substantial growth, this significant expansion highlights the growing adoption of installment-based payment solutions among Japanese consumers, particularly as they seek convenient and flexible alternatives to traditional credit methods. The shift reflects broader trends in consumer behavior, emphasizing affordability and financial flexibility.
• The proliferation of digital commerce is a key driver of BNPL adoption in Japan, with more consumers turning to online shopping platforms. BNPL services align with this shift, providing an accessible and seamless payment method that enhances the e-commerce experience. As demand for digital payment solutions continues to rise, BNPL is emerging as a vital component of Japan’s evolving retail and financial landscape.

Key Players and New Entrants

• Paidy Inc.: A leading domestic BNPL provider, Paidy offers zero-interest installment payments and has partnered with major e-commerce platforms, including Amazon Japan. In 2021, PayPal acquired Paidy, enhancing its presence in the Japanese BNPL market.
• Zozo Inc.: Operating a popular online fashion retail platform, Zozo offers BNPL options to its customers and integrates flexible payment solutions into its services.
• Mercari, Inc.: A prominent marketplace app in Japan, Mercari has introduced BNPL services to facilitate consumer purchases and expanded its payment offerings.
• JACCS Co., Ltd.: A traditional consumer credit company, JACCS has entered the BNPL space, leveraging its financial expertise to offer installment payment solutions.
• Smartpay K.K.: A fintech startup, Smartpay focuses on providing BNPL services with a user-friendly interface, targeting online shoppers seeking flexible payment options.
• Afterpay: An international BNPL provider, Afterpay has expanded into the Japanese market, partnering with local retailers to offer installment payment services.

Recent Launches, Mergers, and Acquisitions

• In July 2024, Money Forward, Inc. and Sumitomo Mitsui Card Company, Limited announced a capital and business alliance, including plans to establish a joint venture for retail business. This partnership addresses financial issues for a broader customer base by leveraging Money Forward's B2C financial services.
• Additionally, Japanese payments company Infcurion plans an initial public offering (IPO) in Tokyo in 2025 to accelerate growth through mergers and acquisitions. The firm secured an investment of approximately 8 billion yen from Sumitomo Mitsui Financial Group, valuing it at over 30 billion yen.

Anticipated Competitive Dynamics

• The Japanese BNPL market is expected to witness increased competition as domestic and international players expand their services. Established companies may pursue mergers and acquisitions to strengthen their market positions and diversify offerings. Innovations in payment solutions and strategic partnerships with retailers are likely key strategies for differentiation.

Regulatory Changes

• While there is no direct regulation of BNPL services in Japan, businesses offering BNPL financing may be subject to the Installment Sales Act. This act requires companies providing installment payment services over periods exceeding two months to register as businesses involved in "Intermediation of Comprehensive Credit Purchases" or "Intermediation of Individual Credit Purchases."

Scope

Japan BNPL Market Size and Spending Pattern

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later Revenue Analysis

• Buy Now Pay Later Revenues
• Buy Now Pay Later Share by Revenue Segments
• Buy Now Pay Later Revenue by Merchant Commission
• Buy Now Pay Later Revenue by Missed Payment Fee Revenue
• Buy Now Pay Later Revenue by Pay Now & Other Income

Japan Buy Now Pay Later Operational KPIs & Statistics

• Buy Now Pay Later Active Consumer Base
• Buy Now Pay Later Bad Debt

Japan BNPL by Purpose

• Convenience - Short Term Loans
• Credit - Long Term Loans

Japan BNPL by Business Model

• Two-Party (BNPL offered by retailers)
• Three-Party BNPL Offering

Japan BNPL by Merchant Ecosystem

• Open Loop System
• Closed Loop System

Japan BNPL by Distribution Model Analysis

• Standalone
• Banks & Payment Service Providers
• Marketplaces

Japan Buy Now Pay Later Market Share Analysis by Key Players

Japan BNPL Analysis by Channel

• Online Channel
• POS Channel

Japan Buy Now Pay Later in Retail Shopping: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Home Improvement: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Travel: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Media and Entertainment: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Services: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Automotive: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Healthcare and Wellness: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later in Others: Market Size and Forecast

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis

Japan Buy Now Pay Later Analysis by Consumer Attitude and Behaviour

• Sales Uplift by Product Category
• Share by Age Group
• Share by Income
• Share by Gender
• Adoption Rationale
• Monthly Expense Segments

Reasons to buy

• Insights on Strategy & Innovation: Navigate through future direction of the Buy Now Pay Later industry market by understanding strategic initiatives taken by key players to gain market share and innovation.
• In-depth Understanding of BNPL Market Dynamics in Japan: Understand emerging opportunities and future direction of the BNPL market, key drivers, and trends. Benefit from a detailed market segmentation with 75+ KPIs.
• Value and Volume KPIs for Accurate Understanding: Value and volume key performance indicators (KPIs) help in developing an accurate understanding of market dynamics.
• Competitive Landscape: Get a snapshot of competitive landscape in BNPL sector with key players and market share in Japan. Formulate your strategy by gaining insights into the current structure of the market.
• Develop Strategies to Gain Market Share: Create and fine tune your targeting strategy in the BNPL sector, identify growth categories and target specific segments across the value chain; evaluate important trends and risks unique to your market.
• Deeper Understanding of Consumer Behaviour: Increase ROI by understanding how consumer attitudes and behaviours are evolving. Get a detailed view on retail spending dynamics across consumer segments.