Launched by Russell Cummer, a former trader with Goldman Sachs in Japan, Exchange Corp. began as a peer-to-peer lending service in Tokyo, but is expanding to offer up-front payments as the market for those services begins to blossom in Asia.
“I left Goldman to start Exchange Corp. as a peer-to-peer lender [and] we’ve lent about $15 million, but the gating agent has been identifying qualified lenders,” Cummer says.
The pivot to Paidy takes advantage of the work that Exchange Corp. had already done to identify creditworthy borrowers, and couples it with a financing platform that has already loaned $15 million through its peer-to-peer network.
“Paidy is a cardless check-out that allows a customer to check out with only their name and email address,” says Cummer. “We’ll take the risk. We will let you check out without a credit card. We guarantee payment to the retailer in 18 days. Customers can pay us in one shot or they can create a financing.”
The idea for Paidy grew from Cummer’s own observations into the way Japanese consumers shop. “People are not so comfortable using their credit cards on the internet,” he says. “In Japan 40% of transactions are not settled via credit card, but with people paying at a convenience store in advance or paying using a bank transfer.”
Using Paidy, retailers should be able to reduce that slippage, says Cummmer. It’s actually part of a broader movement that firms like Arbor Ventures, which led the financing for Exchange Corp., see emerging in financial services.
“Arbor has an investment thesis, which is right, that all of these new categories of data-driven financial services are the future,” says Cummer. “Look at credit card technology, where the stack is 60 years old.”
The vision for replacing the credit card with an automated service that elides the plastic was convincing enough to rope in not just Arbor Ventures, but also CyberAgent Ventures and Recruit Strategic Partners.
“We see a huge market opportunity in the growth of e-commerce in Asia and with cardless payment services, driven by the rising tide of mobile purchases.” said Melissa Guzy, managing partner, Arbor Ventures in a statement.