Yes, foreign founders can score big in Japan. Just ask this guy.

Russell Cummer at Paidy’s Tokyo HQ. The startup launched in 2008. Photo credit: Tech in Asia.

Russell Cummer is a former banker and an international citizen. He was born in Singapore and grew up in Canada and Hong Kong. After graduating from university in London, the physicist completed his transformation into a finance wizard with a master’s at Stanford.

“I could see that there was going to be a change in consumer lending in Japan,” noticed Russell during his time at Goldman Sachs in Tokyo. The space started to become more regulated in 2006 with a law capping interest rates at 20 percent.

In 2008 he left Goldman to pursue a lending business. Things didn’t work out but he learned a lot about the system – which led to his current startup, Paidy.

Paying up

“When you’re shopping on a mobile device, inputting a credit card is not a natural experience,” says Russell. “Have you ever seen someone shopping on the train? Are they going to pull out their wallet and take out their credit card and then input it in front of everyone? I don’t think so,” he laughs.

Photo credit: Tech in Asia.

Paidy works a bit like Stripe. Online shoppers input their email address and phone number and a confirmation PIN is sent via text or a phone call. After typing the correct pin, the transaction is complete. The entire process takes well under a minute.

Russell says it’s the largest funding round for a foreign entrepreneur in Japan.

Unlike Stripe, Braintree, and other payment services, Paidy underwrites and issues credit as well as settles payments directly with merchants with a 100 percent guarantee.

Anyone with a phone now effectively has a cardless credit card with a monthly consolidated bill and an interest rate of 15 percent.

Russell and the team today announced a US$15 million series B cash injection for the startup. The round was led by Eight Roads Ventures Japan and two Softbank spin-offs, SBI Holdings and SBI Investment’s fintech fund.

He reckons it’s the largest funding round for a foreign founder in Japan. It’s certainly more than the US$12 million that Robert Laing and Matthew Romaine got for crowdsourced translation service Gengo back in 2013.

Barriers

Paidy is now available at 600,000 online stores in Japan. It counts Adidas and Dean & Deluca among its merchants.