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When Visa unveiled its newest online payments solution, Visa Checkout, it said it wanted to make the online checkout process easier by taking out the many steps traditionally required. And when Affirm announced a plump new bag of funding last month, it said it wants to expand the definition of online credit and take out much of the friction of paying online.

But Paidy, a service launching in Japan soon, announced today that it has raised $3.3 million in funding and wants to offer a new alternative for paying online in a market where credit cards are much less prevalent.

Paidy, Exchange Corporation K.K.’s (ExCo) newest service, will let online shoppers use their name and email for a quick and simple checkout. Paidy acts as a lender, fronting the money to merchants and letting shoppers settle their Paidy accounts up to two weeks later; guaranteeing payment to merchants within 18 days.

Since Paidy is underwriting the loans, it crunches a bunch of data to determine that the shopper is who they say they are and to make sure they can be trusted to settle the account later.

ExCo uses a number of data sources to assess shoppers, including available data from Japanese consumers’ credit files, government data such as the census, social media, merchant data, third-party providers, and more.

Japanese online shoppers

So why is ExCo launching Paidy first in Japan? Is it because Affirm, Max Levchin’s newest venture that offers a similar service, is taking on the U.S. market and Klarna has been making a name for itself in Europe and soon the U.S.?

Turns out, it’s because the Japanese market has great conditions for such a service, which ExCo learned after providing other financial services there for the past six years, chief executive Russell Cummer told VentureBeat.

Cummulatively, Japanese households currently have more than $8 trillion in cash, Cummer told me. And this makes them very interested in alternative investment products, such as peer-to-peer lending, which ExCo has been providing through its Aqush service. Paidy is capitalizing on this hunger too.

Moreover, unlike the U.S. market, in which about 85 percent of online purchases are settled by credit card, only 60 percent of purchases in Japan’s $140 billion e-commerce market are paid for with credit cards, according to Cummer. He added that Japanese banks are much stricter about issuing credit cards, making it less common for many consumers to have them, especially young women in their twenties and thirties — Paidy’s ideal customer.

Their current alternatives when shopping online are cash-on-delivery and transfers through a bank or convenience store, creating an opportunity for Paidy to provide a new option that’s much more convenient and accessible.

Surprisingly, Paidy will offer a flat interest rate, regardless of individual circumstances. Japanese consumers are pretty reliable borrowers, Cummer said. The company will use data and machine learning to educate its models about the market’s consumers and their habits, not to crunch up specific rates for its users. Those models are actually at the core of the proprietary technology ExCo is developing.

The company plans to expand Paidy to neighboring countries, starting with Korea and Hong Kong next year, and then going to Indonesia, Thailand, and others in 2016. Because these countries have similar markets and consumers, it will be easiest for Paidy to expand on the models it’s building for the Japanese market.

The new funding will go towards growing ExCo’s teams across the board and shifting the company’s resources from its previous services.

Arbor Ventures, CyberAgent Ventures, and Recruit Strategic Partners co-led the round, with additional participation from existing investors 500 Startups and Cherubic Ventures.

ExCo was founded in 2008 and is based in Tokyo. The company previously raised a total of $1.2 million in seed funding.

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