Last week
Reuters reported that SoftBank has picked investment banks Goldman Sachs, JP Morgan Chase, Mizuho and Morgan Stanley to support a potential US IPO for its Japanese payments app operator, PayPay. In what could be as early as Q4’25, PayPay could raise over
$2 billion from investors, but timing and the amount are subject to market conditions. 

PayPay’s success can be attributed to “encouraging Japanese consumers to move away from a long-standing preference for cash by offering rebates on payments through its mobile app.” As SoftBank prepares to

float PayPay on the US stock market, this marks a significant milestone for the Japanese fintech sector, but embedded finance worldwide. 

PayPay started as a QR-code payments app and has now matured into a financial platform that offers banking, credit, and securities within a single user interface. This
reflects a broader shift in how financial services are delivered, and raises important questions for incumbent banks, their challengers, and regulators. Here’s what SoftBank’s PayPay IPO float could mean for the embedded finance trend in Japan, Asia and the
world. 

From payments to platforms

PayPay holds substantial market
share in QR code and barcode payments in Japan,
representing around 64% of total transaction volume in 2024. With remarkable user growth and 70 million registered users as of July 2025 – half of Japan’s smartphone users – this has also resulted in widespread merchant adoption. 

PayPay is accepted across major chain stores, small businesses, vending machines, taxi and public transport, and has contributed to the government’s Cashless Vision initiative. The app has evolved into a financial super app, offering traditional banking
services, providing accessible asset management services, offering credit card services, and allowing users to transfer funds between accounts instantly and without fees. 

In addition to encouraging younger consumers to use the app for allowances, PayPay has also partnered with other Asian cashless payment services such as

Alipay and Kakao Pay. PayPay is today a true fintech platform, pivotal to revolutionising the fintech landscape in Japan by driving the adoption of cashless payments, but also promoting financial inclusion and enhancing security through eKYC verification,
a 24/7 hotline and a full compensation scheme. 

Embedded finance: A global trend

Embedded finance, the integration of financial services into non-financial platforms, is gaining traction worldwide. In Asia, super apps like WeChat, Grab, and PhonePe have pioneered this model, offering everything from payments and lending to insurance
and investment. Japan’s adoption of embedded finance is particularly noteworthy given its historically conservative financial sector. PayPay’s success suggests a shift in consumer expectations and regulatory openness, paving the way for more agile, tech-driven
ecosystems.

Research suggests
that the embedded finance industry is expected to grow by 27.7% during 2024 to 2029, and Japan is a fully-fledged participant in this uptick. With the Japanese government’s aim to have 40% of transactions be cashless by 2025, embedded finance initiatives must
evolve alongside this. “In the embedded finance field, the players are ordinarily divided into three categories: brands, enablers, and license holders; however, enablers (as player of the second category) act as license holders (as player of the third category). 

“The second unique characteristic is that financial companies are users of embedded finance. This is because the speed of digital transformation at traditional financial companies is relatively slow, and traditional financial companies seek to utilize embedded
finance to accelerate their digital transformation,” research outlines. 

These are not new developments. In November 2023, Stripe expanded its support for Japanese card network JCB, making it easy for businesses to accept payments. Further, in October 2021, embedded financial services platform Orenda partnered with card issuer
Nium to leverage BaaS APIs and provide no-code banking infrastructure to their clients. 

Implications for Western markets

While embedded finance is flourishing in Asia, Western markets have been slower to embrace the super app model. Fragmented regulatory environments, legacy infrastructure, and heightened privacy concerns pose significant barriers, and the West has a more
fragmented app ecosystem with a preference for specialised apps. If Western markets fail to embrace the super app model, they risk falling behind in user engagement, convenience, and potentially facing increased competition from companies that do adopt the
model. However, success of super apps in the West will depend on whether companies can overcome the challenges and adapt to the unique cultural and regulatory landscape. 

However, PayPay’s upcoming IPO could serve as a blueprint for Western fintechs seeking to scale through integration rather than expansion. For instance, PayPay’s success stems from its evolution beyond being just a payments app into a comprehensive financial
ecosystem offering banking, credit cards, loans, investments, and insurance. Western fintechs can emulate this by diversifying their services and becoming central hubs for their users’ financial needs. In addition to this, Western fintechs should consider
targeted incentive programs to drive user adoption and engagement in new markets. 

The road ahead

The support of SoftBank and global investment banks lends credibility and resources for expansion and innovation. Western fintechs should cultivate strong investor relationships and strategic partnerships to leverage expertise, resources, and market reach.
SoftBank’s alignment with AI initiatives suggests that integrating advanced technologies can create significant synergies and value. 

Moreover, PayPay’s listing in the US reflects a strategic choice to capitalise on a market that values innovation, scalability, and potentially offers higher valuations compared to other options. Western fintechs considering IPOs should carefully evaluate
global market conditions and choose a listing venue that aligns with their growth objectives and valuation goals. As PayPay enters the global capital markets, its IPO will be closely watched, not just for valuation, but for validation. Can a Japanese fintech
ecosystem thrive on Wall Street? Will embedded finance models gain traction in the US? And what does this mean for the future of financial services?

For financial institutions, technology providers, and regulators, PayPay’s evolution offers a compelling case study in how embedded finance can reshape economies, redefine user experiences, and reimagine the role of financial institutions.