The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Hudson Lockett

HONG KONG, March 2 (Reuters Breakingviews) - Initial public offerings often lean on growth potential in their sales pitch, but the one made by PayPay looks particularly ambitious. The Japanese payments and credit card provider is selling itself in its U.S. listing prospectus as a future one-stop finance super app. Hitting a $20 billion valuation sought by SoftBank Group 9984.T founder Masayoshi Son will require convincing investors the firm is primed to become much greater than the sum of its parts.

The business, which turned profitable in 2025, does have promise: monthly active users rose more than 10% to 40 million in the year to December 31, with 11 million actively using the company’s credit cards. Its performance over the last nine months of 2025 points to annualised revenue of 371 billion yen ($2.4 billion) for the fiscal year ending March 31, up almost a quarter year-on-year. Pretax net profit margin came in at 21.9% for the nine-month period, up from 12.6% in 2024.

At Son's hoped-for valuation, PayPay would be worth 8.4 times its sales, five times the multiple carried by U.S. peer PayPal PYPL.O—which is itself on the M&A radar of payments firm Stripe, per Bloomberg. It’s logical, then, for PayPay to play up a “broader mission of offering a comprehensive digital finance experience” with presumably juicier margins.

Results from PayPay’s cross-promotion between payments, cards and banking show promise: average monthly transactions by users with both an e-wallet and card stood at almost 67,000 yen in the 2025 fiscal year—nearly triple the users of the app alone—with bank users’ monthly average rising to 136,000 yen. And PayPay’s code payments and cards now account for over 10% of digital payments in Japan, behind the 17% market share of rival Rakuten’s credit card business, Pujance Chan, an equity analyst at Morningstar, estimates.

Chan reckons there is still room for PayPay users to grow, especially if accounts are allowed to merge with those of SoftBank-backed messaging app Line, which boasts over 100 million monthly active users in Japan. Yet Line’s history of large-scale data breaches has raised regulatory hurdles for any such linkup. In India, supervisory concerns have hurt the broader financial ambitions of Paytm of One97 Communications PAYT.NS.

Beyond compliance risk, there is the fact that PayPay’s financial services segment, made up of its banking and securities units, accounted for only 16.3% of consolidated operating profit in the final nine months of 2025. Explaining how the firm can swiftly boost that share without tripping regulatory wires would make a stronger case for its super app ambitions.

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CONTEXT NEWS

PayPay, the SoftBank Group-backed Japanese payments app, is set to receive more than $200 million from a group of cornerstone investors, including Qatar Holdings, Visa and the Abu Dhabi Investment Authority, as part of its U.S. initial public offering, Reuters reported on February 28, citing two unnamed sources.

PayPay filed paperwork for its IPO on February 12. Bloomberg reported on the same day that the firm is seeking a valuation of more than $10 billion, with SoftBank founder Masayoshi Son pushing for up to double that amount, according to unnamed sources.

(Editing by Una Galani; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on LOCKETT/ hudson.lockett@thomsonreuters.com))