Yahoo Japan Corporation will be a part of PayPay, the new digital payments service that will use AI to offer mobile-based payments and other financial services in Japan.
Japanese internet conglomerate SoftBank on Friday confirmed the news of partnering with Indian financial services company Paytm to start a payments service. Yahoo Japan Corporation will also be a part of the joint venture.
According to a statement on SoftBank’s website, the joint venture will be called PayPay Corporation. The venture aims to launch PayPay smartphone payments service using barcodes (QR codes) in fall 2018, and will leverage Paytm’s payment technology for the same.
PayPay Corporation, SoftBank, Yahoo Japan, and Paytm will expand the number of users by including the customer base of SoftBank and Yahoo! Wallet, which comprises approximately 40 million accounts.
They will also deploy the platform using SoftBank's sales know-how, and develop a tailored service offering that leverages Paytm's technology. The company’s aim is to make PayPay the top provider of smartphone payment services in terms of number of users and affiliated stores.
The statement said with the launch of PayPay, Yahoo Japan will terminate Yahoo! Wallet's current smartphone settlement function. However, the date for termination has not been decided.
Cashless payment from PayPay will be available on either the PayPay app or the Yahoo! JAPAN app. It will allow two types of payment methods: credit cards and electronic money. The PayPay platform will be seamlessly integrated with Yahoo! JAPAN ID, giving existing Yahoo! Wallet customers the option to use PayPay functions within Yahoo! JAPAN's smartphone application.
SoftBank said that over time customers would be able to use the services at a wide range of outlets, from nationwide chain stores to individual merchants in each region.
In the “user-oriented code-reading format”, initial setup costs will be low as the merchant will only need to display the code in the shop. In addition, the service will be free to affiliate stores for the first three years from its launch Future promotional activities will be planned for participating merchants.
Cash (bank notes and coins) is still the mainstream payment methodology in Japan, with the current cashless payment ratio at 20 percent. Consequently, the Japanese government is taking measures to raise the cashless payment ratio to 40 percent by 2025, with a long-term goal of 80 percent, the highest level globally.SoftBank and Yahoo Japan established PayPay Corporation in June 2018 to aid these efforts.
According to a report in Bloomberg, the new payment service will also leverage artificial intelligence along with other financial services (insurance, lending amongst others). The report added that a couple of Paytm employees are already working in Tokyo to set up operations and get the service running.
Last May, SoftBank pumped in $1.4 billion into Paytm’s parent company One97 Communications Ltd. for close to a 20 percent stake in the entity. This collaboration will give an accelerated push to Paytm in SoftBank’s home market.
Japan seems to be ripe for disruption by new fintech players. According to media reports in March, banks in Japan had submitted draft policies on “open banking”, which will allow banks to open their APIs to fintechs for services like digital payments and money management among other functions. These open-banking policies will allow fintech firms to spread the net of digital payments and other services.
The EY Fintech Adoption Index 2017 states that consumer fintech stands at 14 percent in Japan; in India, this is at 52 percent.
SoftBank isn’t the only player that is trying to tap this opportunity.
In February this year, Japanese financial companies Mizuho Financial Group Inc, Mizuho Bank Ltd, Metaps Inc, and WiL LLC signed an agreement for capital participation to start a new company that will provide a digital wallet app for electronic payments.
Even banks like Bank of Fukuoka, Yokohama Bank, and Resona Bank have come together to start a QR code settlement system called Yoka Pay and Hama Pay.
Tarush is driven towards delivering unbiased and accurate reportage while engaging with as many mediums as possible to narrate a fresh perspective. Working for the past few years in the digital space with YourStory, he has covered the Indian technology ecosystem extensively, focusing on new age Fintech companies, while building strong connects within the industry.