QR code Payment in Japan
QR code Payment in Japan
20%. This is the ratio who paid by cashless payment method like credit card, prepaid card etc. Cashless ratio in Japan is quite low compared with other countries like Korea, Sweden who has close to 90% cashless share.
One unique thing in Japan is we have lots of Convenience Stores, 7Eleven, FamilyMart, Lawson which is close to 60K stores in total but they say still 70% of payments are non-cashless, which means people use “Cash”.
Why Japanese people don’t use cashless payment, very simple hypothesis,
from Merchant perspective (B)
- High commission fees, 3%~
- Worse Money-in cycle brings the worse cashflow
- No facts to increase sales by implementing cashless paymentfrom Consumer perspective ©
- Credit card is not available in all offline merchants and cash is the only common way
- Cannot control the amount how much to spend with credit card, cash is visible and very easy to manage the amount
- When something happened, credit card does not work, cash is king
Downtown like Tokyo, Osaka, Fukuoka city are basically accept the credit card since merchants may feel the loss of sales. Although, merchants who locate in rural areas, they don’t prepare the cashless. As mentioned, more serious on cashflow and consumer also prefer cash.
This is always Chicken and Egg, but my personal feeling says the most important thing is the number of merchant who accepts cashless. Once all merchants start accepting cashless, all other merchants have to adopt to keep the sales higher.
After that, consumer will adopt. We, Japanese have to commit to achieve the goal.
From these senses, Japanese government METI (ministry of economy trade and industry) moved and strongly promotes to merchant and service provider to implement cashless payment.
Specially here in Japanese retail market, QR code payment is having strong attention from last year. This is simply because merchant is quite easy to set up by just printing the QR code in paper and register few steps, that’s all.
Plus, some services are doing “Commission Free” campaign as the special treatment to merchant, and this is not one-shot, most of them are available for two years.
Now let’s see by the players. The advantages for each player would be,
- Servicer who has plenty number of merchants
- Servicer who has plenty number of consumers ( = app downloads)
- Servicer who has own original values and is able to consume the values in offline
R Pay（Rakuten）
・Rakuten is the biggest E-Commerce company in Japan, now provides not only EC but Fintech, OTA, Sports, Ads and recently announced to enter Telecom market as well.
・Rakuten is overwhelming the number of merchants which is 1,200,000.
・R-Pay app download is not that big and need more effort, although Rakuten has about 40 million unique users
・Commission fee is 3.24%～
・Rakuten Point can be consumed（*Cumulative $10B points issued）
・Deposit from flea-market app Rakuma is also consumable
https://pay.rakuten.co.jp/
LINE Pay（LINE）
・Japanese most favorite messenger app
・LINE Pay function is inside LINE. Merchant is now about 100,000.
・Number of LINE app download is far greater than others, now MAU 78 million, as of Q3 2018.
・Commission fee is 0% for three years (Aug. 2018 ~ Jul. 2021). It’s going to be 2.45% after the campaign
・LINE point is available, but not that strong like Rakuten
・LINE is not only P2P or B2C payment player, but consumer can pay fees for public services and this is very unique.
https://line.me/ja/pay
merpay（Mercari）
・Mercari is the most famous flea market app (C2C EC) in Japan
・Payment function is inside Mercari app
・Number of merchant is unknown
・MAU is over 10 million
・Commission fee is 1.5%, this is not campaign and this will last for the service being, quite competitive price setting.
・GMV of Mercari is now $3.7B in annual and this sales deposit can be consumed in offline market.
https://jp.merpay.com/
Origami Pay（Origami）
・Number of merchant is around 20,000.
・Doing big promotion together with famous restaurants by providing the discount coupon.
・User volume is unknown.
・Commission fee is max 3.25%
・Only Visa and Master card brands are available. JCB who has 20% of credit card brand share is not available.
・Uniqueness is that they open their QR code API and every player can deploy this function
https://origami.com/
Amazon Pay（Amazon Japan）
・Merchant volume is unknown.
・Consumer can pay via Amazon shopping app and no need to newly download the payment app
・Commission fee is free until the end of 2020. It’s going to be 3.5% after the campaign
・Consumer can use the credit card info which is already linked to Amazon account
https://pay.amazon.com/jp
pring（pring）
・Merchant and user volume is unknown
・Commission fee is 0.95%~. pring joined QR payment so early and announced the lowest commissions at that time. Although other big players like LINE or PayPay started with commission free and no major attention from market now.
・Good money-in cycle, only one business day in case merchant chose Mizuho bank
・Metaps, public company operated before
https://www.pring.jp/
payID（PAY）
・Merchant and user volume is unknown
・Commission fee depends on the plan but not super cheap like LINE
・Only Visa and Master are available
・BASE operated before
https://pay.co.jp/
pixiv PAY（pixiv）
・Merchant and user volume is unknown
・More for consumers, user can easily generate QR code in Comic Market etc.
・Visa and Master are available, plus convenience store payment
・Commission fee is 0% till Aug.2019
https://pay.pixiv.net/
Bank Payment
・GMO, the Japanese gigantic payment gateway provides the function as OEM to every banks.
・Merchant network is basically common as far as using this GMO, for instance, YOKA!Pay (Fukuoka Bank) is available in the stores who accept Hama Pay (Yokohama Bank).
・Payment is basically debit, deducted from bank balance in real time
・User basically finished KYC process by having bank account and very easy to set up the account in the app.
・Representing players are Yucho Pay (Japan Post), Hama Pay (Yokohama bank), Yoka!Pay (Fukuoka Bank) etc.
https://www.gmo-pg.com/service/ginkopay/
d payment（NTT DOCOMO）
・Docomo is the biggest telecom provider in Japan and has gigantic point system as well. Rakuten Point and dPoint is two major point systems.
・Merchant volume was 1,700 in Apr. 2018 and aimed for 100,000 in 2018 but not clarified yet. Although need strong effort on merchant acquisition.
・App download is about 2 million
・Commission fee is 3.5% as campaign, normally 4.0%
・dPoint is the strength, $794M points are consumed in the first half of FY 2018 and easy to imagine the issuing points are far more.
・Credit card is available, also user can merge the payment with monthly mobile bill.
https://service.smt.docomo.ne.jp/keitai_payment/about/shop.html
PayPay（PayPay）
・Merchant and user volume is unknown.
・Outstanding attentions by conducting $100M incentive campaign two times. They are a group which started later phase and needed to spend marketing fee to acquire both merchants and users.
・Commission fee is 0% until Oct. 2021.
・AliPay is also available and no commissions.
・Credit card and charging deposit from bank is also available.
・Share holders are Yahoo!Japan and SoftBank.
https://paypay.ne.jp/
auPay（KDDI）
・KDDI is another telecom service.
・Announced to borrow Rakuten’s merchant network which is 1.2million, (Rakuten also got KDDI’s mobile network instead)
・auPoint is available, cumulative $1.0B points are issued, not that big compared with Rakuten, Mercari, Docomo.
・Planning to launch in Apr.2019.
Convenience Pay（All are now in planning)
・Most of all payments above are available in most of CVS and this is enough for users. But, CVS also wants to enter this QR code war, from the reasons of stock and utilize the data and increase the engagement of consumers. Representing players would be
・7Eleven Pay
・FamilyMart Pay
・Lawson Pay
Other than these, Japan Taxi has their original tablet in the car which can issue QR code and passenger can pay by registered credit card. There might be similar cases like this.
As we see, there are lots of types of QRs in Japan and this makes merchant hesitating to choose. Too many choices…
The highly expected news is that PAYMENTS JAPAN which is general incorporation foundation was established in 2018 and trying to create the “Unified QR Code”. After the rule fixed, basically all service providers have to learn and follow this. Detail would be announced in April 2019.
Big barriers to promote QR-code payment are,
・Bother to open the app from user perspective. Japanese is quite familiar with contact less payment
・From merchant perspective, too many choices. Contract, management tools, money-in cycle, all are different and individual. Too bothering
・Commission fee is not permanently free and will be charged around 3% in the end
I personally believe the winner will be the players who have
- Original Point (Value) system
- Large number of merchants
Rakuten, MerPay, PayPay, Docomo might be the promising companies from my point of view.
