Refer Report

Softbank, which officially announced the absorption of Line Pay by Line Yahoo, is strengthening its dominance in the Japanese market thanks to the growth of simple payment services. As one in two people in Japan uses Softbank’s simple payment service, its influence is expected to expand further when the absorption of Line Pay is completed within next year.

Japanese simple payment growth… PayPay users 65 million

According to the industry on the 26th, in Japan, where cash transactions accounted for a large portion, simple payment services have recently been growing rapidly. According to data from Japan’s Ministry of Economy, Trade and Industry, cashless payments accounted for more than 40% of all payment methods last year.

In particular, among cashless payments, simple payment methods such as smartphone app-based QR code and barcode payment (code payment) are noticeably increasing. According to data from the Japan Cashless Promotion Council, the proportion of simple payments increased from 12.5% ​​in 2020 to 19.4% in 2021 and 23.8% in 2022.

Amid this market growth, Softbank, which formalized the absorption of Line Pay, is also growing in size. Softbank established a joint venture with Yahoo Japan in 2018, four years later than Line Pay, and introduced the simple payment service ‘PayPay’.

PayPay secured more than 65 million users as of last month. This number amounts to more than one out of two people in Japan. Of these, approximately 50% completed identity verification. The number of payments made through PayPay was 6.36 billion last year, and the payment amount handled during the same period was approximately 10 trillion yen. It is known that there are more than 10 million places where PayPay can be used.

When Line Pay is integrated, SoftBank’s monopoly system is ‘strengthened’

If the integration with Line Pay is completed, SoftBank’s monopoly system will inevitably be further strengthened. Line Yahoo officially announced the end of Line Pay service last June. The gist of it is that the service will end on April 30th next year and be integrated into PayPay.

At the time of this announcement, there was an interpretation that it was part of a plan to ‘delete Naver’. The Japanese government used the Line Yahoo security incident as an excuse to put pressure on Naver to sell its shares in A Holdings. This is why the integration of Line Pay into PayPay was interpreted as an attempt to ‘erase Naver’.

PayPay expanded its scope of use last month when it was selected as a business that can pay salaries in digital currency. The Japanese government’s efforts to promote cashless payments is also an opportunity for SoftBank to expand PayPay’s influence.

“Domestic companies will be able to find ways to expand into the local market.”

Attention is being paid to whether domestic simple payment service operators will be able to increase their influence in the rapidly growing Japanese market.

Last January, Naver Pay expanded its QR on-site payment service in Japan to PayPay affiliated stores through a payment network affiliated with Alipay Plus. It is now possible to make on-site payments using Naver Pay at PayPay affiliated stores that have the Alipay partner company logo attached. Simple payments can be made without currency exchange at convenience stores, shopping malls, duty-free shops, and restaurants.

A Naver Pay official emphasized, “With the addition of PayPay affiliated stores, you can now experience the seamless benefits of Naver Pay at a wider variety of payment sources in Japan.”

Kakao Pay is also strengthening its simple payment business in Japan through Alipay. It allows easy payment using Alipay or Alipay’s Japanese affiliate Paypay QR code. In Japan, if you open the Kakao Pay app and scan the QR code, simple payment is made just like when using it in Korea.

Jeon Jae-eun, Korea Trade-Investment Promotion Agency (KOTRA)’s Fukuoka Trade Office in Japan, said through KOTRA, “In the code payment sector, various services in addition to PayPay are being activated, and services utilizing code payments, such as linking services with overseas cashless payment companies, are also expanding. “As the rate of cashless payments in Japan gradually increases, our company will be able to find a way to enter the local market in line with changing consumption patterns,” he said.

Kim Dae-young, Hankyung.com reporter kdy@hankyung.com

Source: korean