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China, Korea companies expand mobile payment business in Japan

2019-06-05 13:04 Wednesday

A trio of foreign online payment companies – Alipay from China, and Kakao Pay and Naver Pay from Korea – have expanded their presence in Japan in recent months, according to media reports.

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The three firms are each looking to tap into new markets and reach a wider global audience, and take advantage of the upcoming Olympics taking place there next summer.

According to the latest figures, the number of merchants supporting China's Alipay in Japan has surged to more than 300,000, from about 50,000 in early 2018.

Ant Financial, the mobile payments affiliate of e-commerce giant Alibaba Group, said it has signed up more retailers in Japan to serve the growing number of Chinese tourists to the country.

By simply scanning a QR code tourists can avoid paying overseas transaction fees to credit card companies. Credit card users pay about 1 percent in fees to global card companies such as Visa or Mastercard when making purchases overseas.

Instead, users are able to make payments in foreign currency through the system when they travel, if they charge their apps with Chinese RMB.

Alipay is also aware of the impact that breaking into Japan will have ahead of the 2020 Olympics. The company is taking the opportunity to prepare by bridging the gap between visitors and local merchants.

The estimated spike in number of foreign visitors during the games will serve as a good opportunity for the company to expand its business and meet its targets of global expansion.

More than 8.3 million Chinese people travelled to Japan in 2018, accounting for 27 per cent of total arrivals, according to Ant. Asia as a region, led by China, has become a major source of tourist spending in Japan, accounting for 86 percent of total visitors.

Last year, Alipay announced its initial intention to collaborate with a wider range of local Japanese partners to build a cashless environment for tourists going to Japan – something which is has obviously been hugely effective.

Alipay was first introduced to Japan in December 2015 and is currently available in all 47 prefectures across the country. It is available in a wide range of outlets that support tourism including airports, department stores, restaurants and popular attractions.

The Hangzhou-based firm says it will not charge access fees in extending its services to more retailers in the Land of the Rising Sun.

Transaction volume in Japan during May 1-4 ranked the fourth across all markets, according to Alipay, registering an increase of 25 per cent from the same period last year.

Meanwhile, the owners of two major Korean mobile payment apps are staking their own claims for the Japanese market.

Kakao Pay and Naver announced that they are extending their own mobile payment services to Japan. In June, both are set to launch there, which will enable travelers from Korea to make purchases in Korean won via their native e-payment systems.

The move comes after the Korean government revised related regulations to enable local mobile payment services to operate overseas.

Kakao Pay has partnered with the aforementioned Alipay system, so Korean users of its mobile payment system will be able to use QR codes at any stores in Japan where purchases can be made through Alipay. Conversely, Japanese users of Alipay will be able to make payments through Kakao Pay at stores in Korea.

"Our plan is to enable Korean travelers to use our service at stores they are likely to visit on trips to Japan," a Kakao Pay official said.

Naver, meanwhile, has partnered with its Japan-based subsidiary Line's Line Pay, as well as WeChat Pay of China's Tencent. This gives Naver an advantage over the competition. In comparison to Alipay's reach in Japan, there are about 1.6 million stores that already accept payments through Line Pay – more than five times as many.

"The plan is to enable Korean users of Naver Pay to make purchases via the medium at stores in Japan that accept payments through Line Pay and to enable Japanese users of Line Pay to make purchases using the medium at stores in Korea that accept payments via Naver Pay," a Naver Pay official said.

Naver Pay plans to expand its usage in other neighboring countries as well.

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