PayPal has teamed up with Japanese web giant Softbank to launch a joint venture to pursue online transactions business in the country.
The two companies said they will each invest AY=1 billion (US$12.5 million) in the newly established firm PayPal Japan which will be a 50:50 joint venture.
The pair say that they expect to “revolutionise the Japanese retail commerce market” worth $1.7 trillion in 2011, and support the growth of 4.7 million small businesses, which account for 99% of all businesses and 70% of all employment in the country.
The JV’s first move is to launch PayPal Here, the new dongle and app combo that allows users to accept card payments with their mobile phones, in Japan, a nation where more than 31 million smartphones are expected to be shipped this year.
In addition, an updated Japanese version of the PayPal Mobile app for iPhone has been made available. Users in Japan will be able to use the ‘local’ feature on the app to find nearby Japanese businesses that accept PayPal Here.
John Donahoe, president and CEO, eBay, says: “Our Softbank partnership and launch of PayPal Here will make it easier for millions of merchants in Japan to grow their businesses and for consumers to easily pay anytime, anywhere. We believe shopping and paying should be easy, and we’re excited to partner with Softbank to bring payments innovation to Japan and revolutionise commerce.”
Softbank owns Yahoo Japan, a portal with dominant domestic auction and shopping properties. Yahoo Japan is largely independent from its troubled cousin in the U.S.
Softbank CEO Masayoshi Son said: “At large electronics stores and supermarkets, dozens line up at cash registers, and customers have to wait. This allows workers at such stores to settle purchases immediately with their smartphones,” he said. “So I think it will be adapted at larger stores, not just smaller ones.”
PayPal has struggled to become a major player in the Japanese market, in part because its parent eBay quit the country a decade ago in the face of competition from Yahoo Japan – owned by new partner Softbank.
PayPal has in recent years sought to diversify and grow beyond the business generated by transactions from the auction behemoth, and is trying to expand into in-store transactions from its traditional strengths of online and mobile.
Japan is the fifth country to launch the PayPal Here service, after the U.S., Canada, Hong Kong and Australia.
PayPal currently operates a fully-owned subsidiary in Japan. The details of the transition to the new joint venture are still being decided, a spokesman said.
