Japan’s internet giants team up as mobile payments race intensifies

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Line Corp. and Mercari Inc. are joining forces on mobile payments as the nation’s internet companies race to dominate cashless transactions in the world’s No. 3 economy. The operator of Japan’s most popular messaging platform and the used-goods online marketplace app will let users shop and pay for purchases at stores that accept each other’s systems, they told reporters in Tokyo on Wednesday. They also launched an alliance to welcome other mobile payment providers.

After years of inactivity, mobile payments competition is heating up in Japan. Line and Mercari are teaming up to take on powerful rivals: E-commerce giant Rakuten Inc. runs its own bank, has a credit card with more than 15 million customers and is building a mobile-phone network, while PayPay — backed by SoftBank Group Corp., Yahoo Japan Corp. and India’s Paytm — sparked a shopping frenzy in December by giving users ¥10 billion ($90 million) in rebates on purchases.

“Competition has heated up, with SoftBank, Rakuten, and Mercari aggressively promoting their own payment services,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors PTE, said in a note to clients prior to the announcement.

While Rakuten and Line had a head start in payments, Mercari is a latecomer, and none of their rivals have managed to secure an insurmountable lead. Two of the country’s biggest convenience store chains Lawson and Family Mart already accept most competing payment methods, on top of an assortment of e-money and transit cards. The same is true for fast-food operator Matsuya Foods, electronics store Bic Camera and pharmacy chain Tomod’s.

They have also turned to discounts and giveaways to lure users. PayPal is running its second rebate campaign, while Rakuten customers can earn 40 times the points typically awarded on purchases. All three leading players offer users a chance to get back as much 20 percent from purchase values. Line has bet that partnerships with financial institutions will help it get ahead of the competition. The company plans to introduce Line Securities equities trading with the country’s biggest brokerage, Nomura Holdings Inc., this year, provided it receives the necessary permits. And a banking offering in partnership with Mizuho Financial Group Inc. could become available as early as fall 2020. In November, Line announced an alliance with China’s Tencent Holdings Ltd. and its WeChat Pay, aimed at Chinese visitors to Japan.

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