CardLinx: Mobile Payments Battle Royale Shaping Up in Japan

November 5, 2018         By: Steven Anderson

When people think of Japan, they commonly think of one of the world’s technological leaders. Yet it’s also oddly laggard on several points of technology; the fax machine is still a big deal there. It’s also been behind on mobile payments, and now, that may be about to change as four companies take aim at the market.

A new report from the CardLinx Association sent our way suggests that four firms—Yahoo Japan, Alipay, Line and Amazon Pay—are all barreling down on the Japanese mobile payments market like big rubbery monsters stomping toward Tokyo. In fact, the CardLinx report posits that each of the firms is planning to focus on the same mobile payments technology, the quick response (QR) code.

Right now, Yahoo Japan has something of the lead here, as it was the first such digital wallet system in play in the country as of May 2018.  Moreover, Yahoo Japan is poised to partner with Paytm to bring PayPay to the Japanese market as Yahoo! Wallet will be discontinued. Since Paytm is also backed by Alipay, that will give the Chinese firm a foothold—if an indirect one—in the Japanese market.

Line, as the hometown hero, is a social network with around 164 million users to its credit, and it’s poised to bring a mobile payments system forward like so many other social media systems before it have done. Just recently, it announced a QR code reader set to work with Line Pay.

Amazon Pay, meanwhile, announced an entry just last month with a smartphone app and QR code system to match. That makes it the newest entry into an increasingly crowded field.

Smartphones have only recently caught on in Japan; the penetration rate cleared 70 percent back in 2015. So a QR code system for mobile payments should be particularly useful here as it can also be used with more standard feature phones.  So many competitors in the field help ensure that the market really is valid—all these players would not be in place if there weren’t at least a potential market—but cultural issues may play a part, especially considering Yahoo Japan’s Chinese connection.

Only time will tell how it all shakes out, but the Japanese mobile payment market may be much more than theoretical, and soon.