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SoftBank and PayPal form PayPal Japan, bringing smartphone-based credit card payments to the country

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Softbank and PayPal are forming a 50-50 joint venture, PayPal Japan, to bring Smartphone-based credit card payments to the country.


At a press conference in Tokyo, SoftBank’s CEO Masayoshi Son announced that the company is forming a 50-50 joint venture with PayPal worth two billion yen (about $25 million) to bring its online and smartphone-based payment systems to Japan. The newly-formed company will make Japan the first non-launch country to offer PayPal Here, and only the fifth worldwide. The service allows a user to turn his or her smartphone into a credit card reader by attaching an extra dongle to the device. Also, while PayPal's widespread online service is already available in Japan, it isn't accepted at the country's online storefronts — something PayPal Japan aims to remedy.

Credit card use in Japan is lower than in the United States, and people frequently rely on cash even for purchases costing hundreds of thousands of yen (thousands of dollars). SoftBank’s CEO believes that smartphones will allow card-based payments to spread, particularly in small- and medium-sized businesses, where the cost of implementing conventional credit card systems can be an obstacle to adoption. PayPal Japan plans to begin tests of PayPal Here in stores tomorrow (May 10th), and start the actual rollout in July.

Japan is ahead of the curve in terms of NFC-based payments, with FeliCa-based systems in widespread use both in the form of cards (Suica, Pasmo, Edy), and in phones under the name Osaifu Keitai, or "wallet phone." At the press conference, SoftBank’s CEO criticized Osaifu Keitai for the difficulty involved in moving balances around, adding "the reality of the situation is that it isn’t in very broad use. In five or ten years, people will say Osaifu Keitai was a transitory business model."