SoftBank of Japan is gearing up to announce the launch of a mobile digital payment service in the country by the end of this year.
Bloomberg, citing people familiar with the matter, reported that the service will result from a partnership with Paytm, the India-based digital payments startup, and will rely on artificial intelligence. One of the sources told Bloomberg that dozens of workers from Paytm are in Japan getting the service ready for its launch.
SoftBank will be entering a crowded marketplace in which local banks and tech startups are rolling out digital payment services. Bloomberg pointed to Line, Japan’s largest instant messaging service, and the flea market app Mercari as two companies expanding into digital payments. It also has to contend with competition from PayPal, Ant Financial and Tencent, as well as Apple and Samsung Electronics.
Bloomberg reported that SoftBank wants the digital payment service to act as a launching pad to expand the company globally and to capitalize on the growing trend of consumers favoring digital payments over cash-based transactions. The idea is to expand into financial services, including lending and insurance, within the payment platform. The report noted that regulatory changes in Japan – slated to be instated in the next two years – are expected to drive increased adoption of digital payments.
In April, SoftBank announced it is investing $400 million in India’s Paytm E-Commerce Pvt. Ltd., which will bring the value of the online retailer to around $1.9 billion. SoftBank already owns a stake in Paytm’s parent company. It confirmed its investment in the online marketplace Paytm Mall, which competes with Amazon’s Indian unit, as well as local online retailer Flipkart.
“We believe Paytm Mall’s offline-to-online operating model, combined with the strength of the Paytm ecosystem, is uniquely positioned to enable India’s 15 million offline retail shops to participate in India’s eCommerce boom,” SoftBank said in a statement.