TOKYO, Japan — Google’s debut into fintech services in Japan has the potential to radically alter the smartphone payment market, putting PayPay and other prominent cashless payment businesses under pressure after issuing large refunds. Leading financial firms are being compelled to rethink their strategies as boundaries between finance and other sectors fall. Pring, a Tokyo-based cashless payment and settlement firm owned by Metaps, Mizuho Bank, and others, is in final talks to be purchased by Google. Metaps is a Tokyo-based IT firm best recognized for its artificial intelligence-based app monetization platform. In Japan, Google Pay is already accessible, but the smartphone payment service lacks a dedicated pay function. To utilize it, customers must first register their credit cards, electronic wallets, or other payment methods. The number of Google Pay customers in Japan has not been released, and the service has a lesser profile than leading cashless payment providers like PayPay, which has over 40 million registered users. By acquiring Pring, a remittance company that is not a bank, Google Pay will be able to link to bank accounts and offer its own remittance and payment services. With the advent of internet and telecom firms, Japan’s smartphone payment sector has risen quickly from around 2018. According to the Payments Japan Association, national cashless payment transactions utilizing QR codes reached a record 4.2 trillion yen ($38.2 billion) in 2020, quadrupling year on year. Cashless transactions had an annual turnover of 61 trillion yen, which was lower than credit cards but greater than debit cards (2 trillion yen) and nearing electronic money’s 6 trillion yen. PayPay and Rakuten Pay, for example, strive to entice clients to use their other services, particularly e-commerce. Customers are given different bonus points for equivalent smartphone payment services, making redemption programs difficult to understand. Some points are only redeemable for specific services, while others are not redeemable. In Japan, cashless payment businesses compete for clients by offering huge refunds. There were originally 20 of these businesses, but internet giants have pushed for consolidation. Origami, a failing cashless payments business, was acquired by Mercari, the creator of a flea market app, in January of last year. PayPay, Japan’s largest QR code payment provider, reported a 72.6 billion yen operational deficit in the fiscal year that ended in March. Profitability will remain elusive if refund-based marketing persists. In Japan, Google already has tens of millions of users, and its foray into the payments business would just add to the heat. Google Pay will be available for international usage in Japan, according to the business. Users in the United States can already send money to India and Singapore. Pring does not have a large client base or a well-known brand, but according to Nikkei, Google was pleased by its “open service design and distinctive method of carrying out business for a wide range of enterprises.” The company’s remittance app is user-friendly and well-liked by service providers. To complement its other services and technology, Google uses cashless payments. In the United States, Google Pay features a feature that recommends products and advantages to customers based on their preferences. Google has the ability to combine services in ways that its Japanese competitors do not. It can, for example, use Google Maps to display nearby restaurant locations and place preorders. Google Pay is already posing a threat to India’s largest online payments provider, Paytm. It surpasses Paytm’s 11 percent of transactions in India’s small-payment infrastructure with 35 percent. Paytm, which has 150 million monthly customers, lost 17 billion rupees ($228 million) last year. Legacy financial organizations must rethink their tie-up strategy as more financial services become digital. In the United States, Google has worked with Citigroup, and in Singapore, it has partnered with Oversea-Chinese Banking Corp. However, in Japan, where alliances can include more than two corporations, flexibility is necessary./n
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