April 17, 2014 5:55 am JST

Rakuten Edy service turns smartphones into card readers

TOKYO -- A subsidiary of Japanese e-commerce giant Rakuten will soon launch a service allowing retailers to process electronic payments using smartphones without the need for a separate card-reading device.

     Rakuten Edy will initially deploy the service Friday at the Rakuten Kobo baseball stadium in Sendai, Miyagi Prefecture, for patrons to buy beer. While smartphones can already be made to process card payments by attaching a peripheral, this will mark the first time in Japan that the phone itself is the card reader.

     The system was designed by Toppan Forms subsidiary TF Payment Service. It is supported by Android smartphones using Sony near-field-communication technology and requires downloading an application.

     Rakuten Edy aims to eventually capture demand from outdoor vendors and delivery service companies. Businesses will have to register but not pay a monthly fee, instead being charged based on the value of transactions.

     The company is known for its prepaid contactless smartcards and is Japan's top player in the field, with 81 million issued. But Rakuten Edy is No. 4 in transaction volume, with 30 million payments a month, since many cards with the function are credit cards or employee IDs. With the new service, the company aims to enable use of its cards in more places.