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Business trends

FamilyMart joins chase for Japan's cashless purses

Japan's convenience chains gear up to battle internet giants Alibaba and Apple

FamilyMart's cashless payments system will operate through a smartphone app. No plastic cards will be issued.

TOKYO -- Japanese convenience store chain FamilyMart will introduce an app-based proprietary mobile payment service in July.

Famipay will be available at the chain's 17,000 convenience stores throughout Japan. Customers pay by displaying a QR code for cashiers to scan.

It will be the latest in a host of services that attempt to encourage Japanese customers to shift toward a cashless economy.

The penetration of cashless payments hovers around 20% of transactions in Japan, including credit card payments. This figure pales in comparison with South Korea's 90% and China's 60%. The Japanese government says it aims to raise the total to 40% by 2025.

Such expansion depends on the spread of QR codes, which can be read by a simple mobile device installed at stores. Traditionally, Japan's front-runners in cashless payments, such as the prepaid smart card Suica issued by East Japan Railway, have relied on contactless payment, based on embedded chips and antennas.

But those card readers may cost $500 to $1,000, discouraging store owners from using them. The rise of QR codes and bar codes is expected to allow for cheaper installment of an electronic payment system.

To use Famipay, customers will need to download an app that displays the QR codes. Users can add money to their accounts by paying a FamilyMart cashier. They also can link their accounts to a credit card, but no plastic will be issued.

While promoting easier shopping through mobile payments, Famipay also lets FamilyMart track customer purchases, which aids in product development.

Cashless payment systems are being pushed aggressively worldwide, mostly by internet companies like Apple, Japan's Line and Singapore's Grab. China's two major digital payment methods, the Alibaba Group Holding-affiliated Alipay and Tencent Holdings' WeChat Pay, are both based on QR codes.

Now, banks and other businesses are entering the field. FamilyMart rival Seven-Eleven Japan plans to introduce a similar service in the summer.

FamilyMart's cashless system was developed by a joint venture between FamilyMart Uny Holdings and parent company Itochu. It will be introduced via an update to FamilyMart's existing smartphone app, now used to issue coupons.

That app has been downloaded 2 million times, a number FamilyMart hopes to raise to 10 million.

FamilyMart also wants the payments app to be usable at discount retailer Don Quijote, a tie-up partner.

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