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Business trends

Japan mobile pay companies seek international partners

South Korean and Chinese tie-ups aim to lure tourism-focused merchants

PayPay has signed up more than 8 million users and about 700,000 merchants in Japan. (Photo by Shihoko Nakaoka)

TOKYO -- Japanese mobile payment services are teaming with counterparts in South Korea and China as a way to lure local merchants who seek to tap revenue streams from a surge in tourists from those countries.

SoftBank Group unit PayPay will partner with KakaoPay, allowing users of the South Korean app to pay at PayPay stores and restaurants without signing up for the Japanese service. KakaoPay, a subsidiary of internet company Kakao, will update its app so it can read PayPay's QR code at merchants as early as October.

Typically, QR payment codes are app-specific.

PayPay, which also has a similar arrangement with Alibaba Group Holding unit Alipay, has signed up more than 8 million people and about 700,000 merchants in Japan. KakaoPay boasts some 23 million users, mostly in South Korea.

The focus on tourists comes as Japan prepares to host the 2020 Tokyo Olympic Games next summer. It also comes during a wider push by the Japanese government to encourage wireless payments in the country. Japan ranks lower than its Asian peers in the rate of cashless transactions, and is hurrying to make itself friendlier to financial technology startups.

Japanese chat app operator Line made changes to its mobile wallet platform in June so that Line Pay merchants can take payments via Naver Pay, a service by operated by South Korean parent company Naver. As early as this year, Line Pay stores will also start accommodating customers of WeChat Pay, offered by Chinese Internet powerhouse Tencent Holdings, as well as Line Pay users from Thailand, Taiwan and Indonesia.

Line also has a separate partnership with Payco, a platform by a unit of South Korean Internet company NHN, that allows customers of the two services to make payments in both countries. Payco serves more than 9 million customers with a network of 140,000 merchants.

Not only is Line Pay looking to expand its reach, but it is also preparing to add more services, said Hisahiro Chofuku, Line Pay's chief operating officer.

"We want to link overseas payment services through the Line Pay platform so that we can offer a cross-border remittance service," he said.

Mobile wallet services in Japan are waging a price war to gain new merchants and users, slashing fees and enhancing member rewards, in a crowded market with some two dozen players. PayPay and Line hope deals with international platforms will help distinguish themselves and entice retailers looking to become more tourist friendly to join their networks.

International visitors spent an aggregate 4.51 trillion yen ($41.5 billion) in Japan in 2018, up 2% on the year, according to the Japan Tourism Agency. Travelers from China and South Korea, the top two countries in terms of visitors, were responsible for nearly half of that spending.

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