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Alibaba eyes Japan’s e-payment market

Posted August. 17, 2017 07:36,   

Updated August. 17, 2017 08:02


An information technology (IT) companies in China, a powerhouse in electronic payment, is seeking to make forays into Japan, where cash is still the most preferred means of payment. Japan appears to fear losing the initiative in the IT services to China after the manufacturing industries.

Japanese business daily Nihon Keizai Shimbun reported Wednesday that China’s e-commerce giant Alibaba Group Holding will start electronic payment services via smartphones in spring 2018 at the earliest. The daily said that Alibaba aims to have 10 million Japanese users within three years after launch, potentially serving as a catalyst for an explosive growth in Japan’s electronic settlement market.

China has the largest penetration of the use of mobile payment platforms in the world. It is common to see Chinese consumers to make payments using Alibaba’s mobile payment service Alipay or WeChat’s WeChat Pay. When QR codes are scanned for cash transfers, payments are made automatically from the users’ bank accounts.

By contrast, cash payments are still the most preferred payment method in Japan, where non-cash payment accounts for just 20 percent of total transactions. According to a survey last year by the Bank of Japan, just 6 percent of Japanese people used a mobile payment service. The slow transition to electronic payment is attributable to Japan’s high proportion of senior citizens, the deep-rooted preference to cash transactions and concerns of leakages of private information. The Japanese government aims to increase non-cash settlements to up to 40 percent of total transactions by 2027, but it remains unclear whether Tokyo can achieve the goal.

Alibaba plans to begin its electronic payment services with a new brand while maintaining the QR code scanning system. Particularly, the Chinese company plans to expand users by allowing customers to make payments freely in both China and Japan. The new services will focus on Alibaba’s existing partners such as convenient stores and department stores. Alibaba plans to increase the number of affiliated shops from 30,000 to 50,000 by the end of this year.

Won-Jae Jang peacechaos@donga.com