As the shift to digital payment gathers momentum, big tech firms that have attached payment features to their traditional business are pushing to gain market share through acquisitions.
Alphabet, Google’s parent company, has agreed to buy Japanese payments firm, Pring. The startup’s three top shareholders – Metaps, software company Miroku Jyoho Service Co Ltd, and Nippon Gas Co – announced on Tuesday they would sell their combined 87% holding in Pring to Google.
Metaps said it is selling its 45% stake for 4.9 billion yen ($44 million).
Once the deal is completed, Google will offer FinTech services, including payments and transfers, across Japan by next year, mirroring similar offerings in the U.S. and India, according to the announcement.
Google’s entry into Japan marks an important shift for the country, which has been largely resistant to cashless payments, the report stated. Users of the pring app can make payments, cash transfers, and withdrawals on their mobile devices and laptops.
Google has operated its smartphone payments business – now called Google Pay – in Japan since 2016. Tech companies such as SoftBank Group Corp and Rakuten Group Inc as well as financial firms are encouraging Japanese consumers to move away from a deep-seated preference for cash. Japan has a rapidly growing market for cashless services as the Asian country has erased its early moves to transit to a cashless country.
Japan was home to one of the world’s first mobile commerce innovations with the DotCoMo mobile wallet all the way back in 2004, but the country remains a heavily cash-based economy, Darren Abrahamson, managing director of Bain Capital Tech Opportunities told PYMNTS in August.
“It’s just a very different cultural market,” Abrahamson said.
He said Japanese consumers have a well-established preference for managing transactions in cash, but Bain sees that coming to an “inflection point” where things could soon change for three reasons. First, Japan’s younger generation is becoming a larger part of the consumer economy and demanding a change to digital to match their tech-friendly habits. Second, massive political efforts have started to “bend the curve a little bit on this” by giving consumers rewards and cash rebates backed by the government for making cashless payments.
Abrahamson said the government is also giving merchants incentives to buy contactless terminals. He said some of those efforts stemmed from the Tokyo Olympics, “where they just wanted to have the ability to accept all forms of payments from all the tourists that were expected. And even though that has been shifted out a year, much of the push has been to catch up, frankly, with the rest of the developed world and certainly the other Asian economies in particular.”
The third main driver for Japan’s potential move to electronic payments has been the pandemic and the resulting loss of consumer appetite worldwide for handling cash.
Google’s acquisition of Pring is likely going to trigger more interest in Japan’s digital payment space. Other payment companies appear to be waiting for a sign for a change in Japanese people’s cash attitude to invade Japan.