Taiwan’s Payment System Relies on PayPay for Trips to Japan
For Taiwanese travelers heading to Japan, “PayPay” is certainly a familiar term. Simply mentioning this word to the store staff allows customers to pay by scanning a code with their mobile phones. Cross-border payment options such as Jkopay, Allpay, E.SUN Wallet, and iPASS MONEY are all in cooperation with PayPay.
Actually, PayPay was established only in 2018 and is considered a latecomer in the Japanese payment market. However, it now boasts over 68 million users, with MMD Research Institute indicating that PayPay holds more than 66% market share in Japan. What enabled PayPay to rise rapidly and become a sought-after partner for overseas businesses?
Investing 10 Billion Yen in Cashback Campaign, Surpassing 5 Million Users in Just 2 Months
PayPay was jointly founded by the SoftBank Group and Yahoo! Japan, collaborating with India’s largest mobile payment company, Paytm, to launch its services in just three months. After its launch in October 2018, PayPay introduced a “10 Billion Yen Cashback Campaign,” anticipating that the cashback would last for four months, but it was exhausted within just 10 days.
According to a survey by the Japanese internet behavior analysis company VALUES, out of the 5.41 million users in December 2018, 4.89 million were newly registered during the campaign period.
For merchants, PayPay adopted a strategy of free installation and no transaction fees, making it more appealing for small and medium-sized businesses. Although PayPay began charging merchants a fee of 1.6% in October 2021, this fee remains lower compared to the 2.5% to 3.75% charged by credit card and other payment companies, thus still attractive for merchants. As of April 2025, the number of stores installed with PayPay has reached 10 million, making it the leading payment service in Japan.
Aiming for Non-Cash Payment Consumption Spaces, Creating Three Revenue Models
However, PayPay’s goals extend beyond payment services, aiming at all non-cash payment consumption scenarios. Its revenue currently comprises three parts: first is transaction fees, second is income from assisting merchants in profit generation, such as fees for issuing coupons; and third is the creation of a market centered around PayPay, providing services like credit cards, banking, and securities to enhance user engagement with the app.
The group also supports PayPay’s development. In 2019, SoftBank and South Korea’s NAVER jointly established Z Holdings, integrating the businesses of LINE and Yahoo! Japan to expand PayPay’s user base. LINE also terminated its LINE Pay service in Japan, concentrating resources on PayPay.
In 2020, SoftBank and Z Holdings consolidated six financial service companies and services under the “PayPay” brand, including renaming “Japan Net Bank” to “PayPay Bank” and “Yahoo! JAPAN Card” to “PayPay Card.” This approach has made it easier for users to recognize the brand and facilitated smoother connections between different services. After the renaming of Japan Net Bank, the number of personal account applications increased approximately 6.5 times within a week, and personal loan applications rose about threefold.
Collaborating with Overseas Payment Providers to Boost Overall Transaction Volume
In addition to consolidating its Japanese user base, PayPay has also increased its overall gross merchandise volume (GMV) by collaborating with overseas payment providers. Zhang Ting-Hsuan, Chief Business Officer of Jkopay, analyzed that PayPay has not charged higher transaction fees to merchants despite its high market share. Instead, it collaborates with foreign payment providers to enhance overall transaction volume, benefiting its revenue generation.
As for Jkopay’s cooperation with PayPay, the main reason is its high market share. Previously, Jkopay had to negotiate with Japanese merchants individually, which was less efficient. Collaborating with PayPay allows them to access numerous channels at once, and users only need to recognize the PayPay logo, reducing communication costs with users.
Today, PayPay’s total merchandise transaction volume continues to grow, from 10 trillion yen in 2023 to over 12 trillion yen in 2024. Through comprehensive strategies, PayPay’s consolidated revenue for the first half of fiscal 2024 reached 116.5 billion yen, a year-on-year increase of 17%.
This article is a cooperative reprint from: Manager’s Magazine
Reviewed by: Lin Ting-An
References: ORICON NEWS, CNET Japan, Business Insider Japan, PayPay, Reuters, Softbank, Mynavi, POS+, Self-operated Encyclopedia