Google’s parent company Alphabet plans to buy the Japanese fintech Pring to strengthen its digital banking services. This move will give the company a foothold into Japan’s growing financial sector.
Google is set to pay between $180 million to $270 million for all the shares of Mizuho Bank and several investors in Pring.
Google plans to provide fintech services including payments and transfers across Japan next year. It mirrors the services provided by the company in the U.S and India.
Google Pay is present in Japan through partner banks and credit card lenders. The new acquisition will allow the company to work independently.
Google is operating its payment service Google pay since 2015 covering 40 countries including Japan. The company has over 150 million monthly users and plans to partner with 11 financial organisations including Citigroup to offer banking services this year.
The cashless payment method in Japan has been slow compared to other countries that have many available payment methods. Japan’s share of cashless payments was just 30% in 2020. The slow shift in cashless payments suggests that the market has plenty of room for expansion. The entry of Google into the market will increase the competition.
Darren Abrahamson, managing director at Bain Capital said Japan was once home to one of the world’s first mobile commerce platforms in collaboration with DoCoMo in 2004, but the country remains heavily drawn towards cash-based transactions.
“It’s just a very different cultural market,” he added.
He said the government is investing heavily in digital payment methods by providing incentives to merchants so they can buy contactless terminals. Some of these efforts began from the Tokyo Olympics, “where they just wanted to have the ability to accept all forms of payments from the tourists. Even though it has been shifted out a year, much of the push has been to catch up, with the rest of the developed world and certainly the other Asian economies in particular”.
Pring partners with 50 Japanese banks and 450 companies
The 50 Japanese banks including three megabanks, in association with the 7-Eleven chain of stores along with 450 companies process their payments on Pring’s platform. Pring provides payments, cash transfers, and withdrawals via smartphones and computers. It gives fintech an edge over the cashless payment service.
COVID-19 has accelerated the digital transformation of various Japanese organisations and people are drawn to utilise cashless payment services.
Google will compete with PayPay, which is a unit of SoftBank Group and e-commerce company Rakuten. Both organisations have established a market for customers where they can access a broad range of services such as e-commerce shopping, internet access, and other financial services.
This new acquisition is the latest example of various technology companies utilising strong online presence to their full potential and bringing out one-stop shops for services including e-commerce options.