Softbank and PayPal to Form Joint Venture, Brings Card Reader to Smartphone Users

Japanese mobile carrier Softbank (TYO:9984) has just announced that it will form a joint venture with online payments solution PayPal. The joint venture, ‘PayPal Japan,’ is aiming to “revolutionize digital payments in Japan.” The two companies will both invest 1 billion yen each ($12.5 million), and Hiroaki Kitano [1] will serve as the CEO of the joint venture.

As reported a few weeks back, PayPal Here implements a card reader that can be attached to smartphones via the audio jack. And this will be coming to Japan as well, making this the fifth country to receive this payment solution [2]. The card reader add-on itself will retail for 1200 yen, or about $15. David Marcus, the president of Paypal, noted in the announcement:

We are very excited to support the growth of small businesses and empower anyone to be an entrepreneur with the launch of PayPal Here in Japan, one of the most advanced mobile markets in the world yet one where cash is still used for many transactions. […] By partnering with a fast-growing mobile Internet leader like Softbank, we can bring our innovative, secure online and mobile payment solutions to market faster and at greater scale across Japan.

Marcus also noted that they are working on support for JCB cards as well, but don’t have any expected date just yet.

During the press conference, Softbank’s Masayoshi Son explained that he visited eBay (NASQAQ:EBAY) two months ago, and they discussed the possibility of a partnership. At that time PayPal shared its plans for PayPal Here, which had not yet launched at that time. Son pointed out that Softbank and eBay have been competitors in the past in both Japan and China, and grew to respect them as a competitor.

Son says that with many other competing mobile payments that there are often a number of problems, like repeatedly having to top up, or complications when you change to a new handset. Most of these are used for smaller payments, whereas he says that PayPal can be used for payments large and small. He hopes that in five or ten years from now, we Japanese consumers won’t have to carry a wallet anymore.

Softbank currently has 29 million mobile subscribers in Japan.