TOKYO - Japan is known for its extremes—a country where having among the world’s fastest internet speeds hasn’t cancelled out the fax machine. Similarly, it’s a pioneer in the mobile payments space, where cash is ultimately still king and credit-card penetration rests at around 15 percent. Japan is still nowhere to be found among the world’s leading countries for contactless purchasing. According to a 2015 study by NFC World, Australia, Singapore and Taiwan have the highest rate of adoption.
Origami Pay is a homegrown service that aims to take things to a new level by capitalising on Japan’s high smartphone penetration. Origami (the parent company of Origami Pay) started out in 2012 as an ecommerce platform. Origami Pay evolved gradually as a system that blurs ecommerce and epayment.
Having launched officially in May, it aims to set itself apart from existing domestic services from the likes of NTT DoCoMo and Sony, and Apple Pay—which has just made a shaky Japan debut—by reducing costs for both retailers and consumers. Origami Pay promises to simplify the transfer of money and reduce credit card transaction fees for stores, and offer price reductions and promotions for buyers.
How? It all hinges on data, and the shortcomings of loyalty cards. Origami’s founder, Yoshiki Yasui, says existing CRM programmes are an inefficient way of obtaining the customer information that merchants all want access to. Not only do relatively few people actually sign up for ‘stamp card’ type programmes, but the actionable information they provide as a result is quite limited, Yasui says. Connecting bricks-and-mortar retailers via an online payment system with individual user identities stands to change things dramatically by generating a lot more data and making it easier to offer relevant information or incentives to the consumer.
“We have built a platform which allows retailers to pick up valuable in-store data which we allow retailers to use for marketing and CRM,”
Yasui says. He explains that Origami Pay plans to enable companies to provide “marketing solutions” within its network. While this facility is not yet available, it is currently in the testing phase with several merchants.
Yasui does not disclose the number of users in Japan, but the service already has a number of major retailers on board, ranging from high-end department stores such as Hankyu to individual design labels such as Todd Snyder, Toms and Alessi. The goal now is to secure relationships with as many large merchants as possible, Yasui says. He notes that retailers have been much more open to change than expected.
The company is also open to the possibility of collaboration with outside operators in the payments space. “It could be nice to work with some Chinese payment platforms,” says Yasui. Given that Chinese consumers, including inbound travellers to Japan, are reluctant to use credit cards due to security concerns, Origami sees an opportunity to simplify payments for tourists.
Of course, Origami Pay’s first priority is to establish itself as a leading payment brand in Japan. Real scale will take time to build, given that Japan is still the most cash-based of all developed economies. But Yasui says international expansion is on the cards. Indeed, one of his motivations for becoming an entrepreneur was to create an innovative Japanese company at a time when the world was asking why Japanese innovation had fallen off a cliff. Yasui is unable to give a timeline for overseas movement, but says simply “we’re interested in Asia and the US”.
Origami Pay’s prospects are promising. But speaking more generally from his perspective as an entrepreneur, Yasui expresses frustration with the Japanese system. He dismisses the notion that language barriers or lack of entrepreneurial vision are a problem in Japan. Instead, he says, it’s all down to a lack of resources. Funding for startups in Japan amounted to a trifling US$1 billion last year; in the US, it was more than 70 times that.
For Japan’s tech industry to move forward requires the support of existing large corporations, he says. At the moment, “they just want to carry cash. If that changes and they start to believe in open innovation—that it could help their business to invest in smaller companies including startups, then I believe there’s a chance for the entire ecosystem to change. But without that, even if you have a great team and a great idea, it’s going to be tough for them to compete with companies in China or the US that have raised more than 100 times what they have.”
This article is also available in Japanese on Campaign Japan: 日本のモバイル決済市場を変革できるか ― Origami Pay