PayPal forms Japanese JV with Softbank

PayPal forms Japanese JV with Softbank

PayPal has formed a joint venture with Japan's leading Internet company Softbank as it bids to finally crack the country's digital payments market, kicking off with the launch of PayPal Here.

The firms have committed $12.5 million each to PayPal Japan which will be led by Softbank SVP Hiroaki Kitano, with a board of six directors evenly split.

PayPal has struggled to become a major player in the Japanese market, in part because its parent eBay quit the country a decade ago in the face of competition from Yahoo Japan - owned by new partner Softbank.

The new approach - PayPal's first JV - sees the company tap in to Softbank's local market knowledge, 29 million mobile subscribers and vast distribution network including thousands of retail outlets and sales staff across Japan.

The pair say that they expect to "revolutionise the Japanese retail commerce market" worth $1.7 trillion in 2011, and support the growth of 4.7 million small businesses, which account for 99% of all businesses and 70% of all employment in the country.

The JV's first move is to launch PayPal Here, the new dongle and app combo that allows users to accept card payments with their mobile phones, in Japan, a nation where more than 31 million smartphones are expected to be shipped this year.

In addition, an updated Japanese version of the PayPal Mobile app for iPhone has been made available. Users in Japan will be able to use the 'local' feature on the app to find nearby Japanese businesses that accept PayPal Here.

John Donahoe, president and CEO, eBay, says: "Our Softbank partnership and launch of PayPal Here will make it easier for millions of merchants in Japan to grow their businesses and for consumers to easily pay anytime, anywhere. We believe shopping and paying should be easy, and we're excited to partner with Softbank to bring payments innovation to Japan and revolutionise commerce."

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