PayPal Japan – PayPal SOFTBANK partnership

“PayPal Japan” a new joint venture between PayPal and SOFTBANK to build a digital payments business that will drive the future of commerce in Japan. The strategic partnership was announced in a presentation by Masayoshi Son, Chairman & CEO of Softbank and John Donahoe, President and CEO of eBay and David Marcus, President of PayPal. Hiroaki Kitano, a senior vice president and director of SOFTBANK MOBILE Corp., is expected to serve as the CEO of the joint venture.

The two companies are investing $25 million on a 50:50 basis in the new company and will each have three directors on the board.

PayPal and SOFTBANK also announced PayPal Here in Japan, the fifth country to receive this global mobile payment solution that is already available in the USA, Canada, Hong Kong and Australia. PayPal Here will enable millions of Japanese small businesses to accept credit/debit cards and PayPal payments through a smartphone.

eBay don’t have a great record in Japan having pulled out in 2002, trying again with an eBay/Yahoo! partnership in 2007, and currently eBay/GMarket in 2010. The current “eBay Japan” marketplace is branded Qoo10 in association with eBay.

For eBay to have a better record in Japan for payments than they had with marketplaces it’s essential that they partner with a Japanese company. SOFTBANK already have local market knowledge, 29 million mobile subscribers and a distribution network including thousands of retail outlets and sales staff across Japan. PayPal add the products and services to make payments work.

As an aside PayPal Here is now available in USA, Canada, Hong Kong, Japan and Australia but not anywhere in Europe. Could this be because payments are more advanced in the UK and EU and swiping a credit card is so passe? We need a Chip and PIN solution so PayPal will need to provide new solutions to meet the needs of European payments. It does seem strange that PayPal are handing out free swipe versions of PayPal Here around the world when even the US will soon move away from swiping credit cards and retailers will bear all losses from fraud if they continue to swipe cards. I’m guessing that PayPal will have an announcement soon for an EU payments solution as the market is simply too big to miss out on.