Online-payment company PayPal and Japanese telecom and Internet firm Softbank announced this evening a joint venture, PayPal Japan, meant to create "the premier digital wallet for online, mobile, and offline transactions" in the Asian country -- one of the world's largest economies.
As a first step, the companies said Japan would be the fifth nation to get PayPal Here, a Square-like service that lets small businesses accept credit and debit card transactions -- and PayPal payments -- through a smartphone.
Like Square, PayPal Here is a free service that involves a small credit card reader merchants can plug in to a smartphone's headphone jack. PayPal Here charges 2.7 percent to make a transaction, compared with the 2.75 percent Square charges. And merchants receive a debit card that gives them 1 percent cash back, knocking the transaction price down to 1.7 percent. In addition, Square is currently available only in the U.S.
A report last month said the hot, 3-year old Square company was seeking an additional funding round at a valuation of $4 billion.
PayPal and Softbank said they're each contributing about $12.5 million to PayPal Japan and that Softbank Mobile Senior Vice President Hiroaki Kitano is expected to helm the venture.
"Even though Japan is the most advanced mobile market in the world, and there are over 300 million credit cards in circulation here, it's still largely a cash-based economy," PayPal President David Marcus wrote in a blog post. "Together with Softbank, we can change all that and open up new commerce opportunities for the nearly 5 million small businesses that form the backbone of the Japanese economy."
In a press release, PayPal touted the pairing of its "global online and mobile payment solutions with 110 million active accounts in 190 markets and 25 currencies" with Softbank's "local market knowledge, 29 million mobile subscribers, and vast distribution network including thousands of retail outlets and sales staff across Japan."