Why trust is key to digital payments in Japan


There is a tendency to associate cash consumers with developing economies and the world’s unbanked population.

The cash client, according to conventional wisdom, does not use the money out of desire but out of necessity, and having afforded himself something better through the transformative power of technology to digitize his funds, he will gladly jump on it.

And while this pattern may be true across much of the world, it doesn’t work very well to describe Japan, where the vast majority of consumers have bank accounts in one of the world’s most developed and regulated banking systems. and still demonstrate an overwhelming cultural preference for using cash to pay.

This preference, Paying Founder and CEO Russell cummer said in a conversation with Karen Webster, this means that e-commerce has grown relatively slowly in Japan compared to the rest of the world, because there is so much friction, or what the Japanese call mendokusai, associated with the transactions of e-commerce. Consumers are either forced to wait at home for a few hours to be able to pay the delivery guy for their purchase, or they have to run to a physical store to provide the money and pay so they can reconnect, prove it, and complete. actually their transactions online.

Either way, Cummer said, it’s a lot of unnecessary friction and more difficult than it should be, and something Paidy is based on a solution in the Japanese market. And not by asking consumers to do something different, he said, but by meeting them where they are with their cash payment preferences and offering them a reliable way to make money compatible. with instant online payment.

“We just see all of these other things that are super mendokusai, and we see an opportunity to either build something new to address it or adapt our existing product that fixes it,” he said.

A bridge to digital that is not a bridge too far

Broken down most simply, Paidy provides an easily accessible digital payment method for Japanese customers that allows them to make a one-click payment through Paidy – then go to a convenience store or other physical location, present a QR code to quick scan and hand over the money for that payment. They can pay everything at once or in several pre-defined installments.

Paydy is not trying to give Japanese customers a product that looks like a traditional credit product, he said, because what his customers have made clear is that they don’t want a product. traditional credit; they want an easier way to shop online without having to use one.

Additionally, Cummer said, as Paidy has grown to 5 million regular active users, its ambitions have broadened in terms of what it brings to its customer base.

“We see that there is a role for us to play, which is making people more and more comfortable with the digital commerce business by bringing things like subscriptions for digital goods and instant purchases into the world. terms of e-commerce and mobile commerce without having to use a payment method. method that’s kind of a bridge too far for some people, ”Cummer said. “Because we let consumers do exactly what they want. “

Consumers manage their budgets and pay cash in ways they have been strongly shown to prefer, while Paidy facilitates a scale of consolidation that allows them to make digital and instant transactions in over half a million. of digital destinations.

Confidence is the secret to building confidence

Paidy aims to provide a different and radically improved business experience for its customers, but the company was still something new when it entered the market 12 years ago in a conservative business culture known to be reluctant to embrace new ones. payment ideas. Webster wondered how Paidy gained the trust of Japanese consumers.

Cummer said the answer is simple but a bit surprising. Payy created trust by offering it to consumers. Getting a card account in Japan can be incredibly difficult, he noted, in part because of the very strict Know Your Customer (KYC) rules under which Japanese banks operate, in part because of a attitude that trust can only be extended to those who have a proven track record. worthy of it. Widely.

Paydy, he said, only asks consumers for a Japanese phone number, and then they’re ready to make a purchase right off the bat, more or less. Obviously, as a payments business, security is the number one priority, and all this upfront ease of use requires a lot of smart security behind the scenes to prevent scammers from trying to take advantage of their nature. confident.

“For us, you don’t do anything,” he said. ” We trust you. We do all the hard work. We want to trust you, so we do. And then you start that relationship with trust, and people are overjoyed. Building on trust has been a huge differentiator, not only in terms of the consumer experience, but also this relationship with the consumer and how it has changed over time. “

An improvement, not a disruption

Paidy’s goal is not to disrupt traditional finance in Japan – a fact that the number of banks on its investor board gives a line. Paidy is grateful to banks, the services and stability they provide and the financial services ecosystem in which they allow Paidy to exist. He said the goal is not to disrupt banks, but to increase what they can offer consumers looking for a better, easier way to do digital transactions.

“I don’t think we’re a disruptor,” Cummer said. “I think we are definitely a facilitator for merchant partners, certainly for consumers. And if there’s a role we can play in the ecosystem to get things done and inspire others to improve their consumption experiences as well, I think that’s great. I would be extremely happy as a founder if that was part of what we were doing.



About the study: U.S. consumers see cryptocurrency as more than just a store of value: 46 million plans say they plan to use it to make payments for everything from financial services to groceries. In the Cryptocurrency Payments Report, PYMNTS surveys 8,008 cryptocurrency users and non-users in the United States to examine how they plan to use crypto to make purchases, what crypto they plan to buy. ‘use – and how merchant acceptance can influence merchant choice and consumer spending.


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