executive impact

PayPal faces many challenges in Japan

By Chris Betros

People who use PayPal on a regular basis see the value in it as a safe, easy way to pay and get paid online. The service allows anyone to pay in any way they prefer, including through credit cards, bank accounts or account balances, without sharing financial information.

PayPal has quickly become a global leader in online payment solutions with more than 157 million accounts worldwide. Available in 203 markets and over 100 currencies around the world, PayPal enables global ecommerce by making payments possible across different locations, currencies and languages.

But for many people, especially in Japan, there is still a lack of knowledge on what PayPal is all about, especially regarding security and convenience. That is the challenge facing PayPal Japan country manager Elena Wise and her team. Born in Australia, Wise took up her position in April 2013.

What is PayPal’s background in Japan?

We set up in Japan in 2010 as a cross-border market, the same as most of the other markets in the Asia-Pacific region, except Australia. Cross-border markets mean we don’t have a domestic license and consumers use PayPal to buy from overseas and merchants who want to sell to customers overseas. However, in mid-2012, we got our domestic license. That expanded the potential for us in Japan because it is one of the few markets in Asia where we can operate domestically.

When you came in 2013, what was your mission?

To grow the domestic business. We are still really a start-up in Japan and for the past two years we have been building a brand, as well as domestic consumer and merchant base.

How is the Japanese market different from other markets for PayPal?

Some localization is necessary in Japan. For example, we have to be conscious of the fact that cash is still a big part of the economy and that we need to operate in an environment where we recognize that. Another factor is that loyalty points are very important in Japan. We make sure people know that when they use PayPal with their credit card, they still get their credit card loyalty points.

For people who are still not sure about PayPal, what are the advantages of using it as a form of payment?

With credit cards, you’re leaving a digital footprint with merchants all over the Internet. You have to trust every single one of those merchants that they are keeping your credit card details secure, that they are PCI compliant, that those merchants aren’t going to get hacked. If you use PayPal, that’s not going to happen. You’re not leaving a digital footprint and we do not share your data with anyone else.

With bank transfers, again you’re leaving a digital footprint. When we add bank funding to PayPal, you’ll be able to use your bank account and we won’t be sharing those details with the merchant.

How are you marketing PayPal in Japan?

A lot of our marketing is about explaining the product. About 18 months ago, most Japanese didn’t know the name PayPal. Step 2 is to let them know what it is and what the value is in using PayPal. We use online tools like display ads and SEO, SEM to build our brand. And word of mouth is big.

One major strategy is that we have been doing campaigns with Café Nescafe, Brooks Coffee and Yamada Denki. Brooks Coffee has been a merchant of ours for quite some time because they do a lot of cross-border business. They opened a cafe in Harajuku and we decided to work together. That’s our business model. We build trusted relationships over time. People come into an environment they know and trust and then buy their coffee with their PayPal wallet.

What will you be doing this year?

One of our most exciting products is Mobile SDK, which enables businesses and startups to integrate payment into apps. That’s our future. It’s really for merchants who start up on a mobile device. They have apps, could be games or ticketing, and they want to have an easy payment method on mobile devices. Nobody wants to get out a credit card when they buying on a mobile device and have to key in all their details, shipping and billing address. Mobile SDK is a piece of software that integrates within a few hours into the merchants’ mobile app or mobile website. Consumers, if they have a PayPal account, just need to click PayPal, key in a PIN or password and then check out and that’s it. It’s a very quick and easy way to pay on a mobile. We plan to target mobile app-based startups in Japan like Mercari, Frill, Bento.jp and app services by existing large merchants.

The focus for us is merchants who have trouble getting accounts from banks because they are new and don’t have a transaction history. Also, they have the type of tech where they want an easy integration and quick mobile payments because we are seeing faster growth in mobile payments than growth on PC websites.

We will also be enabling you to add your bank account to a PayPal wallet. This app will let you move cash, not just use a credit card. It can store your credit cards, send and receive money. It can find and make purchases inside stores that use PayPal.

How competitive is the market in Japan?

Companies like Rakuten, Amazon and Yahoo are all marketplaces, whereas PayPal is a payment method. So they are not direct competitors per se. Consumers want to go to the one place they trust; they know those names and go there because they trust the name. This is a tough challenge for small businesses in Japan – how to get known and trusted by consumers. We know from our research that consumers are very concerned about spending directly on a small business website because they don’t know if they can trust it. We have to educate small businesses that if they accept PayPal, they have a trusted payment method for their consumers. They can build their business on their own without having to join up with those big names. And that’s how we’ve always done business overseas, helping small businesses set up on their own and we grow with them. That hasn’t happened yet in Japan.

How many consumers use PayPal in Japan?

We have about 1 million active consumers in Japan and growing in double digits. When you look at our strength or cross-border market, we have at least a 40% share of the big cross-border merchants who are using PayPal and selling to our consumers overseas. So if you’re a Japanese company wanting to sell overseas -- and many are -- they need to accept PayPal. Our merchants tell us that we are at least 40% of their checkout on the cross-border side. Ultimately, we’d like to replicate that on the domestic side.

How do you get feedback from consumers?

We have a call center. A lot of calls are from people asking for help in setting up an account. Others want to know more about PayPal. Merchants call about the processing of the transactions.

There is a lot of potential in Japan with the older generation. In rural areas where they don’t have the access to stores that they used to, we can create more equality if they can’t get around. We can help them to learn how to use PayPal to safely shop online and buy things trusting the payment side with us.

How do you think Apple Pay will affect your business?

My view on Apple Pay is that it is going to increase the pie. It will be competition for us, but I think that is good for everyone. Secondly, making mobile payments is still nascent around the world and all the players have struggled a little bit to get consumers to trust mobiles for payments. Apple Pay’s entry into the market will accelerate that and we are well-placed, sitting there with a device-agnostic product for mobile payments. It will change the way that merchants interact with consumers for all of us.

I should point out that we already work with Apple. Braintree, a unit within PayPal, accepts Apple Pay as one of their payment options on their v.zero SDK. Our Mobile SDK and PayPal wallet on the merchants’ side can be used on Android, Apple phones and on the web. It is a cloud-based wallet, so if you decide you want to change over from Apple iPhone to Samsung or other Android providers, you don’t have to change your payment method. You can still use PayPal on any of those devices. You can’t do that with Apple Pay, which locks you into Apple phones.

eBay, which owns PayPal, will spin off the business this year. What changes do you foresee?

It won’t impact us in Japan because we don’t have an eBay platform here. The spin-off enables us to invest a lot more in PayPal. Globally, the two companies will still be close. The synergies have been incredibly strong but the growth is in partnerships that are more divergent.

Tell us about your team.

Here we have 70 staff in sales and marketing, compliance, a product team that localizes products for Japanese market, communications, on-site operations team to take calls and an external call center.

What is your management style?

My goal is to build the Japanese team to be self-sufficient and run the business. I am the conduit between the U.S. and the Japan team. I tend to be more hands-on about coaching the team on how to think about the business and how to localize the product in Japan. I am also hands-on concerning the strategic side. I try to make sure we have good people who can interact with our customers and then empower them to make their own decisions with the merchants.

What is a typical day for you?

I show up around 8:30 a.m. I’m not a fan of big meetings and prefer to have one-on-one interactions with the team. I like to meet clients during the day. I probably finish around 7.

How do you like to relax?

I try and encourage a work-life balance among all the staff and that includes me. My husband and I love sailing whenever we go back to Sydney and this year we are planning to go sailing in Tokyo Bay. I am also keen on photography and if there is one thing Japan has, it is fantastic subjects for street and landscape photography.

For more information, visit www.paypal.com (global) or www.paypal.jp (Japan)

© Japan Today

©2022 GPlusMedia Inc.

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Well, she looks like the person for the job.

1 ( +2 / -1 )

Good to use when ya don't completely trust a vendor site.

4 ( +4 / -0 )

Pay WHAT ?...no thanks.

-8 ( +1 / -9 )

Their customer service here is excellent. In order to receive payments in Japan, I had to add my Japanese bank account information. It had to be in Japanese to match the account information on file at the bank exactly. Problem was, I can't read read Japanese, and my computer cannot input any of the three Japanese scripts. I contacted their customer service via chat and email. They took care of it for me. Not only that, they answered all my emails almost immediately. Thank you!

7 ( +9 / -2 )

Unless things have not changed, you cannot add funds to your PP account in Japan. You MUST use credit card. I guess she didn't want to mention the things you cannot do.

2 ( +5 / -3 )

Unless things have not changed, you cannot add funds to your PP account in Japan. You MUST use credit card.

This is probably due to money laundering regulations in other countries. Japan is fairly risky since banks don't have to report suspicious transactions.

A few years back there was a Russian businessman who was able to deposit $290 million in hundreds of sequentially numbered travellers cheques into a small local Japanese bank and nobody asked any questions. Paypay probably doesn't want to end up like HSBC.

3 ( +3 / -0 )

I tried to add another credit card. When I tried to add the new card, they put my other two cards in a holding state.. I could not use them to pay or get money. Totally ridiculous. It took six months for them to fix it.

0 ( +2 / -2 )

@ knowitall - I was able to receive payments in PP, and then transfer them to my bank account, without a credit card.

2 ( +2 / -0 )

I was able to receive payments in PP, and then transfer them to my bank account, without a credit card.

Yes, but you can't do it the other way around - transfer funds from your bank account to this company (JT's swear filter won't let me use the company name).

But I believe this is because of Japanese laws, not (JT's swear filter won't let me use the company name).

1 ( +1 / -0 )

Been using it for a few years now. Not one problem. Safe and hassle-free.

0 ( +0 / -0 )

@ sensei258, I had a problem putting in my name in Katakana into the signup form, a few years ago when I needed to received some money through PP, it would not recognise one character combination which happened to be included in my name. So after trying to get the bug fixed at PP un-successfully I went back to my bank and told them I wanted to make the spelling different for the name of my account so I could get the money through, they relented and let me change the katakana slightly. After I got the money I got the correct name back and it was the last time I used the PP service in Japan.

0 ( +1 / -1 )

One problem I had in Japan was in creating a new account. As soon as I went to the account creation (or possibly another related, but just as important page), their site changed from English to Japanese (with no option to change the language).

I then had to contact the American Helpline, and after suffering the awful robot voice system, I cancelled my account shortly after creating it.

They REALLY need to fix their language/location system.

1 ( +1 / -0 )

Banks have never heard of PP, trying to get money out of PP to your bank account in any large amounts is next to impossible.

0 ( +0 / -0 )

There is not many stores and business that accept these way of payment.... although I admit that by "stores and business" I mean, restaurants and izakaya mostly... and I also admit I don't frequent as much those shops and business that aim for the "new and the cool" that could be more inclined to adopt the PP system

So maybe my almost non-existent use of PP is because of my lifestyle... but still I really would like to use it more frequently (I have the app in my phone ready to use...)

0 ( +0 / -0 )

Paypal will continue to have problems in Japan until to issues are overcome. First, not many banks in Japan will accept payments through PayPal. Second, Japanese banking regulations (the most obtuse and primitive in the world) prevent PayPal customers from transferring their money to their PayPal accounts. Third, linking credit cards to your Japanese PayPal account is difficult, and confirming them even more so, mainly because Japan is two decades behind the rest of the world when it comes to online credit card and bank account access.

PayPal is a 21st century financial service, while Japan still remains stuck in the 20th century when it comes to banking and finance.

0 ( +1 / -1 )

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