Will crypto payments be a part of the new Rakuten ecosystem?

At an earnings briefing held on February 12, Rakuten, Inc. (TSE: 4755) announced a plan to update its Rakuten Pay App on March 18. The update will consolidate all of Rakuten’s electronic points and money, namely Rakuten Points, Rakuten Cash, Rakuten Edy, and Rakuten Pay, into one platform. Rakuten also announced a new corporate structure that is driving expectations for cryptocurrency payments in the future.

In August 2018, Rakuten entered the cryptocurrency business by acquiring all of the shares of the cryptocurrency exchange Everybody’s Bitcoin Inc. through its consolidated subsidiary Rakuten Card Co., Ltd. Whether or not cryptocurrency payments will be included in any updates of Rakuten Pay, which controls various cashless payments, including electronic points and money, barcode & QR code payment, and credit cards, is the topic of much speculation in Japan – driven in no small part by the company’s expansion plans and pro-crypto stance.

For example, the Japan Association of New Economy, where Mr. Mikitani serves as Representative Director, issued requests for new regulations on crypto assets to the Minister of State for Financial Services on February 14, calling for laws and regulations that do not hinder innovation.

In the presentation material for the fiscal 2018 fourth quarter and full year issued on February 12, Rakuten announced a shift to a new corporate structure from April. A new organization chart has been released, which shows Rakuten’s plan to establish Rakuten Payment, Inc. in April to oversee the payment business and to convert Everybody’s Bitcoin and Rakuten Edy, Inc. into subsidiaries of the new company to handle electronic money. While no official announcement has been made, increasing attention is being given to the possibility that an update to Rakuten Pay in March will include cryptocurrency payments.

Mr. Hiroshi Mikitani, the founder of Rakuten, unveiled the Rakuten Coin concept, which will use blockchain to manage its electronic reward points which are handled by Rakuten’s service.

Rakuten’s core business of online shopping is a major market with roughly 44,000 merchants selling products in Japan. While Rakuten has increased repeat customers by granting electronic reward points that can be used for payments on its websites, the points cannot be used outside Rakuten, including overseas. Because the company aims to expand its global business, Rakuten has been paying close attention to blockchain technologies.