Disclaimer 1: As many regular readers know, I am not a QR Code fan. It’s not the technology so much as the assumption that the central processing model and constant network connections solve everything. When I went to Starbucks today I tried paying with the Starbucks app bar code and got a nice little rude reminder that when one link fails, the whole QR/bar code chain crashes. The WiFi at that particular Starbucks store is not robust and ends up jamming the smartphone 4G pipe because the device thinks there is a good WiFi connection. After 2 attempts without getting a bar code load, the staffer said, “turn off the WiFi.” I gave up and used Apple Pay Suica instead. Done.
Disclaimer 2: As many regular readers may not know, I am not a SoftBank fan. This goes back to the time when SoftBank bought Ziff Davis of which the Seybold Report was part of. SoftBank quickly destroyed the Ziff Davis business by sucking it dry and selling off the zombie for a good price before anyone realized it was dead. I wrote for the Seybold Report at the time. What had been a tightly run ship collapsed into chaos because the parent company starved the subsidiary groups and people didn’t get paid. Later on when I wrote reports for Off The Record Research, I regularly visited a Yahoo Japan source who complained that they could not create good iPhone apps because SoftBank constantly sucked the budgets dry. Later on he quietly told me he could not complain anymore because all the conference rooms were wired and everything was recorded. SoftBank is that kind of company. To me all they ever really do is play one big never ending shell game.
There are lots of people excited by the Line Pay/Yahoo Japan merger. IT reporter Junya Suzuki says it’s about creating a ‘Super App’ platform. Bloomberg says it’s about creating a super ‘big data’ platform that sucks up everybody’s everything (and of course nobody discusses where the big data will be stored and processed: will it stay in Japan or be sent to notoriously security lax Korean data centers).
There will be lots of news and discussion in the weeks to follow but it’s important to remember a few essential points.
One: Line Pay and PayPay operations are running in the red, some people estimate PayPay could never turn a profit with its current business model.
Two: neither SoftBank/Yahoo Japan nor NAVER/Line Pay own a real bank. At some point in the cashless payments process, real cash has to change hands. Payment processors without real bank operations have to live with real bank transaction rules and fees, real banks will always have the upper hand. Having a real bank for example, puts Rakuten in a much stronger position than SoftBank. Yahoo Japan does own half of Japan Net Bank but this is a co-venture and Yahoo Japan only runs the internet service side, the other half, the real bank transaction half is owned and run by SMBC. In this arrangement SMBC is calling the shots.
As for me, I have been hanging out on the Girls Channel where Japanese women let down their hair and diss. Japanese women make, or break, products in Japan, especially everything Keitai, not men. Comments on the Line Pay and PayPay merger are very interesting and cutting. They range from “Mercari Pay is disappearing next” to “Hello Rakuten, goodbye Hagebank,” (a diss of bald Masayoshi Son, but also a double entendre for the highly leveraged SoftBank going bust). Day after day it reads like the bloom is off the Line Pay Pay Pay rose and Japanese women who created the first Keitai boom and have money now, are ready to move on. They are in it for the campaigns but not really in it. I’m going to keep hanging out with the girls. It’s a lot more fun and informative than reading the news, and faster too.