Here’s Why EBay Needs Apple to Succeed in Japan

Business users of the Apple (NASDAQ:AAPL) iPhone in Japan have a new digital payments service after Japanese phone company Softbank announced it had formed a joint venture with eBay’s (NASDAQ:EBAY) PayPal on developing a product. Softbank, which competes with KDDI in supplying the Apple smartphone in the country, and PayPal will each invest 1 billion yen ($12.54 million) in the venture.

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Softbank has been trying hard to become more attractive for consumers as its rivalry with KDDI grows. KDDI became the second company to sell the iPhone in Japan in October, ending Softbank’s local monopoly. Softbank reacted with an attempt at improving its network connectivity after winning a license for more bandwidth earlier this year.

The new company, PayPal Japan, will offer a service that allows businesses to accept debit card, credit card, and PayPal payments through smartphones and will target Japan’s 4.7 million small businesses, a very large majority of the country’s business segment. The Japanese retail commerce market was worth 134 trillion yen last year. PayPal has 110 million active accounts in 190 markets and 25 currencies, while Softbank has 29 million mobile subscribers, according to the companies’ statement.

Merchants will pay the company a 5 percent transaction fee on Visa (NYSE:V), MasterCard (NYSE:MA), and American Express (NYSE:AXP) card swipes. The card reader will sell for 1,200 yen and is already available for the iPhone for “select merchants” to start with. A more open version will be launched later, as will one that is compatible with Google (NASDAQ:GOOG) Android-run phones.

The venture may eventually sell shares to the public. “That’s the way both companies can benefit from the business if it succeeds, instead of absorbing profits from the venture,” Softbank president Masayoshi Son said.

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