Mobile payment service in Japan moving toward a cashless society.
Naver is going all out to target the mobile payment service market in Japan through its Japanese subsidiary Line in tandem with the country’s policy to move toward a cashless society.
Line is the Japan-based mobile messenger operator owned by Naver, Korea’s largest portal operator.
Based on the huge influence of its mobile messenger service in Japan, Line, which launched its mobile payment service Line Pay in 2014, has carried out aggressive marketing to be a frontrunner in the market, in which it has to compete with large Japanese companies such as Rakuten and NTT Docomo as well as global tech giants Apple and Google.
Last year, SoftBank also joined the competition, establishing PayPay, a joint venture formed by SoftBank and Yahoo Japan.
Amid intensifying competition, Line has invested heavily in its mobile payment service.
Naver said Thursday that Line would invest 30 billion yen ($274 million) in marketing in a bid to attract more users to Line Pay.
Naver CEO Han Seong-sook vowed to continue to invest in Line Pay, saying there were high hopes for growth.
“The Japanese fintech market has great potential for growth on the back of the Japanese government’s promotion of a cashless society,” she said during a conference call after the firm’s January-March earnings were announced.
“We believe that it is very important to dominate the market in advance this year, thus we will make more active investments.”
The Japanese government has been nurturing the mobile payment service market ahead of the 2020 Summer Olympics in Tokyo, when many foreigners will visit the country.
Line has made a series of investments in marketing, and the company said it would not receive commission from member stores until July 2021.
But such aggressive investments have laid a burden on Naver, whose operating profit has been falling for six consecutive quarters.
In the first quarter of the year, Naver posted 1.5 trillion won ($1.3 billion) in sales and 206 billion won in operating profits. Operating profits fell 3.3 percent from the previous quarter and 19.7 percent from the same period the previous year.
In particular, Line posted a 102.5 billion won operating loss.
“Line is aggressively moving to expand Line Pay’s market share,” said NH Investment & Securities analyst Ahn Jae-min. “The firm will continue to make aggressive investments until the Tokyo Olympics takes place. Therefore the firm’s operating losses will continue for the time being.”