Softbank to Form Venture With Ebay Inc.’s PayPal, Son Says

Softbank Corp. (9984), Japan’s third-largest mobile-phone company, will form a joint venture with EBay Inc. (EBAY)’s PayPal to offer digital payment services in the country.

Softbank and PayPal will each invest 1 billion yen ($12.5 million) in the venture, to be called PayPal Japan, the companies said in a joint statement today. The new company will offer a service that allows businesses to accept debit-card, credit-card and PayPal payments through smartphones, they said.

The companies are targeting Japan’s 4.7 million small businesses, which can use the service to avoid setting up merchant accounts to collect card payments, Tokyo-based Softbank and San Jose, California-based PayPal said in the statement. The venture may eventually sell shares to the public, Softbank Chairman Masayoshi Son said at a press conference in Tokyo.

“That’s the way both companies can benefit from the business if it succeeds, instead of absorbing profits from the venture,” Son said.

The Japanese retail commerce market, where many transactions are still cash-based, was worth 134 trillion yen in 2011, according to today’s statement.

The service’s card reader, to sell for 1,200 yen, and an application for Apple Inc.’s iPhone are available from today for “select merchants,” the companies said. It will be available to others “in the next several weeks,” along with a version for Google Inc.’s Android operating system, according to the statement.

Spending Growth

PayPal has 110 million active accounts in 190 markets and 25 currencies, while Softbank has 29 million mobile subscribers, according to today’s statement.

PayPal led global growth in payment network spending in the first quarter of this year, expanding 24 percent, compared with a 13 percent marketwide increase, according to a report yesterday by Bloomberg Industries analyst Alison Williams. Growth outside the U.S. outpaced domestic growth, with PayPal’s 30 percent expansion leading rivals, the report said.

Facing intensifying competition in smartphones, Softbank is trying to lure more customers by improving its network connectivity after winning a license for more bandwidth earlier this year. KDDI Corp. (9433), Japan’s No. 2 carrier, became the second company to sell Apple Inc.’s iPhone in Japan in October, ending Softbank’s local monopoly on selling the devices.

Softbank rose 1 percent to 2,418 yen as of 12:51 p.m. in Tokyo trading, extending its gain this year to 6.7 percent. EBay has gained 33 percent on the Nasdaq Stock Exchange this year.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net