China is the most popular country for cashless payments, which has recently become a hot topic. Racala, a company at the forefront of cashlessness in China, is now setting up a Japanese corporation and is planning new services using blockchain. As an acquirer, the company aims to create "new added value" using blockchain to survive the age of cashless Sengoku. I asked Hideki Yagi of Lakara Japan COO about the whole story.
Before discussing the blockchain strategy that Lacara Japan is working on, let's first talk about the company's formation. The company's roots are a former start-up company called Lakala in China. Established in 2005, develops cashless payment terminals. The company is a pioneer in the acquirer industry, which is the bridge between payment providers and consumers.
The company worked with Lenovo, an IT giant, to gain market share in China at the dawn of cashless adoption. Currently, it operates point services and social networking services in conjunction with the acquirer business, and has more than 120 million Chinese customers throughout the ecosystem. The annual transaction value of the acquirer is worth 72 trillion yen.
As of 2010, it is one of the only unicorn companies that are unlisted and that only tech startups with a valuation of more than $ 1 billion are allowed. In April 2019, the company was listed on the Shenzhen Stock Exchange through its group company, Lacara Payment.
Lakara Japan is the first overseas subsidiary of Lacala in China. It is said that Lakara's plans for overseas expansion reached Mr. Yagi in the summer of 2017. So, in February 2018, we launched a company with Mr. Ken, the current president and CEO of Lakara Japan.
By the way, although not mentioned in this interview, President Zhang has an outstanding career. At the age of 15, she entered the Tianjin Medical University of China with a skip-the-ear class. At the age of 17, he hated studying medicine and came to Japan [talking to Mr. Yagi]. At the age of 19, he entered Kyushu University. He left the Faculty of Economics and was active in Japan as an expert in Japan-China trade and Chinese market strategy.
Japanese cashless market
The first thing that comes to mind when you hear "cashless" is "xx pay". It is not the same, and there is an image of each company actively conducting campaigns and competing for customers. By the way, have you ever paid attention to the response of stores when showing such payment company applications at cash registers? There should be multiple terminals at the cash register. It may be provided by a payment company as a dedicated terminal, or it may be a composite terminal with a major company logo. In stores that support multiple payment methods, there are three terminals, including cash registers, and as many as five terminals.
This situation has several disadvantages for shops. First of all, there is a simple occupation of checkout space by terminals and complicated handling of employees. An even more troublesome problem is that as the number of terminals increases to accommodate more payment methods and multiple acquirers intervene, each account will be different. In this case, "the parts that would be cashless and convenient, such as the settlement of accounts at the end of the month, would be inefficient." [Mr. Yagi]
This is the problem facing Japan's early days of cashlessness, but China once had a similar problem. There are more than 30 payment methods in China including credit card payments, including WeChatPay and Alipay. While processing them with a single terminal, it is responsible for reading and displaying QR codes, printing receipts collectively, and developing terminals that can connect to mobile lines and Wi-Fi. It is.
Lakara Japan offers a custom version of a multi-settlement terminal for the domestic market. The body color has been changed from light blue to calm black or white, and it also supports FeliCa-type touch payments such as electronic money for transportation. The terminal's OS is based on Android and already supports nearly 30 payment methods in the categories of credit cards, QR codes, electronic money, and Chinese payments. Updates can be made simultaneously via the Internet, and the number of compatible brands can be increased gradually.
Although there are some conditions, this multi-settlement terminal is provided with a store-paid 0 yen and a low settlement fee. Employees are less burdened because they only need to learn the operation of this one unit, and accounting is centralized at Rakara Japan, which makes document creation more efficient.
From the perspective of retailers and restaurants that introduce cashless payments, this is a service that can be hoped and fulfilled, but is it really a business? In response to this question, Mr. Yagi said, "It is important to expand our market share right now. We want to rewrite the usage and checkout to a better structure at the store first. We get the benefit after the store." showed that.
Lakara Japan is particularly promoting its introduction to SMEs and privately owned stores. The low cost of introduction and learning makes it ideal for stores that are taking a second step there. There is also cooperation with local governments, and there are some hundreds of units that can be used to cover an entire shopping street. Also, at the moment, a major sports equipment group that has not been able to clarify specifically, but is not so interested in sports, knows about it and has decided to introduce it.
Involve end users in the business for B and create an ecosystem
According to the explanation so far, it seems that during the cashless Sengoku era, Lacala Japan has a good chance of winning. However, Mr. Yagi analyzed the problem: "Just a cheap game alone would be a barren battle just to lower prices." We aim to provide further added value. Until now, the so-called services for B and for businesses have been added, but by adding services here, services for C, that is, services for end users, will be launched, aiming to build an ecosystem that covers the entire end.
That's where blockchain technology emerged. Yagi himself has devised the project and steers himself. The plan is close to completion as "MIRAI NO WALLET", and although it cannot be revealed yet, there is a concrete roadmap to release.
Yagi, who was inspired to add value to the acquiring business by building a token economy using blockchain, brought an idea to Tech Bureau Holdings, which develops the private blockchain "mijin" in early summer 2019. The project starts immediately after the first meeting. By the end of summer, about three months later, the prototype had been completed.
When asked why they chose blockchain technology and mijin, Yagi states that "this speed was important" and that "various attributes can be easily assigned to tokens." It is said that Tech Bureau HD, which develops mijin, is a domestic company, and that its development is mainly done in Japan, and that it has been selected as a partner because of its many achievements in Japan. Since the start of the project, the teams of both companies have been able to proceed with development in a fast-paced manner with weekly meetings in a two-person tripod.
Whole picture of MIRAI NO WALLET
MIRAI NO WALLET is based on the function of "accumulate points" and "use points" as the name of the wallet. All functions are implemented on the blockchain, and points are issued as replaceable tokens.
Explaining how to use points, at the time of release, 1 point = 1 yen, which can be used as a coupon that can be used at Lakara Japan's payment terminal installation store. The issued coupon is also issued as a blockchain token. Registered in the wallet. At the time of use, the QR code is presented at the cash register and processed by reading it on the same terminal. In addition, it is a token, so it can be passed between users.
It is said that points will be added at any time, but at the time of release, simply return 5% of the paid amount as points. These points can be received in duplicate with the original points given by the “XX Pay” settlement business, so it is advantageous from the user's point of view. In addition, there is also a mechanism that allows you to earn points as a reward for promoting health by walking a certain distance.
As an addition plan after the release, it is said that it is considering building a social networking community on MIRAI NO WALLET and earning points by writing impressions of store use there, and giving points when visiting stores . The company plans to use the data from these users for marketing, including at merchant stores.
So far, there seems to be no need to use a blockchain. But MIRAI NO WALLET is more than just a point service.
These points are implemented using the latest version of mijin, Catapult. Since various attributes can be assigned to tokens, for example, it is possible to set something like Ladies' Day and award points only for women, or provide local currency as an OEM that can be used only at stores in a specific area It is. Another benefit is that users who do not plan to use these limited points can be transferred between users.
In addition, it is considered that in the future, it will be linked with different point bases. Using COMSA, which works with mijin to enable token cooperation between different blockchains, it is possible to expand the ecosystem by linking with other point services. "We chose blockchain for future-proof scalability."
Eventually accelerate development with three-legged tripod
"MIRAI NO WALLET" has the above functions and will add more functions after launch, but development has shifted to a three-person quadruple system halfway. The function of accumulating points while walking is a function imported from "FiFiC" that utilizes NEM. The Opening Line team, which has been working on "FiFiC" since the middle of development, joins the development team. The three companies were able to accelerate their development with their knees facing each other.
In the blockchain project, there is a certain standard called token, and in the case of mijin, each function is modularized, so it is easier to incorporate elements of the existing project as functions in this way than before.
Mr. Yagi says that the only thing that pushed the project ahead of schedule was "a gift of teamwork." He added, "I'm planning as smoothly as I thought it would be, or even better. At least as an app I'll be able to release without problems by next spring."
If the blockchain-based ecosystem project is on track, Lakara Japan plans to launch a similar project from its Japanese and Indian and Vietnamese subsidiaries. He also said that he would collaborate with Chinese services to provide convenience to Chinese visitors to Japan. Although it is a plan for the future, the company is looking into moving the payment platform currently operated by AWS [Amazon Web Service] to blockchain.