Small businesses and individual merchants who previously shunned credit cards because of the required pricey card-reading devices are now letting customers use their plastic thanks to the advent of cheaper smartphone-based payment systems.
Such mobile payment services can be used to pay for food delivery, rickshaws at tourist spots, and discount hotels, bars, and flea markets where credit cards were previously off-limits.
The Yadoya Guesthouse in Nakano Ward, Tokyo, a small facility with seven rooms that charges only around ¥2,500 to ¥4,000 a night, downloaded Rakuten Inc.’s application called smartpay. After that, it only had to plug a small card reader into the smartphone’s headphone jack, swipe the guests’ cards through the reader and get their signature on the screen for authorization. Receipts are emailed to the guests.
Despite high demand from customers, the guesthouse could not afford to buy a conventional card reader needed for credit car payments. It started using the digital payment service last summer because it requires no initial investment. The response has been favorable, the manager said.
Tokyo-based Coiney Inc. and PayPal Inc. of the United States have started offering mobile payment services for smartphones and tablets in Japan. Compared with a conventional card-reading setup, which costs around ¥50,000 to ¥100,000 plus a commission of 5 percent to 7 percent per-transaction, no initial hardware costs are charged and the typical transaction fee is less than 4 percent.
Furthermore, the money will be credited to their bank accounts within several days of the transaction, is much shorter than the month or half a month it takes for a conventional credit card service.
As an experiment, PayPal last November launched a new mobile check-in and payment service allowing people who have installed its application and registered their credit card data and photo in advance, to pay automatically once their face has been identified.
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