Japan Post Co., the mail and parcel delivery arm of government-owned Japan Post Holdings Co., plans to form a tie-up on credit card settlement operations with Sumitomo Mitsui Trust Bank, a source said Monday.

Under the tie-up, services to settle credit card transactions for retailers and online businesses will begin after Sumitomo Mitsui invests in Japan Post's finance unit as early as this fall, the Japan Post source said.

Sumitomo Mitsui is most likely to have a stake of more than 14 percent in the unit, through which Visa and MasterCard credit card settlement can be made.

The partnership is aimed at boosting the group's profitability as the parent company, Japan Post Holdings, seeks to go public next spring, the source said.

Japan Post wants to market the credit card settlement services to companies that have not introduced such services in the hope of earning commission income.

By tapping into its network of post offices nationwide, Japan Post intends to expand business by focusing on regional entities, which make less use of credit card settlement services compared with their urban counterparts, according to the source.