TOKYO — A start-up in Japan is bringing e-payments to one of the world’s most sophisticated retail markets.
Origami, which was founded in 2013 as a mobile e-commerce platform, will launch Origami Pay here on Thursday. The system allows consumers to make purchases simply by opening the Origami application on their smartphone, tapping the “pay” button, and then holding their phone near an in-store device, which could be an iPad or another smartphone. The charge will then be made to a credit card that the customer has pre-registered in the app, and no signature is necessary.
“We are the first ones to enable off-line payments via the Internet in Japan,” said Origami’s founder and chief executive officer Yoshiki Yasui.
While the service has existed in beta format since October, Origami Pay officially launches Thursday with an event at the Apple Store on Tokyo’s Omotesando location. The service became available on users’ apps from Thursday as well.
“We’re finally starting what we actually wanted to do [when we launched], but if we started this from the beginning we probably would not be here today, because with five million dollars you would never get here,” the executive said.
That figure refers to Origami’s first round of financing, which was led by Japanese telecommunications company KDDI. The start-up has recently completed a second round of financing, this time led by Softbank. In the three years since it launched, Origami has raised between $21 and $22 million.
“Now that we have enough capital, I believe that we can actually expand into the off-line space,” Yasui said.
Yasui said his short-term goal is to get enough merchants signed up for Origami Pay that customers will start to see the logo in many of the same places where the Visa, MasterCard and American Express logos are displayed. At the time of launch, there will be around 1,000 merchants in Japan accepting the payment service, but Yasui said he expects this number to grow tenfold within about six months. Retailers that have already signed on include Burberry, Urban Research, Hankyu department stores, MOMA Design Store and Bang & Olufsen. In addition to stores such as these, Yasui plans to target everyone from restaurants and bakeries to convenience stores and salons.
“Everyone is now carrying around their phone, it’s always in their pocket, but no one is using it for shopping, and everyone is taking out their leather wallet and paying with a credit card or cash,” Yasui said.
But Yasui said the real value of Origami Pay isn’t just in making payments at brick and mortar stores simpler for customers and merchants alike. It has to do with gathering highly sought-after customer purchase information.
“If you pay by cash or credit card, with every single transaction you’re not creating any customer data. But because now you’re paying with — you are actually paying with a credit card because you’re linking it to Origami — but you’re paying on the Internet, which means you’re creating purchase information online,” Yasui said. “And we have this engine to monetize that via ads online, which means we can collect the cost from the credit card company or also the merchants, and give that back to the customer. Which means it’s always cheaper to pay by Origami.”
Each time customers use Origami Pay, they will get some kind of a discount on their purchase. How much of a discount varies greatly depending on the merchant, but it could be between 3 and 10 percent, or 50 to 200 yen off ($0.46 to $1.83).
“In short, it’s a very simple, valid exchange. The customer pays via Origami; they are providing customer data or purchase information to the merchants or to Origami. And the merchants are going to recommend Origami because they want to collect more customer information. And then the value exchange for that is that to the customer, it’s always cheaper,” Yasui said.
The entrepreneur said the data collection is what sets Origami apart from services such as Apple Pay, or Japan’s Suica or Nanaco, which are e-money cards that can be “charged” and then used for payments at train stations, convenience stores, and in taxis.
In the future, Yasui said he hopes to continue to expand into the fin-tech, or financial technology, market, offering additional options for payment services.
“We’re going to start from letting consumers link their credit card into Origami and pay via their credit card, but it doesn’t mean that it has to be their credit card. Because we already have consumers’ IDs, merchants already have their IDs, and we’re linking it with pipe called Origami,” he said. “Why does the money have to go all the way to Visa and go back to [the merchant], and they get charged three-point-something percent? If you think about it, it doesn’t have to be a credit card. What if you just link your bank account to Origami and transfer money straightaway like you do for your debit card?”
Yasui said that in the long term, his vision is for Origami to act like a financial institution; something like a PayPal that is available for customers to use off-line. The business is already growing rapidly, with around 40 staff now and almost one new hire per month. Yasui declined to give a sales figure for the business.
Eventually, Yasui said he wants to take Origami Pay global. The executive said he wants to target the United States and Asia, although China is not in his crosshairs. Yasui said he doesn’t think Origami can compete effectively in China, where services such as Alipay and WeChat Pay dominate the market.
Alipay and WeChat are becoming more widely accepted in Japan as retailers look for ways to cater to the growing number of Chinese tourists coming to the country. But Yasui doesn’t see this as a threat to Origami’s business, which targets Japanese consumers.
“I think it will help create the smartphone payment market, so I think that’s a big plus for us,” he said. “No Japanese are using Alipay or WeChat Pay, but it’s a good education for the merchants, so I think that’s a big plus for us.”