Masayoshi Son’s best bet for future profit is PayPay in Japan⁠ — built on Vijay Shekhar Sharma’s Paytm model in India

• After a dramatic turn with profits, Masayoshi Son has chalked out a plan to hit 1 trillion yen (over $9 billion) in operating income with an eye on PayPay’s fast growing business.
• Son is looking at a model that his prized investment in India, Paytm led by Vijay Shekhar Sharma has already proven.
• In an interview with Business Insider, Aditya Mhatre, head of products at PayPay, shares how Sharma’s tried and tested model in India is helping them in Japan.

Masayoshi Son, the billionaire investor who has placed risky yet daring bets on the biggest unicorn startups across the world, has drafted a dramatic turnaround for his SoftBank corporation. After posting historic losses, SoftBank has posted a $12 billion profit in the April-June quarter.

Son has roped in profits by selling major stakes in the US-based Sprint, and one of his oldest cash cows, Alibaba.

And now, the Japanese billionaire has chalked out a plan to hit 1 trillion yen (over $9 billion) in operating income with an eye on PayPay’s fast-growing business. PayPay, which runs on a partnership with Paytm, SoftBank and Z Holdings (formerly known as Yahoo Japan), is all over SoftBank’s road to 1 trillion yen presentation.

So, Son is looking at a model that his prized investment, Paytm, led by Vijay Shekhar Sharma has built in India.

PayPay currently has 30 million users and over 2.3 million merchants onboarded in Japan. Aditya Mhatre, the Head of Products at PayPay, breaks it down for us – on why Son is betting big on PayPay.

Bringing the Paytm touch to Japan

Mhatre explains that they are bringing the Paytm touch and replicating it in other businesses. “It’s all about engaging with users in as many different ways as possible, that’s what we learnt at Paytm. At PayPay, we are focussing on high frequency payment use cases and we are by far the number one player in offline payments across categories. We are now moving into online payments, getting into e-commerce, investments and more,” said Mhatre.

Such is Son’s belief in the PayPay brand that Z Holdings and SoftBank’s portfolio companies are now being brought under PayPay.

Mhatre and his team of 150 product guys are busy at work in Japan. “We are relooking at customer value propositions, redoing the UX completely so that it looks like it comes from the same brand and of course, making it all accessible through PayPay,” said Mhatre.

PayPay’s plan of offerings


Paytm’s offerings



While Taxi, food, offline and online payments and lending are currently live at PayPay, they are soon introducing a PayPay credit card, are talking to multiple partners for insurance as well lending partners and soon, just like in India will foray into stock broking by the end of Q3.

With e-commerce, Mhatre shares that they have created a mini app platform. “Yahoo Japan had launched e-commerce and we rebranded it as PayPay Mall and PayPay auctions, which is basically like a flea market for second-hand goods,” he said.

The difference between India and Japan

“What Alipay achieved in x years, Paytm achieved it in (x-y) years and we have achieved it in (x-y-z) years. We are carrying that learning forward and not repeating the same mistakes,” said Mhatre.

However, Son’s confidence in PayPay is not just based on the company, and the lessons it draws from the mistakes in India, but also the market it operates in. Japan is a developed economy and the offline to online merchants ratio is the exact opposite of India.

In Japan, most of the transactions happen at convenience stores, which PayPay has already tapped. PayPay, which launched in Japan in 2018 and had 10 million users as of August 2019, tripled its user base in the next 10 months.

While in India, still a developing economy, the addressable market is more of unorganized offline merchants. “The way we differentiated and managed to win was we looked at the long tail – we knew we can’t call it a day until we have the smaller merchants on board as well,” said Mhatre.

The pressure in India is higher from big competitors like Google Pay, Walmart-backed PhonePe, and Amazon. The biggest of them all, WhatsApp Pay, is yet to make a sure-footed entry.

Partnership with Alipay

PayPay has also partnered with Alipay for users of Alipay who are visiting Japan to pay through PayPay. “There’s a massive amount of spending that happens from people who are coming from China, Taiwan, Hong Kong – these are the top three countries from where people come and spend in Japan. And they are Alipay users. With Alipay being compatible with PayPay, they just have to scan those PayPay QR codes and they can pay through Alipay,” shared Mhatre.

Is there pressure from Softbank?

With Son betting big on PayPay and placing it at the core of his business strategies, is the pressure building? Mhatre answers that the pressure has always been there. “The pressure was there even before we launched. We had to do the launch in three months and there were five other players in the market. But the good part is the culture is the same as Paytm, we are creating pressure on ourselves to be better than others,” he said.

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