Sunday, December 26, 2021

Japan’s Biggest E-Commerce Giant Push Crypto Integration: Boost in Merchant Adoption

Rakuten, the largest e-commerce company in Japan with well over 90 million active users, is pushing forward with its plans to integrate crypto into its platform.

Last week, the company announced in its 2018 yearly earnings report that it would overhaul the firm’s corporate structure to improve growth and embed all payment solutions into one platform.

The newly designed Rakuten Pay App is set to release on March 18, 2019, and some local analysts anticipate crypto payments to be integrated into the platform.

Why Crypto Push is Expected

Japan’s Biggest E-Commerce Giant Push Crypto Integration

In August of last year, Rakuten acquired everybody’s bitcoin, a small cryptocurrency exchange operating in the local digital asset market.

In Japan, conglomerates tend to acquire cryptocurrency exchanges to integrate digital asset payments into their platforms rather than relying on third-party service providers.

The move is sensible for a platform the size of Rakuten because all of the payments processed through an in-house exchange could generate a new stable source of revenue for the company.

The exchange was acquired for less than $2 million, and for a multi-billion company in Rakuten, the acquisition and integration of everybody’s bitcoin does not place significant pressure on the cryptocurrency department to outperform the expectations of investors.

In the earnings report, Rakuten revealed that everybody’s bitcoin would begin operating under a newly established subsidiary called Rakuten Payment, Inc., along with Rakuten Edy, the company’s membership points application.

Previously, all of the subsidiaries, including the cryptocurrency exchange, operated independently. The new structure will allow the entire payments division of Rakuten to cooperate, embedding everybody’s bitcoin deeper into the core payments infrastructure of the e-commerce platform.

Rakuten is yet to confirm that the new Rakuten Pay App will feature cryptocurrency payment options. But, the company has had over six months to streamline the integration process of everybody’s bitcoin.

In consideration of the time frame of the acquisition and the timing of the release of the company’s new app, analysts foresee cryptocurrency payments being implemented by the platform.

Motivation of Rakuten

Japan’s Biggest E-Commerce Giant Push Crypto Integration

The cryptocurrency market is in the midst of the worst correction in its 10-year history. The public’s perception of the sector’s image has deteriorated with scandals like QuadrigaCX, Mt. Gox, and Coincheck.

The overall trading volume of cryptocurrency exchanges has declined since the retail investor bubble in late 2017.

Despite the lackluster performance of the digital asset sector, Rakuten is seemingly demonstrating strong efforts to integrate and adopt cryptocurrencies through everybody’s bitcoin.

It is entirely possible that the company is attempting to salvage its multi-million dollar investment in the small cryptocurrency exchange.

It is more likely, however, that the company has seen the progress shown by other conglomerates like Bic Camera, the largest electronics retailer in the country, and the growing confidence of investors within the cryptocurrency market with high-profile deals such as the $40 million investment by U.S. pension funds into Morgan Creek’s crypto fund.

In the last quarter of 2018, Rakuten announced its plans to compete against Amazon and retain its position as the dominant e-commerce corporation in Japan.

“The idea is not to try to win with any particular service alone, but rather by combining them together. It’s OK to be No. 2 if your combined lifetime customer value is higher than that of your competitors,” Kentaro Hyakuno said.

Innovative initiatives could allow the company to secure niche markets and unique user bases, including active cryptocurrency users.

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