PayPal Joins With Japan’s SoftBank to Start Digital Payment Venture

EBay subsidiary PayPal and Japanese telecom SoftBank will each invest $12.5 million in a joint venture to introduce PayPal’s mobile payments service to Japan.

In an interview with CNBC’s 'Worldwide Exchange', eBay CEO John Donahue said the scheme, to be called PayPal Japan, aimed to make it affordable for small businesses in Japan to accept payment by credit card.

“With this simple [PayPal] card reader, all small businesses need to be able to do is plant it into their smartphone, and then they can receive credit cards, something that was prohibitively difficult and expensive before this unique technology came along,” Donahue told CNBC.

Donahue said PayPal card readers would retail in Japan at 1,200 yen, with a 5 percent charge on each transaction. At present, card reading equipment costs around 100,000 yen in Japan, with businesses also paying monthly fees. Transaction charges vary between 5 and 8 percent.

Donahue said introducing the technology to Japan would help PayPal to position itself as a market leader in the Japanese e-commerce market.

“We will target the small businesses that make up 70 percent of the jobs in Japan and almost 90 percent of the commerce,” said Donahue.

Separately, Donahue said ex-PayPal president Scott Thompson, now Yahoo CEO, was a “good leader”. Yahoo came under scrutiny last Thursday after a shareholder alleged the firm had overstated Thompson’s academic qualifications.

“Scott did a very good job at PayPal,” Donahue told CNBC. “He was a good leader, and as a fellow CEO, I’m very supportive of Scott and I hope this situation resolves itself in a way that means everyone can get back to work.”

By CNBC.com's Katy Barnato