Smartpay launches open banking credit in Japan

Japanese fintech Smartpay has launched a new service that will allow customers to pay for goods online in instalments, directly from their bank account. The company is at the confluence of buy-now-pay-later (BNPL) and account-to-account (A2A) transactions - two of the biggest areas of interest in the payments industry.

FACTS

• Smartpay was founded in June 2021 by seasoned industry professionals who had previously held leadership positions at Instagram, Standard Chartered Bank, Facebook, Stripe, Adyen and Mastercard in the Asia Pacific and MENA regions.

• The fintech uses open banking to connect consumers through a network of over 67 partner banks across Japan.

• Smartpay targets middle and high income customers. These are low-risk, high-value customers with an average transaction value of USD 200, non-performing loan (NPL) rates of less than 1% and who want to avoid a poor credit rating and non-payment of debt instruments.

• The fintech is currently focusing on Japan, where over 60% of transactions are currently paid in cash, Saudi Arabia and the United Arab Emirates. In the medium term, Smartpay intends to expand to Singapore, South Korea and Taiwan, as well as other markets in South East Asia and the MENA region.

CHALLENGES

• The company's strategy was 'built in two phases':

  • The first phase focused on financial inclusion and helping those without access to credit to join the BNPL digital economy.

  • Smartpay is entering the next phase of its digital consumer credit journey, which aims to target middle- and high-income users and offer them smart financial solutions that are safe, convenient, fast and create real value for its customers. To achieve this, the two strengths of the application are:

    • The adaptive UX, which defies market standards.

    • The eKYC solution will secure higher value customers.

MARKET PERSPECTIVE

• Smartpay is backed by Global Founders Capital (Europe), Matrix Partners (Silicon Valley) and SMBC VC (Japan) as it prepares for global expansion with its open banking powered solution.

• The fintech is currently focused on Japan, where over 60% of transactions are currently paid in cash, Saudi Arabia and the United Arab Emirates.

• These markets all share the five common factors that are at the heart of Smartpay's business model:

  • Specific consumer profile with an appetite for technology, access to smartphones and the internet and high disposable income,

  • A digitally transformed economy,

  • Merchants who need help to accelerate a successful digital transformation,

  • Traditional banks that have been disrupted by digital solutions that have made them irrelevant and limited access to key consumer data,

  • Governments and regulators who want to work with established digital financial solutions that have existing global partnerships (evidence of quality and security) and credible local partners (evidence of local interests).

• In the medium term, Smartpay intends to expand into Singapore, South Korea and Taiwan, as well as other markets in South East Asia and the MENA region.