Rakuten Group to combine its mobile payments and credit card business units

Mobile payments Japan - person paying via mobile

The struggling Japanese company intends to fold together several of its units, according to recent announcements.

Rakuten Group, headquartered in Japan, has announced its intentions to fold its mobile payments and points businesses into its credit card unit.

This move could align the company to eventually list its card business as it has done with others.

Even though Rakuten earns solid earnings from its e-commerce business, it has continually lost money over 12 straight quarters as a result of the expensive expansion of its mobile payments business, which didn’t gain popularity in Japan as the company expected.

mobile payments - Rakuten logo on phone
Credit: Photo by depositphotos.com

The struggling company has already listed some of its other units, such as Rakuten Bank, its popular internet banking business. This has allowed the company to bring in some much-needed cash.

Last week, the company announced its intentions to consolidate its mobile payments and points businesses. They will both be folded into the company’s credit card and loans unit, called Rakuten Card. From there, Rakuten Card will move forward as the “driving force” behind the fully integrated payments business. It could also be used for collaborating with other companies and for “raising its own capital as necessary,” explained Rakuten in a recent statement.

Mobile payments and points are at the core of Rakuten’s complete e-commerce ecosystem.

The design of that environment is meant to pull customers into the experience with a wide range of offerings. Those customers can accumulate points by shopping, by using the company’s mobile payments, credit cards, or by using their insurance services. By accumulating points, customers can then use them to pay bills, purchase groceries or even book vacations.

Rakuten made a commitment not to take on any more gross debt, when it held a quarterly briefing at the end of last week. Instead, the company intends to turn to equity-related financing to slash the debt it is carrying.

At the time of the writing of this article, Rakuten’s debt was about $13.22 billion (1.9 trillion yen). Of that, 406 billion yen is due next year. Another 430 billion yen is due the following year. This, according to data released by Refinitiv.

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