The management integration of Z Holdings (ZHD) and LINE had a great impact not only on the IT industry but also on society as a whole (* 1).

That should be the case, and ZHD operates one of the largest portal sites in Japan, Yahoo, and provides many services that Japanese people need, such as e-commerce, online auctions, fashion, tourism, food and drink, news distribution, and finance. doing. ZHD is also closely associated with mobile operator Softbank.

On the other hand, LINE operates LINE, one of the largest free calling apps in Japan.

The integration of these two IT giants has many implications, but in this article, we will focus on the smartphone payment capabilities of both companies. What will ZHD PayPay and LINE LINE Pay look like, and will it increase the benefits for users?

（※1）https://xtech.nikkei.com/atcl/nxt/news/18/09767/

The meaning of the combination of ZHD and LINE

The combination of ZHD and LINE will have a great impact on smartphone payments. Smartphone payments in Japan are still in widespread use, and the quality of services will improve, which should increase the number of users. ZHD and LINE not only contribute to the expansion of smartphone payments but also have the potential to become the champion of smartphone payments in Japan.

The reason why such a thing can be inferred is that the combination of ZHD and LINE has a great significance. Before looking at the fate of smartphone payments, let’s see how big the union of ZHD and LINE is.

Amazing numbers of 300 million, 2 trillion, and 40{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} are lined up

The magnitude of the impact of the combination of ZHD and LINE can be explained by the large numbers of 300 million, 2 trillion, and 40{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} (* 2).

The total number of ZHD accounts and LINE accounts is 300 million. Since the account is acquired when the user starts using the Internet service, the number of accounts of 300 million can be read as “the number of users of ZHD and LINE is 300 million”.

Japan has a population of 120 million, including babies and the elderly, so we can see that the number of users is 300 million, which is an exceptional number. One Japanese digital user is using double-triple and ZHD / LINE.

The total sales of ZHD and LINE are 1.4 trillion yen in 2020, and the management of both companies has declared that this will be 2 trillion yen in 2023. If realized, the rate of increase will be over 40{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}.

If you are a business person, you can understand how difficult it is to achieve a 40{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} increase in sales in three years.

（※2）https://business.nikkei.com/atcl/gen/19/00128/030100019/

Why can it be “1 + 1 = 2.4”?

Why did ZHD and LINE think that they could increase sales by 40{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} in three years? Why can “1 + 1” be changed to “2.4”? Their chances of winning are the following two points (* 2).

• If the two companies are integrated, the advertising, sales promotion, and fintech businesses can be expanded.
• There is a market size of 15 trillion yen in the sales promotion area alone, and we can expand our market share through digitalization.

Neither ZHD nor LINE is a company that makes and sells things. Both companies sell services, many of which are free. Browsing Yahoo News and chatting on LINE is free. Still, both companies are making big profits because they are making advertising revenue.
ZHD and LINE expect to get more ads through the business integration.

Another point is digitization. Both ZHD and LINE use digital services. For both companies, “digital is a management resource.”

However, while building services using digital, both companies have become companies that can improve their digital skills and create new digital technologies. And now you can sell digital.

Digital is also a product for both companies today.

Digitizing the area of ​​sales promotion is nothing more than selling new digital sales promotion services.

And one of the new digital sales promotion services is smartphone payment. Smartphone payments can be thought of as a sales promotion service tool because they are an effort to digitize payment methods, and at the same time, they make payments much easier and increase the number of users.

What will happen to the two smartphone payments and the impact on users?

ZHD has a smartphone payment tool called PayPay, and LINE has a smartphone payment tool called LINE Pay.

This is the two companies, it will be integrated into Beibei in prospect April 2022 (※ 3). PayPay will remain and LINE Pay will disappear.
What does this mean?

（※3）https://www.nikkei.com/article/DGXZQODZ016LS0R00C21A3000000/

PayPay becomes even stronger first place

According to distribution news, the share of smartphone payments as of January 2021 is as follows (* 4).

1st place: PayPay, 43.1{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
2nd place: d payment, 18.2{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
3rd place: Rakuten Pay, 15.4{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
4th place: au Pay, 12.1{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
5th place: LINE Pay, 4.6{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
6th place: Melpay, 3.6{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
7th place: Fami Pay, 1.5{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
8th place: QUO card pay, 0.9{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
9th place: Yucho Pay, 0.4{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
10th place: Other, 0.3{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}

When the 1st place PayPay and the 5th place LINE Pay are combined, the market share will be 47.7{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}, and it is expected that about half of the users will use the new PayPay.

It is no exaggeration to say that it is a great achievement for one brand to gain a market share of 47.7{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} in the area of ​​one digital service.
For example, for mobile phones and smartphones, DoCoMo 37{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}, au 28{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}, and SoftBank 22{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} (* 5).

ZHD is enthusiastic about making the new PayPay, which merges with LINE Pay, a service that “leads the expanding cashless market,” but that doesn’t seem to be an exaggeration.

※4：https://www.ryutsuu.biz/promotion/n012017.html
※5：https://iphone-mania.jp/news-336907/
※6：https://www.nikkei.com/article/DGXZQODZ016LS0R00C21A3000000/

Expectations for smartphone payments are rising

From 2022, the government will be able to pay taxes such as income tax and gift tax by smartphone payment (* 7). Tokyo and other countries have already made it possible to pay local taxes by smartphone payment, which will expand.

In addition, the salary of office workers can be transferred to smartphone payments (* 8). Until now, if you wanted to pay the money you earned as salary by smartphone payment, you had to withdraw the money from the bank account to which the salary was transferred and deposit it in the smartphone payment.

However, when salaries are transferred to smartphone payments, the trouble will be saved, and users will use smartphone payments even more.

Improving smartphone payment services is welcome for consumers.

※7：https://www.nikkei.com/article/DGXZQODF059NK0V00C21A2000000/
※8：https://www.nikkei.com/article/DGXZQODF266MB0W1A120C2000000/

What are the concerns about new PayPay?

It is good for society to expand one digital service, improve its quality, and increase its convenience. It is also good that there is one outstandingly strong service in one digital service.

The reason is that if consumers are wondering which service to use, they can choose the first service for the time being. The new PayPay, which is a combination of PayPay and LINE Pay, will provide new value to consumers.

However, there are also concerns about new PayPay. It’s too strong.

Fair Trade Commission watches

1 Strong conditions can weaken competition and lead to monopoly. And monopolies carry risks such as 1) rising usage fees, 2) stagnation of services, and 3) loss of innovation opportunities.

In the management integration of ZHD and LINE, the Fair Trade Commission is raising concerns about the birth of the top one (* 9). Although the Japan Fair Trade Commission has approved the business integration of the two companies, it has added the condition that “regular reports are required” for smartphone payments. We are wary of the digital market becoming oligopolistic.

※9：https://www.nikkei.com/article/DGXMZO62282110U0A800C2916M00/

Summary-Balance between convenience and fair competition

When people who are accustomed to smartphone payments go to stores that cannot use smartphone payments, they strongly think that it is inconvenient. This high convenience is the appeal of digitalization.

However, if there are too many smartphone payment methods, this smartphone payment can be used, but that smartphone payment cannot be used, which reduces the convenience. The news of the integration of PayPay and LINE Pay would have been good news for those who use both PayPay and LINE Pay. This is because there is no need to use the two properly.

And if the use of new PayPay expands, people who have not used smartphone payments before may want to try it.

Consumers want to be more convenient while maintaining fair competition.