Supplementary information
Financial results briefing for the 2Q of FY2017

May 1, 2017

GMO Payment Gateway, Inc.
(3769: Tokyo Stock Exchange section - 1 )http://corp.gmo-pg.com/en/

Online payment
Our group business field is mainly online payment
Offline（card-present)
payment

Online payment（ Point ）（ Point ）Must present credit card
Must provide signature
Use terminals such as
POS terminal & CAT
terminal

No need to present credit card
Use postcard, telephone, fax
Use Internet
Use automatic payment
machine which registers credit
card number in advance

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

2

Business outline of payment processing company(1)Problems of the existing online credit card payment
ConsumerShops（merchants）①OrderLarge volume of expense sheets

TelFAX②Enter each into theCAT terminal

Postcardnetwork③Make sales report to eachcredit card company（sales processing）④Post sales report toeach credit cardcompany

Credit card company

Authorization（get approval number）

Internet

Problems in the business Need to enter twice→CAT terminal and our system Sorting for each credit card company
 Insufficient check for deposit money⑤Check whether payment has been
received
Deposit payment

 Human error

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

3

Business outline of payment processing company(2)Payment processing service
which could do credit card payment operation efficiently
ConsumerShops（merchants）

Payment processing company① Order

Update credit
card information

Tel

Post
cardnetwork

Processing sales

Submit sales report

FAXInternet②Check whether
payment has been
received＜Credit decisions in real-time＞

Credit card company

Credit. Sales

Deposit payment

In the early days of EC, offline processing was done for online credit card
payments between merchants and credit card companies, increasing theburden of each.
To solve this problem, payment processing companies have been
established and made it easier to do business.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

4

Business outline - The role of our group
We connect merchants and businesses dealing withcontracts, payment information and money transactions
Consumer

Merchants

Our Company & Service<merchants=Our Customers>

More than 40
credit cardcompanies

Online About 85,123 shops(as of March, 2017)

PCSmartphone

OfflineNarrow definition EC
・Internet Shopping

Convenience stores

Public money
・National Broad Casting・Prefectures(Tokyo, Osaka)

Cash on Delivery

Service Commerce・Donation
・House rent
・Tuition fee
・Rental fee for Wi-fi

E-money

Carrier billing

Comprehensive payment
processing service
Money service business
Online Advertising(as of March, 2017)

Online Banking
E-Wallet
Account transfer

GMO payment
after delivery
G lo b a l p a ym en t

29,910 terminals

Real store

Business related

Comprehensive payment
processing service
Money service business

BitCoin Payment
Apple Pay Payemnt

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

etc.

5

Revenue model for credit card payments
Revenue model by merchant scale■Revenue breakdown

Merchant＜Merchants＝our customers＞①

Initial
Initial introduction fees
Coefficient： Number of merchant newly acquired
Sales：Number of new merchant acquired × ~Yen/time of introductions

Enterprise

Stock

②

GMO-PG

Customer support and maintenance fee
Coefficient: Number of merchant
Sales：Active merchants × ～Yen/monthSME
Fee③Fee charge per transaction(number)
Coefficient: Number of payment processed
Sales：Number of payments processed × ～YenStartup④

GMO Epsilon

SpreadFee charge per transaction (amount)
Coefficient: Number of payment processed
Sales：Number of payments processed × ～%Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

6

Two types of contract form
Contract type and the flow of money
Direct contract
with merchants

processed payments

processed payments

Our group
Credit cardcompany（3％）

Representative
contractwith merchants

Merchants

Business related(3.6％）（3.0％）
Our group

0.6％ Merchant acquiring
service revenue

Credit cardcompany*The depositsof merchantsCredit card company↓
Our group↓
Merchants（4%）
Merchants*Numbers are provided for illustration purposes only.

Business related
The deposits of merchants
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

7

Revenue breakdown
Action plans to realize the balanced growth
Merchant acquiring
Service revenue
Payment Processing
Payment After delivery
Transaction Lending
Early Payment
Finance Lease
GMO-FG・MK
etc.

（million yen）
18,00016,00014,000Transaction processing
revenue
Payment Processing
Payment After delivery
Shipping services
Remittance Service
GMO-FG ･ MKetc.

12,00010,000

8,000Monthly revenue
Payment Processing
Online AdvertisingServiceGMO-FG

6,000

4,0002,0000
2004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9E

listed on
the TSE

2008
Launched
EarlyPayment

2011
Launched
OnlineAdvertisingServiceetc.

Initial revenue
Payment Processing
System Development
SSL
GMO-FG
etc.

2014
2015
2016
2013
LaunchedLaunched Renewed Acquired
FG andPayment TransactionEarly
Lending
Payment MK
After
delivery*FG：GMO Financial Gate/GCS, MK：MACROKIOSK

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

8Growth potential of the EC market in Japan
Low EC ratio and high cash payment ratio■EC ratio（％）■The ownership rate of credit cards
UK

15.0

14.5

US

（2015）

Credit card
usage ratio(A)

Debit card
usage ratio
(B)

UK

11 ％

40 ％

51 ％

US

25 ％

19 ％

45 ％

Korea

69 ％

17 ％

86 ％

Australia

28 ％

22 ％

50 ％

Japan

17 ％

-17 ％

A+B

12.5

Japan
11.3
10.4
10.0

9.2
7.6

8.2

8.2
7.3

7.0

6.4

6.0
5.0
3.6

4.1

4.6

5.0

5.4

5.4

5.8
4.8
4.4

1.8

2.1

2008

2009

2.5

2.83.1

3.70.0
2010

2011

2012

2013

2014

2015

2016

References：METI, (Market report in regard to EC) “Informatization of Japanese economic
society/Improvement of service infrastructure 2017”,American Bureau of the Census「The4th Quarter 2015 Retail E-Commerce Sales Report」, Office for National Statistics ｢RetailSales, March 2016」*Ratio=(Amount handled by CC or DC) / (Private finalconsumption expenditure*Estimated by: CPSS Red Book
THE WORLD BANK「Household final consumption expenditure (current US$)」

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

9Our approach to Japanese EC marketApproaching to all kinds of EC markets
BtoB

BtoC

CtoC

Enormous market
potential;¥1,000trillion

Narrow definition
BtoC EC market

Developing market¥1trillion¥15.1trillion ($151bil)
The rate of EC5.4%（growing at a annualrate 10～15%）

OnlineOffline(card-present)

Flea market
apps

Goods

BtoB
credit card
payments

2016
EC rate(%)
5.4
Market scale(T¥)15.1

2020
824Services,
digital contents

Public fund・
Public utility fee
・Local tax¥36trillion
・National tax ¥58trillion

Consumer spending¥300trillion

2025
1545

Flea market*METI「Market report in regard to EC 2016」

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

10Expansion of public funds and utility payments
We have been cultivating tax card payments since
the revision period of the Local Autonomy Law in 2006

National Tax Credit Card Payment Site

LaunchedJanuary
2017

SapporoLocal governments etc. : Local Tax (Automobile Tax,Light vehicle tax, Fixed assets tax, etc.)
Water bill, Gas bill, hometown tax

NHK: Broadcast subscription fee(Credit card usage rate at the end of FY2015: 12.8%)

Japan Pension Service: National pension insurance fees

Great potential for expansion
Maintenance fees, Cram school tuition fees
Parking fees, Charge for a school meal, etc.

OsakaTokyoFukuoka

Kyoto*Nippon Housou Kyoukai Business Report for FY2015

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

11Offline(card-present) payment market
Focus on a new growth area of card-present market: Payments + IoT
Embedded EMV terminals

Growing area

Target

EMV・cashless

Existing area

Available devices■GMO-FG Group, OP (Actual & Forecast)with PIN

without PIN

2,500K units

960K units
Railwaycompany

Number of mobile TRX

157K units

Gas station

Parkingcompany

Amount of mobile TRX

Mobile payment

Forecast

200K units

These pictures are merely illustrations, and do not intend to suggest implementation.

Beveragemaker

Actualwith PIN

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

12

Definition of Money Service Business（MSB：Financial Business）
Financial services that only payment processing company
can provide
Consumer

Merchant

GMO-PG group

Business related

GMO-PG Remittance Service（③）
Efficient and secure refund and remittanceprocessing for e-commerce operators

Transaction
lending（④）
RefundRemittance

Credit card companies
Convenience storesElectronic money
Mobile phone companies
etc

Financing moneyfor growth

Dealing with daily transactions

Revenue model (sales breakdown)

①
②
③
④

Early payment（④）
Early payment

Payment
Improving cash flows by moving up
the date of payment to member stores

InitialStock
FeeSpread

Payment after delivery（③④）
Improving cash flows“GMO payment
after delivery”
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

13

GMO Payment Service
Providing “GMO payment after delivery”

No need of credit card
（The buyer can pay at the post office and CVS after getting there goods）
EC site②Credit③Goods delivery / receipt

examination⑤Deposit①Purchase④Mailing invoice

Convenience stores
Post offices, banks⑥Deposit

consumer

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

Strategies in Asia
Strategic Investment in MACROKIOSK
Company name MACRO KIOSK Berhad

Advantage

Location

Malaysia and 11 countries across Asia

Headcount

231（Malaysia:176, Asia:56）

Financials

RevenuePBT（FY2015）:2,338 millions yen:77 millions yenⅠ. Stable revenue modelⅡ. Strong client base
（Banks, Aviation and so on)Ⅲ. Development capabilities
Ⅳ. Acquiring of talented humanresource

GMO-PG’s share 70％
Investment
BusinessmodelApprox. 1,121 millions yenServices forfinancial institutions

80%

GUANGZHOU
DUBAI

MACAU

MANILABANGKOKKUALA LUMPUR
SINGAPORE

TAICHUNG
HONG KONG

HO CHI MINH

JAKARTA20%SYDNEY

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

15

Changes in Segments and Revenue models
GMO payment after delivery is divided into fee and spread,
Red：Changes from 2Q
consolidation of MK
３ Segments

Payment processing
business

4 Revenue modelsPayment processing

InitialSystem development
GMO Financial Gate etc

System development
etc

Stock(Monthly revenue)

Online Ad Serviceetc

Payment processing（MK）

Transaction lending

GMO payment afterdelivery（Fee）

MSBFee(Transactionprocessing revenue)etc

SpreadSSL(Merchant acquiring
service revenue )Delivery service
MKetc

etc

Payment processing（MK）

Online Ad Service*FG：GMO Financial Gate/GCS, MK：MACROKIOSKRemittance service
Delivery service

Finance lease

etc

Payment processing（MK）

Remittance service

Early payment service

Paymentenhancement business

SSL（Initial revenue）

GMO payment afterdelivery

Money servicebusiness

Payment processing（MK）

GMO payment afterdelivery（Spread）
Transaction lending
Early payment
Finance lease

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

etc16

GMO-PG Group
GMO Payment Gateway’s subsidiaries and affiliated company
GMO PAYMENT GATEWAY, Inc.
＜ Consolidated subsidiary＞
Multiple payment（small scale）

GMO Epsilon, Inc.

（Financial results for the end of September 2016）
Sales：2,242 million yen, Ordinary income：1,504 million yen

Payment after delivery

GMO Payment Service, Inc.
Card-present payment

GMO Financial Gate, Inc.

（As of the end of September 2016 ）Equity share 65.0％

Overseas

GMO PAYMENT GATEWAY PTE. LTD.

（Singapore）

GMO PAYMENT GATEWAY HONG KONG LIMITED（Hong Kong, Taiwan）

GMO PAYMENT GATEWAY MALAYSIA SDN. BHD.

（Malaysia）

GMO PAYMENT GATEWAY (THAILAND) CO.,LTD.

（Thailand）

Overseas

Macro Kiosk Berhad（As of the end of September 2016 ）Equity share 70.0％< Equity-method affiliate >Multiple payment

SMBC GMO PAYMENT（As of the end of December 2016 ）Equity share 49.0％
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

17Company outline■Name

GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange section-1)■Date of establishment

March 1995

■Location

1-14-6, Dogenzaka, Shibuya-ku, Tokyo, Japan■Capital stock

4,712 million yen■Major shareholders

GMO Internet, Inc., Sumitomo Mitsui Banking Corporation, Issei Ainoura ,etc

■Members of the Board

Chairman & Director
President & Representative Director
Executive Vice President
Executive Vice President
Senior Managing Director
Director
Director
Director
Director
Director
Director
Senior executive officer
Executive officer
Executive officer
Executive officerExecutive officer
Executive officer
Executive officer
External Director
External Director
AuditorAuditor
External Auditor

Masatoshi Kumagai
Issei Ainoura
Ryu Muramatsu
Satoru Isozaki
Yuichi Hisada
Yasuhiko Kimura
Tomoyuki Murakami
Shinichi Sugiyama
Yusuke Arai
Masashi Yasuda
Masaru Yoshioka
Takeshi Yoshii
Katsunari Mukai
Yoshikazu Yanagishima
Kazunari Taguchi
Tatsuhito Muramatsu
Kiyonobu Inayama
Shingo Ito
Masaya Onagi
Akio Sato
Yasuhiro Kanda
Takashi Iinuma
Kazuo Ikeda

External Auditor

Kazutaka Yoshida■Managing underwriter（Main）Nomura Holdings, Inc.、（Sub）Mizuho Holdings, Inc.

■Auditor

Deloitte Touche Tohmatsu LLC■Subsidiaries

GMO Epsilon, Inc. GMO Payment Service, Inc., GMO Financial Gate, Inc.
GMO PAYMENT GATEWAY PTE. LTD. (Singapore), Macro Kiosk Berhad, etc.
SMBC GMO PAYMENT, Inc. etc.

■Affiliated companies（As of March,2017）

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

18