Annual Report
26th Fiscal Year2018.10.1–2019.9.30

Message from the President

Why GMO-PG?
Enriching the world by creating
new value in payment

Issei Ainoura

President &Chief Executive Officer

A company that presents new value to the world
and leads Japan with its high aspirations

Global leadership
We are committed to achieving 25% growth in
A company with outstanding potential and a
30-year growth trajectory that is highly acclaimed
by global investors

Business model
A company that achieves exceptional growththrough delegating and instilling a sense of ownership to our younger partners to seek new challenges

Ownership model

operating profit through the expansion and evolutionof our businesses as we adapt to the changing
business environment.
Achieved 14 Consecutive Years of Growth
in Revenue and Operating Profit
We achieved 14 consecutive years of growth inrevenue and operating profit, with FY2019 revenueof ¥32.1 bn, up 21.6% YoY, and operating profit of¥8.3 bn, up 26.7% YoY. This was led by the significant growth of our core business of online payment services, profitability improvements infinancial services such as cashless payments forfinancial institutions, the expansion of offline payment services, GMO Payment After Delivery, andglobal lending services.
We express our deepest appreciation andgratitude to our shareholders and stakeholders
for their continued support that enables theseachievements.

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

01

Message from the President

Growth Strategy to 2025 and the Transformation of Our Merchants
Establishment

Listed on
TSE Mothers

Reassigned to
TSE First Section

Capital and Business Alliancewith SMFG*1

1995

2005

2010

2015

2020

2025

Operating Profit*2¥0.2 bn¥1.0 bn¥3.0 bn¥10.0 bn¥25.0 bn

Transaction Value*2 ¥0.3 tr¥0.8 tr¥1.6 tr

Approx. ¥6.0 tr

Approx. ¥18.0 tr

Transformation of Our Merchants

2030¥100.0 bn

Global Corporations
Large Corporations
Financial Institutions

Public Entities / Local Municipalities
SMEs*1 Capital and business alliance between Sumitomo Mitsui Financial Group, Sumitomo Mitsui Banking Corporation, GMO Internet, and GMO Payment Gateway.
*2 Figures show the operating profit and transaction value targets to be achieved from 2020 onward.

Creating New Businesses and Adapting to
the Changing Business Environment
The business environment in which we operate iscontinually undergoing major changes brought
about by fast-paced technological evolutions.
In order to sustain growth in such an environment, it is of crucial importance to keep evolving
our existing businesses as well as foster new ones,
with a mindset to preemptively respond and thoroughly adapt the Company to the changes. In
2015, said to be the inaugural year of FinTech inJapan, we commenced our capital and businessalliance with Sumitomo Mitsui Financial Group(SMFG) and commenced the Money Service
Business. It is a testament to our ability to be­forward-thinking that the Ginko Pay service had

02

GMO Payment Gateway, Inc.

already been launched in November 2017 when
the Ministry of Economy, Trade and Industry initiated the Study Group on Cashless (formally the
Study Group for API-based Collaboration Involving
Credit Card Utilization).
Sales Capability Underpinned byDiverse Human Resources
We possess Four Strengths that we have upheld
since our inception: Marketing, Development,
Support, and Investment. These strengths are thesource of our competitiveness and enable our sustainable growth as a company. In par­ticular, wehave further strengthened our sales system which
is tailored according to the client’s industry or
scale, and diversified our human resource base to

be more agile in reflecting decisions by management. As a result, we have been able to expand ourbusiness with larger corporate clients in recent
years in addition to our services targeted to SMEs.
Pursuing Business with a Long-Term Perspective
When I was appointed as President in 2000, I set
the Company’s long-term targets of achieving consolidated operating profit of ¥10 bn in FY2020,¥25 bn in FY2025, and ¥100 bn in FY2030. Backthen, there were more than a few skeptics giventhat we were in the red, but I believed that thesetargets were achievable if we could sustain a 25%
operating profit growth rate, and compiled andimplemented the managerial and operational
requirements to achieve this goal. Thanks to these

efforts, we project that we will exceed ¥10 bn inoperating profit for FY2020.
We are working on multiple large projects in our
five focus areas to ensure that the FY2025 andFY2030 targets are achieved regardless of uncertainties over the domestic economy after the Tokyo
2020 Olympic and Paralympic Games.
Finally, and very importantly, we thank you, ourshareholders, for your continued support andencouragement as we continue to move forward.
December 2019

Issei Ainoura

President & Chief Executive Officer

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

03

Our Services and Focus Areas
Utilities

Bills paid on a regular basis
such as electricity and gas
Public dues
Payments ofautomobile taxes
and water bills

GMO Payment Gateway
creates new value inpayments with sights
set firmly on the future,adapting to a world
where change happens
faster than ever before.

Content purchases

Payments when purchasing
content such as music,
video games, and e-books

Payments of fixedmonthly expenses

Regular payments for things
such as water delivery,
newspapers, magazines, etc.

Internet shopping
Supporting payments forpurchases of everyday
goods, perishables, etc.,
and the advertising
operations of businesses

Services used indaily life/at home

Usage fees forvarious services

Servicesused outside
the home

Payments for travel tickets
and car rentals,delivery services, etc.

Our Business Activities Center on These Five Focus Areas

E-COMMERCE
Providing all types of highly conve-

Providing payment services
Payment after receiving products(GMO Payment After Delivery)

CASHLESSGLOBAL

Offering services for financial institu-

Globally exporting our expertise,

tions to facilitate more payments

nient, secure payment methods,

going cashless, which is anticipatedfrom internet shopping to online

to reach the same level in Japan aspayments of taxes and public dues

in other countries

know-how, and services in payments
and finance, while actively promot-

Withdrawals at ticket machines
Accommodating need for
cash in the cashless era

ing partner strategies throughinvestment

Card payments at
vending machines
Diverse payment methods
handled securely

Shopping by smartphone
Payment services for purchasing
goods and services outside
the home

04

GMO Payment Gateway, Inc.

FinTechIoT

For merchants, we develop payment

Providing highly secure services inmethods that utilize financial technol-

ogy and services that support growthaccording to their funding needs

Payments at offline stores
Using smartphone apps
to pay for services and purchases

the area of offline payments, where
further growth is expected, alongwith the promotion of cashless payments and increased inboundconsumption

Sustaining global
payment infrastructure
Providing safe and convenient
payment services around the world

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

05

10,000

Our Strengths Nurtured over the Years

9,000

Based on GMO Payment Gateway’s core belief to “enrich the world throughpayment,” we have continuously expanded and captured markets by offering
new services. We will continuously endeavor to create new value in payment
by deploying our unique strengths fostered during the Company’s growth.

2018
Issued Euro-yen convertible
bonds, 2023 maturity, raising
approx. ¥17.5 bn.

Four Strengths

Sales andMarketing

8,000

Operating Profit

01

7,000

Continually enhancing our ability to negotiate
and make proposals since our early years.

2015
Established capital andbusiness alliance withSMFG (Approx. ¥8 bn incapital procured)*1995
Company established

2000
Company name changed to Card Commerce Service, Inc.
Issei Ainoura appointed as President (currently President& CEO)

2004
Acquired credit card payment businessfrom Payment-One, Inc.

6,000

Sales

2008
Launched PG Multi-Payment
Service2008
Transfer of listing to Tokyo
Stock Exchange First Section

Launched GMO B2B Early
Payment, which enables pre­payment on accounts receivable

2013
Established GMO Payment Service, Inc.
as a consolidated subsidiary
Launched GMO Payment After Delivery

5,000

40

Sales
2017

Started marketing the GMO-PG Processing Platform,a one-stop payment solution service targeting financial institutions and financial service providers

2005
Listed on Tokyo Stock Exchange Mothers
market (raised ¥1.2 bn through IPO)

Sales

Systems Development

2017

Start of Ginko Pay service

3,000

Systems Development
2019

Upgraded the core system inanticipation of increased transaction volume and value

1,000

0

Investment

Systems Development

2014

Started the design, operation, and maintenance service for Visa’s B2B exclusive
payment system “Visa Business Pay”
Sales

Systems Development

2016

GMO Financial Gate, Inc. becomesa consolidated subsidiary

2018

Received the highest 3-star ratingin the “Monitoring” evaluation
conducted by HDI-Japan

Client Support

2016

Macro Kiosk Berhad becomes aconsolidated subsidiary

Launched GMO Pallet, the smartphone
app-based payment service that was tobe the predecessor of Ginko Pay

Started payment services for
public taxes and dues

Client Support

Investment

2014

2007

Investment

2005/92006/92007/9Growth Stage
2008/92009/92010/92011/92012/92013/92015/92016/92017/902

Building a reliable system to process highvolume concentrated transactions.

Systems development capabilities that caterto each customer’s needs.

ClientSupport03

Our client-focused support system
attempts to solve even the underlying andlatent issues.

Investment

2018/904

Ability to uncover promising start-ups.

Expansion Stage
2014/9Systems
Development

Awarded the 5-star rating underthe HDI Five Star Recognition
Program

Equity investment into FinAccel,
the No. 1 firm in deferredpayments in Indonesia

Start-Up Stage819 (consolidated)

2019

2016

Inception

2019

Systems Development

2,000

Sales

2004

4,000

2012
Initiated global businessexpansion

Sales

Supporting our clients’ growth with our unparalleled human resource base.
Number of Employees

2018

2005
Company name changed to
GMO Payment Gateway, Inc.

1995

(Unit: Millions of yen)

2019/9Comprehensive support that contributes to
the growth of our investees.

* Capital and business alliance between Sumitomo Mitsui Financial Group, Sumitomo Mitsui Banking Corporation, GMO Internet, and GMO Payment Gateway.
(Note) IFRS Accounting was adopted from the fiscal year ended September 30, 2018. Figures for the fiscal year ended September 30, 2017 have been restated on this basis.

06

GMO Payment Gateway, Inc.

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

07

GMO Payment Gateway at a Glance
Our business is comprised of three reportable segments
separated by service type. We identify the following five
focus areas to be the growth drivers of our business.

Revenue Breakdown

Payment Processing
Business

Money Service
Business

We expanded services to non-EC operators and focused

The GMO Payment After Delivery payment service has

Although revenue increased at our consolidated subsid-

growth in the online EC market.

In addition, continued robust growth is also seen in

was recognized on goodwill to acknowledge the uncer-

on acquiring large-scale merchants given the steady

Payment
Enhancement
Business¥5.8 bn
18%

Payment
Processing
Business¥18.8 bn

59%
FY2019
Revenue¥ 32.1 bn

In the offline market, sales of payment terminals grewby capturing the terminal replacement demand for

IC-chip embedded credit cards as well as steady orderintakes of projects related to the Unattended Market.

¥7.4 bnother services such as Remittance Service, Early Payment

Service, financial services that offer multi-faceted support
to B2B EC operators, and global lending.

Revenue/Segment Profit

14,801

FY 2017
Revenue

8,064

FY 2018

10,031

FY 2019

Segment Profit

7,478

6,254

declined as ad placements decreased due to adverse

FY 2017
Revenue(Unit: Millions of yen)

4,187

4,967

1,377
FY 2018

FY 2019

Segment Profit

5,832

5,361

204

1,972

(177)
FY 2017
Revenue

Online Payment
Pay-as-you-go/Non-recurring Payments (payment formerchandise/goods, digital content, etc.)
Recurring Payments (payment for public taxes and dues, etc.)

FY 2018(1,151)

FY 2019

Segment Profit

Online Advertising Service
SSL Service
Delivery Service

 MO Payment After Delivery
G
Remittance Service
Early Payment Service

FinTech
CASHLESS

pared to our initial estimates. Online advertising revenue

Revenue/Segment Profit(Unit: Millions of yen)

145

E-COMMERCE

tainty over profit generation in the medium term com-changes in the business environment.

Revenue/Segment Profit
18,811

6,364

Focus Areas

iary Macro Kiosk Berhad, an impairment loss of ¥992 mil

amongst banks.

11,89923%

expanded its merchant base and improved profitability.

The Ginko Pay system is also seeing wider adoption(Unit: Millions of yen)

Money Service
Business

Payment Enhancement
BusinessTransaction LendingFactoringGinko Pay
GMO-PG Processing Platform

Offline Payment

IoT
GLOBAL08

GMO Payment Gateway, Inc.

Z
 .com Payment(overseas payment service)Global Lending

Macro
Kiosk Berhad
SMS Authentication and Notification
Mobile Payment

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

09Focus Areas

E-COMMERCE
Vision“Customer First”
Aiming to accurately assess the customer’s needs
and build the optimum payment platform.

Operating StoresTransaction Volume

End of FY2004

6,837

37 mil

FY2004FY2019*2
E-books

1.78 bn

Tickets

Fresh FoodGames & MusicEnd of FY2019*1

The very source of our strength is that we are

empowered by people—our customers, collaborative partners, and the partners with whom wework together. I am grateful to be able to work

together in such an empowering environment in

the constantly changing and stimulating businessof payment.

111,425

Printed Books

Automobile
Taxes

Transaction Value
Taxes

FY2004120.0 bn

FY2019*2

Water Utility
Apparel¥¥CDs

4.6 tr

*1 Operating stores as of End of September 30, 2019 exclude the recent impact of a sudden increase in new stores from a particular merchant.
*2 The Transaction Volume and Transaction Value include the payment transactions at GMO Financial Gate, Inc.

This is what drives us to continuously strive tobe the partner that provides satisfaction and innovation to all. My mission is to build the most powerful sales force that inherits this spirit and canflexibly adapt to changes in the businessenvironment.

TO PIC

Rollout of Next-Generation Payment Platform “stera”

The growth of Japan’s cashless market is marked by increasing complexity
given the proliferation of various payment methods. In order to accelerate

Chikayoshi Katsuki

Manager, Management Department of Sales #3,
Innovation Partners Division

cashless adoption given this complexity and to eliminate the inefficiencies

One-stop supportof the overall payment system, we have developed a payment platform

Omnichannel support

is a next-generation payment platform jointly developed by Sumitomo

World-class networkthat meets the advancements in technology and customer needs. Stera
Mitsui Card Co., Ltd., Visa Inc., and GMO Payment Gateway, Inc.

New services

Business
Environment
and Growth
Strategy

The B2C EC market continues its strong growth, brought about by the progress in logistics reforms and increased penetration of smartphones. In fact, the scope of EC itself

Consumers/
Users

Payment
Methodhas broadened with the emergence of B2B, C2C, and D2C (direct from manufacturers

Credit card,
E-money

outlook of increasing web-based payments in areas such as public dues and taxes and

QR codepayment

to consumers). The possibilities in payment services can be said to be infinite, given thevarious other services.

Given these favorable trends, we strive to achieve above-market growth by acquiring

large-scale merchants for online payments; creating new services for the various typesof non-merchandise/service EC operators; making inroads in the offline market, particularly with the high growth potential of the Unattended Market; and expanding services

Biometric
authentication
EC

Merchants

All-in-one
settlement
terminal

Network

Payment Service
ProviderOfflineDashboardEC
payment
systemPayment
Processing Center

OnlineSumitomo
Mitsui Card
Sumitomo
Mitsui Card

Sumitomo
Mitsui Card

that support the cashless businesses of financial institutions.

10

GMO Payment Gateway, Inc.

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

11

FinTech
VisionAiming to improve profitability and capital efficiency
by further expanding financial services that
contribute to our customers’ growth.

TO PICS

Steady Growth in FinTech by Offering
Services that Cater to the Cash Needs ofCustomers

We are focused on improving the profitabilityof existing services as well as creating newservices which are highly profitable in order to

Revenue Trend of Major Services (% shows the year-on-year change)
Domestic Lending+31.4%
Overseas Lending+1,479.5%
Factoring+2,402.3% Payment After Delivery +46.3%(2-week payment period)

improve the capital efficiency of financial ser-

We provide GMO Payment After Delivery, a highly
beneficial payment service for consumers that do
not own a credit card or prefer to pay after confirming the delivery of goods. This service alsoenables EC shop owners to capture a wider cus-

tomer base by offering payment after delivery tocustomers who prefer cash payments.

We will strive to expand the EC market and ourbusiness performance by further growing the

Payment After Delivery service, which benefits

both customers and sellers. We will also work tovices. GMO Payment After Delivery continues

its high growth on the back of the 32% CAGR
growth outlook of the Deferred Payment

market*, a payment method where payment ismade after the goods are delivered. We willcontinue on our high growth trajectory following the 2018 launch of high-margin services,such as global lending that provides growth

capital to our overseas partners and the GMO
B2B Early Payment service that targets SMEs.
* Source: “Domestic Cashless Payment Market 2019” by Yano
Research Institute Ltd.

FY2018FY2019Target for
FY2020

improve credit assessment accuracy and deploy
AI for fraud detection.

Katsuyoshi Souta
GMO Payment Service, Inc.
Director

Launch of GMO B2B Early Payment toInfomart Corporation from January 2020
Despite the increasing cash needs of SMEs,

the total loan balance has been steadily declining, leading to the problem of worsening cash

35

By leveraging our core payment services, we provide FinTech services that contribute toThis service will be offered on Infomart’s B2B

30

improve merchant cash flow, global lending, GMO Payment After Delivery, and factoring.

Platform Invoicing. By resolving the growth-

25

cial services that align with customer needs and improving the profitability of eachtors, we will work to enhance the usage andWe strive to improve the Company’s overall capital efficiency by creating new finan-­service line.

GMO Payment Gateway, Inc.

–20

from January 2020 which enables a quick

the growth of our customers, such as the Early Payment and Remittance services that

platform for electronic invoicing, called B2B

impeding cash liquidity issues at B2B operaawareness of upfront payment of accounts
receivable.

SME Business Condition DI (right)

45
40

upfront payment of invoices with a single click.

12

Non-bank loan balance (left) (Unit: Trillions of yen)

flow for B2B transactions. We plan to launch
the Electronic Invoice Early Payment service

Business
Environment
and Growth
Strategy

Trend in Loans to SMEs*

20

–30

Gap

–40

–50

–60

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

* Source: Small and Medium Enterprise Agency “SME Business Condition
Survey,” Financial Services Agency “Statistics on Money-Lending Business”

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

13

CASHLESS
VisionAggressively promoting new business creationand expansion of stock revenue by supportingthe cashless businesses at financial institutions.

TO PICS

Growth of Services for Financial Institutions

We provide services to support the cashless businesses of financial institutions such as Ginko Pay,a smartphone app linked to the user’s bank account that enables instant debit, and the GMO-PG

Processing Platform, which provides the system and functions required for the payment business suchas transaction processing, merchant management, and credit card/debit card issuance.
Stock Revenues from Services for Financial Institutions

Japan’s predominantly cash-based society is now
beginning to shift towards cashless payment.

Ginko Pay
GMO-PG Processing Platform
Other services% YoY

Total +87.7%% YoY

To preempt this change, we launched Ginko+153.2%

Pay from 2017, an application that financial institutions can use to promote their cashless busi-

nesses. The number of banks that have adopted
this system has steadily grown, and Ginko Pay is

now available to non-financial businesses as well.

% YoY+70.7%

Ginko Pay is not the end goal in and of itself,

but one of the tools to achieve the blueprint of

our future. Our aspiration is to grow together withour customers by using Ginko Pay as a launchpad.

Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2019
2019
2019

Yasunori Hatada

Head of SmartPay Business
Management Department of Strategic Business
Innovation Partners Division

Rising Ginko Pay Adoption to Promote
Cashless in Japan

Banks that have Adopted Ginko Pay

As of the end of November 2019, 10 financial

institutions have adopted Ginko Pay, thanks toour efforts to increase the number of banks

Hokuriku Bank

Hokkaido Bank

implementing the service. Not only can finan-NEW

cial institutions launch their proprietary smartBusiness
Environment
and Growth
Strategy

The Japanese government aims to raise cashless penetration to 40% by 2025, from 20%
in 2016, a low cashless penetration compared to other countries.

We provide services that support the cashless businesses of financial institutions andfinancial service providers, thereby contributing to the realization of a cashless society.
Ginko Pay, which was co-developed with The Bank of Yokohama, Ltd., has seen asteady rate of adoption among financial institutions since its launch. More recently, it
has also been newly launched as the base system for “Enterprise-Version Pay” by

Sumitomo Mitsui Banking Corporation, expanding its adoption among enterprises.

phone payment apps by utilizing Ginko Pay’s

Sumitomo Mitsui
Banking Corporation

Hiroshima Bank

base system, but it is also possible to interlink
the adopting banks through the Multi-Bank
Payment function. Furthermore, Sumitomo

Bank of Fukuoka

Ginko Pay

Japan Post Bank

Mitsui Banking Corporation has launched the“Enterprise-Version Pay” that utilizes Ginko Pay,
and as a result of this, Ginko Pay has been ad-

Kumamoto Bank

Bank of Yokohama

opted as a payment method on Toyota Wallet.

We will continue to provide multi-faceted support for the cashless needs of financial institu-

Shinwa Bank

Bank of Okinawations and business operators.

14

GMO Payment Gateway, Inc.

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

15

IoT

GLOBAL
Contributing to cashless payment and achieving
co-prosperity with our customers by promoting
solution-based marketing and by establishingstrong relationships with partner companies.

VisionFocusing on “AI x New Payment Domains,”
expanding payment and lending services through alliances,and opening joint offices with top North American andAsian FinTech companies.

VisionThe cashless payment market is expected to expand

Our global business has achieved outstanding results this year.

Games. Given the substantial reliance on cash payment

growth of the lending services commenced in the US andshould contribute to labor-saving and be an antidote toZ.com Payment, despite the lackluster performance by

We were able to achieve a profit thanks to the highahead of the Tokyo 2020 Olympic and Paralympic

Indonesia, as well as the payment business offered byin Japan, we believe that promoting cashless payment

Macro Kiosk Berhad in the latter half of the year.

the decline in labor population.

In addition to business performance, we are focused on

We aim to contribute in raising our corporate value

by prospering together with our customers throughpayment services and to be a contributing member in

Kentaro Sugiyama

enriching the economy through payment services.

President and CEO,GMO Financial Gate, Inc.

Our business opportunities are expanding thanks to Japan’s cashless transformation

Business
Environment
and Growth
Strategy

backed by the government’s promotion of cashless payment in the offline market.

We are witnessing the progress of IoT, which connects various household devices, andrapid expansion of payment and recurring payment in various settings, including parking
fee machines, vending machines, and ticket machines. By positioning the Unattended

Ryu Muramatsu

16

and a corporate entity in the US and other countries.

Fund, and we are strengthening our systems and organization in preparation of further
expanding the lending business to support our investees’ phenomenal growth in the
key markets of the US, Indonesia, and India. Additionally, the number of merchants
adopting Z.com Payment services in the ASEAN region is steadily expanding.

Macro Kiosk Berhad, which offers authentication services to banks, is leveraging its

customer base of several thousand banks and businesses to shift toward CPaaS services
and pursue measures to re-accelerate growth in Malaysia’s neighboring countries.

Promoting Businesses that Capture the Transformations Occurring in the Gigantic Offline Market

GMO Payment Gateway, Inc.

financial institutions and establishing dedicated departments

Steady progress is being made in investment activities of the GMO Global Payment

Business
Environment
and Growth
Strategytion volume and value going forward.

GMO Financial Gate, Inc. increased new customer
acquisitions by 475.9% in FY2019 with its strategic
focus on the Unattended Market, and due to thetailwinds of a transforming offline market driven
by expanding inbound consumption and IC-chip
embedded credit cards.
In addition, the new all-in-one payment terminal
for the next-generation payment platform stera,
jointly made with Sumitomo Mitsui Card Corporation
and Visa, is scheduled to commence sales fromMarch 2020.

Domains,” and are making progress in forging alliances with

Executive Vice President
Head of Corporate Value Creation Strategy
Division
President of GMO-Z.com Payment
Gateway Pte. Ltd.

Market as a focus area, we will make inroads in this market to contribute to our transac-

TOP I Cmaking inroads in the global trend of “AI x New Payment

GMO Payment Gateway Overseas Locations and Investments

Market Size
Beverage/Food
Vending Machine

Ticket Machine

USA

Fare Adjustment/
Payment Machine

Office Coffee
Machine

Japan

China
Hong KongIndia¥2.83 tr¥1.82 tr¥1.00 tr

Vietnam¥446.4 bn

Malaysia

stera payment
terminal(merchant facing)Indonesia

NearlyTripledTaiwanThailandSingapore
stera payment
terminal (consumer facing) MO Global Payment FundG
Investment AmountPhilippines

Japan’s first FinTech fund(Total AUM ¥2.0 bn)

Business segment locations
Payment Processing Business
Money Service Business
Payment Enhancement BusinessInitialinvestment
amountCurrent
marketvalue

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

17

Management System
Corporate GovernanceComplianceFundamental Approach

Under the management principle of “Seeking both materialand spiritual wealth by contributing to the progress anddevelopment of society,” we implement governance sys-

tems that can effectively and efficiently turn these principles
into reality. The fundamental approach to corporate gover-nance in our Group is to devise and implement governancesystems for healthy business development, while simultaneously ensuring both the efficiency and compliance of management. We consider governance to be one of the mostimportant issues in management.

On December 16, 2018 we responded to changes in thesurrounding environment by establishing a Management

Fundamental Approach

Committee to handle the decision-making function for the

In our group of companies, we consider the scope of com-the management oversight function through the separationc) rules, regulations, and procedures, and d) management

execution of important operations, in order to strengthenof supervision and execution. We are working to accelerate
the decision making of management and improve gover-nance, while also reinforcing the oversight function of theBoard of Directors.

To achieve our corporate governance objectives, we arealso committed to conducting more transparent manage-

ment by providing timely disclosures for shareholders andinvestors, and investor relations activities.

pliance to include a) ordinances, b) ethics and social norms,
vision. With an awareness of “adapting to the demands ofsociety” (known as full-set compliance) which includes

observance of ordinances, we are actively boosting thecompliance mindset of all our employees. In its yearly audit
plan, our internal audit office also reviews our state of

In order to sustainably develop, we established the Management Committee in December 2018 as the decision-making
body on business execution. This will further strengthen management oversight while clearly separating the management functions of supervision and execution.
Board of Directors

The Board of Directors is comprised of 11 Directors, including 2 External
Directors, which fulfills the supervisory function of the Board of Directors
and ensures fair and efficient management and risk management.
Management Committee

The Management Committee is comprised of a few Directors including
the Representative Director and certain Executive Officers, and deliberates and reaches decisions on important matters in business execution
in order to expedite the decision-making process and improve the efficiency of business execution.

Board of Directors

Management Committee
Oversight

Internal Directors
9 personsConcurrent position as
Director 4 persons

ReportManaging Executive
Officer 7 persons

External Directors
2 personsEnhancemanagement
oversight

Clearly define
the scope of
responsibility

Improve agility of businessexecution

Board of Auditors

Our Board of Auditors is comprised of four members (of whom three are external auditors). Auditors oversee the execution ofduties of Directors by conducting audits according to the audit plan formulated by the Board of Auditors, and by attending
important Board of Directors meetings, etc.

pany rules, and other such regulations. When the circumstances are found to require improvements, we takecorrective measures, and follow up to ensure the correc-

tions are enforced. In addition to the normal reporting systems based on chains of command, we are building andoperating an internal notification system for incidents wherecompliance violations are suspected within our company.

Information Security (as of September 30, 2019)
Certified ISO 27001 Compliant

Partial Changes to Corporate Governancecompliance with ordinances, articles of incorporation, com-

With a scope that encompasses all ofour business locations, we have beencertified as compliant with the ISO/IEC
27001:2013 global information security
standard (within Japan, the JIS Q
27001:2014 standard).

management systems requirements” for the handling of personal
information.

IS 686090/ISO 270001

Privacy Mark Certified

As recognition that we are taking the appropriate measures to safeguard personal information, we have received Privacy Markcertification which signifies compliance with
the Japanese Industrial Standard “JIS Q
15001:2006 personal information protection

First Payment Processing Company toReceive the Highest 5-Star Certificationfrom HDI
We were awarded the highest 3-star ranking for the twoyears of 2018 and 2019 in the “Monitoring” evaluation conducted by HDI-Japan. Moreover, we were the first ever payment processing company to receive the highest 5-starrating in the HDI Five Star Recognition Program, a certification system for companies that have received three stars

Fully PCI DSS Compliant
The services we provide are in fullcompliance with version 3.2 of the
PCI DSS global security standard forthe credit card industry, which was
jointly formulated by the five global
credit card brands JCB, American
Express, Discover, MasterCard, and Visa. As such, we aredelivering peace of mind to all of our customers, in addition
to secure credit card payments.

Client Support
from HDI-Japan’s rating benchmark. We will strive to continue to improve and strengthen our customer support, notonly through responses to inquiries but also through offering optimal solutions, services, and operations that accurately match the customer’s needs.

First-Time Recipient of Award for Excellence inCorporate Disclosure Presented by the Securities
Analysts Association of Japan

Kazutaka Yoshida
Standing Auditor

18

GMO Payment Gateway, Inc.

Takashi Iinuma
AuditorKazuhiko Okamoto
External Auditor

Yumi Hokazono
External Auditor

We received the top award in the Tele-communication/
Internet industry in the 2019 (25th) Awards for Excellence inCorporate Disclosure, organized by the Securities Analysts
Association of Japan’s Corporate Disclosure Study Group.
The award aims to promote corporate disclosure andemphasizes voluntary and proactive information disclosure

over mandatory disclosure. The result is based on the strict
selection by over 500 experienced analysts based on thefive criteria of (a) management stance on investor relations,(b) investor meetings, (c) fair disclosure, (d) matters related
to corporate governance, and (e) voluntary information
disclosure.

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

19

Financial Highlights (consolidated)

Consolidated Financial Statements

Achieved 14 consecutive years of revenue and operating profit growth since 2005;
achieved over 25% growth in operating profit even after making strategic investments
and the recording of goodwill impairment for Macro Kiosk Berhad

Consolidated Statement of Profit and Loss

Revenue

Operating profit

(Millions of yen)

10,00032,121

30,00026,41725,00020,00015,0009,030

10,00032,121Up 26.7% YoY(9,080)(11,617)Gross profit

17,337

20,504

8,301

Other income

165

153

(10,470)(11,202)

Other expenses(480)(1,154)

Operating profit 2

6,550

8,301

Financial income

415

48

Financial expenses

(63)

(291)

Equity method investment
gains or losses

(203)

(19)

Profit before income tax 3

6,700

8,039

Income tax expenses(2,453)(2,986)

Profit

4,246

5,052

4,000

2,977

3,819

3,948

2,000

FY2015FY2016FY2017FY20180

FY2019

 PS (Basic earnings per share)*E
ROE (Return on equity)
(%)

EPS:

FY2016FY2017

16.1

Up 24.0% YoY

17.0
39.2

26.3

30

FY2015

Profit attributable to:
Owners of parent

(Yen)

30

40

36.0

57.8
19.1

FY2016FY2017FY2019

5,267

(8)

(215)

4,246

5,052

0

IFRS

0

(Millions of yen)

9.0

FY2015FY2016JGAAP

FY2017FY2018FY2019IFRS

ProfitOther comprehensive income

Items that will not be reclassified to profit or loss   Fair value of financial assets measured through other comprehensive income   Share of other comprehensive income of equity method affiliates   Total of items that will not be reclassified to profit or loss

Our management priority is to continue a stable share-

holder return as well as to sustain a retained earnings level

necessary for future business expansion and strengthening

In light of our earnings performance and to fulfill our shareholders’ expectations, the dividend for FY2019 was ¥36, anincrease of ¥1 compared to the year-end dividend planannounced in the FY2018 Summary of Consolidated
Financial Statements.

Items that will be reclassified to profit or loss   Exchange differences on translation of foreign operations   Share of other comprehensive income of equity method affiliates   Total of items that will be reclassified to profit or loss
Other comprehensive income after income taxes

Comprehensive income

Comprehensive income attributable to:* On October 1, 2018, the Company carried out a 2-for-1 stock split. The values shown have been retroactively adjusted to reflect the stock split.
(Note) IFRS Accounting was adopted from the fiscal year ended September 30, 2018. Figures for the fiscal year ended September 30, 2017 have been restated on
this basis.

20

GMO Payment Gateway, Inc.

Financial income reached ¥48 mil, a decline of ¥367 mil YoY,
due to the gains on investment partnerships recorded in theprevious fiscal year. Financial expenses reached ¥291 mil, an
increase of ¥228 mil YoY, primarily due to foreign exchange
losses. Additionally, equity method investment losses shrunkby ¥184 mil YoY, reaching ¥19 mil.

Consolidated Statement of Comprehensive Income

20.0ROE (right)

our corporate structure.

2 Operating Profit

The Payment Processing Business segment operating profit
grew 24.4% YoY and the MSB segment operating profit grew
43.2% YoY. This was thanks to the steady expansion of highmargin online payments and profitability improvements infinancial services and a one-time profit impact. On the other
hand, the Payment Enhancement Business segment operating
loss reached ¥1.1 bn due to the ¥992 mil impairment loss ofMacro Kiosk Berhad.
As a result, consolidated operating profit reached ¥8.3 bn,
up 26.7% YoY, and an operating profit margin of 25.8% thanks
to the 21.6% YoY growth in revenue.

13.5

10

FY2018The Payment Processing Business segment revenue increased
27.1% YoY driven by the steady growth in the EC market as wellas the expansion of services targeting non-EC operators. The
Money Service Business (MSB) segment revenue grew 19.6%
YoY with the growth of the Remittance service and the transaction value of GMO Payment After Delivery, a deferred payment
service. The Payment Enhancement Business segment revenue
grew 8.8% YoY thanks to revenue growth at consolidated subsidiary Macro Kiosk Berhad, which provides SMS-based authentication and notification and mobile payment services. As aresult, consolidated revenue reached ¥32.1 bn, up 21.6% YoY.

20
20

32.6

4,255

29.0

30

20.5

Profit1 Revenue

3 Profit Before Income Tax

Non-controlling interests

10

JGAAP
EPS (left)

12.9

FY2019

IFRS

71.6
60

FY2018Dividends*

(Yen)

90

FY2015

JGAAP

IFRS

JGAAP

0

Selling, general andadministrative expenses

6,000

5,000
0

26,4176,550

12,113

FY2019(Oct. 1, 2018 to
Sept. 30, 2019)

Cost of sales

8,000

21,054FY2018(Oct. 1, 2017 to
Sept. 30, 2018)

Revenue 1(Millions yen)

Up 21.6% YoY

35,000(Millions of yen)K
 ey Points of Consolidated Statement ofProfit and Loss

Owners of parent

Non-controlling interests

Total

FY2018(Oct. 1, 2017 to
Sept. 30, 2018)

4,246

FY2019(Oct. 1, 2018 to
Sept. 30, 2019)

5,052

1,650

(522)

1,768

(527)

88

(11)

70

(99)

117

(17)
1,838

(4)

(87)

(626)

6,085

4,426

6,069

4,630

6,085

4,426

15

(204)

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

21

Consolidated Financial Statements
Consolidated Balance Sheet

Key Points of Consolidated Balance Sheet(Millions of yen)

(Millions of yen)

FY2018
As of Sept. 30,
2018

FY2018
As of Sept. 30,
2018

FY2019As of Sept. 30,
2019 Accounts payable–trade 5

4,663

4,688

 Accounts payable–other 515,740

16,118 Deposits received 541,22850,834 Borrowings 5

4,101

15,800

98

108

1,530

1,569

7

396

FY2019As of Sept. 30,
2019Liabilities and equity
Liabilities

AssetsCurrent liabilities

Current assets
Cash and cash equivalents 4 

42,03352,013 Operating receivables andother receivables

13,236

13,663

Advance payments–trade 4

22,26732,496

Accounts receivable–other 4

15,717

21,566

64

207

7,000

–

 Other financial assets

706

165

 Other current liabilities

2,030

2,229

 Other current assets

1,205

956

 Total current liabilities

69,40091,746 Total current assets

102,232

121,069 Inventories Deposits to affiliates andsubsidiaries 4

Non-current assets

450

517

 Goodwill and intangible
assets

4,934

4,359

 Investments accounted forusing equity method

2,938

3,001

 Tangible assets Deposits to subsidiaries
and affiliates

–

5,000

 Other financial assets

5,444

4,803

 Deferred tax assets

833

1,124

 Other non-current assets

24

116

 Total non-current assets

14,62618,921

Total assets

22

GMO Payment Gateway, Inc.

116,858

139,990 Other financial liabilities Income taxes payable, etc Provisions

Total Assets 4 : Increase of Current Assets

Total Liabilities 5 : Increase of Current Liabilities

Total assets increased by ¥23.1 bn compared with the end of
the previous fiscal year to reach ¥139.9 bn. This was mainly
due to an increase in cash and cash equivalents, an increasein advances paid thanks to growth in the MSB segment, andan increase in accrued revenue.

Total liabilities increased by ¥21.6 bn compared with the endof the previous fiscal year to reach ¥112.4 bn. This was
mainly due to an increase in short-term borrowings and anincrease in advances thanks to growth in the Payment
Processing Business segment.

AssetsLiabilities and net assets(Millions of yen)

(Millions of yen)

116,858

Current assets
121,069 4

Non-current
assets
14,626

Non-current
assets18,921FY2018 Corporate bonds

16,676

16,745 Borrowings

2,199

1,398

 Other financial liabilities

185

223

 Provisions

64

35 Deferred tax liabilities

205

85

 Other non-current liabilities

2,107

2,215

 Total non-current liabilities

21,43820,704

Total liabilities

90,838112,451

116,858

Current assets
102,232

Non-current liabilities

As of Sept. 30, 2018

FY2019As of Sept. 30, 2019

Current liabilities
91,746 5Current liabilities
69,400Non-current
liabilities
21,438Equity26,020Non-current
liabilities
20,704Equity27,539FY2018

As of Sept. 30, 2018

FY2019As of Sept. 30, 2019

Consolidated Statement of Cash Flows
Operating cash flow resulted in ¥1.3 bn in net cash provided
by operating activities. This was a result of cash inflows fromprofit before tax and an increase in deposits received fromthe growth of the Payment Processing Business, which offset
the cash outflows of an increase in advances paid from the

expansion of the MSB segment and an increase in accrued

Equity139,990

139,990

revenues.

inflows from the repayments from deposits to subsidiaries

and affiliated companies, which offset the cash outflows fromthe acquisition of intangible assets and deposits made to
subsidiaries and affiliated companies.

Financing cash flow recorded ¥7.9 bn in net cash pro-vided by financing activities. This was mainly a result of cash

inflows from the net increase in short-term borrowings, which Capital stock

4,712

4,712

 Capital surplus

5,758

5,847

 Retained earnings

12,875

15,884 Treasury stock(491)(1,181) Other items of equity

1,941

1,231

 Total equity attributable toowners of parent

Net cash provided by (used in) operating activities

4,701

24,796

26,494

Net cash provided by (used in) investing activities(8,296)858 Minority interests

1,223

1,044

Net cash provided by (used in) financing activities

18,067

7,959

Total equity

26,02027,53926(148)

116,858

139,990

Increase (decrease) in cash and cash equivalents

14,4999,980

Balance of cash and cash equivalents at the beginning of the period

27,53342,033

Balance of cash and cash equivalents at the end of the period

42,03352,013

Total liabilities and equity

Investment cash flow recorded ¥0.8 bn in net cash pro-vided by investing activities. This was mainly a result of cash

offset the cash outflows from dividend payouts.

(Millions of yen)

FY2018(Oct. 1, 2017 to Sept. 30, 2018)

Translation differences of cash and cash equivalents

FY2019(Oct. 1, 2018 to Sept. 30, 2019)

1,311

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

23

Board of Directors and Management Committee Members(As of December 15, 2019)

Member of the Board

Company Information
Company Overview (as of September 30, 2019)

Management Committee Member

Name

Masatoshi
Kumagai

Chairman and
Director

Issei
AinouraPresident andChief Executive
Officer

Ryu
Muramatsu

Director, Executive Vice
President, Head ofCorporate Value Creation
Strategy Division andPresident of GMO-Z.com
Payment Gateway Pte. Ltd.

SatoruIsozakiDirector, Executive
Vice President, Headof Corporate
Support Division

Establishment
Head office

Capital stock

Capital surplus
Number of
employees

GMO Payment Gateway, Inc.
Stock listing First section of the Tokyo Stock Exchange

Memberships		

Japan Consumer Credit Association

March 1995

		EC Payment Forum

Major subsidiaries

GMO Epsilon, Inc.

		GMO Financial Gate, Inc.

(Securities code: 3769)

 HIBUYA FUKURAS 15F
S
1-2-3 Dogenzaka, Shibuya-ku, Tokyo, 150-0043, Japan(Offices relocated to the above address on November
25, 2019)¥4,712 million¥5,847 million

Senior Managing
Director, Head of
Innovation
Partners Division

Masashi
YasudaDirector

Takehito
KanekoDirector

Hiroyuki
Nishiyama
Director

Number of Group
companies		

Tomoyuki
MurakamiManaging Executive
Officer, President and
COO of SMBC GMO
Payment

Takashi
MitaniManaging Executive
Officer, CTO, andGeneral Manager of
IT Service Department,
Systems Division

24

GMO Payment Gateway, Inc.

External Director

ShinichiSugiyama

Managing Executive
Officer, Head of
Systems Division

Katsunari
Mukai

Managing
Executive Officer,
President and Chief
Executive Officer of
GMO Payment
Service, Inc.

MasaruYoshioka

102,400,000
74,301,000

Business year	October 1 through September 30 of thefollowing year
Base dates for
dividends of surplus
December 31, March 31, June 30, September 30
Annual meetingof shareholders
Annually in December
Shareholder registryadministrator
Mitsubishi UFJ Trust and Banking Corp.
Administrator contact
information
Mitsubishi UFJ Trust and Banking Corp.
Stock Transfer Agency Department
1-1 Nikkocho, Fuchu-shi, Tokyo
0120-232-711 (toll-free)
Stock listing
Tokyo Stock Exchange
Method of public
noticesThrough electronic public notices
Notices published at https://corp.gmo-pg.com/en/ir/(However, when electronic public notices cannot be published due to an
accident or any other inevitable circumstances, we will publish them in
the Nihon Keizai Shimbun newspaper)

Number of shareholders:

10,195

Shareholders and Numbers of Shares
Other institutions

Individuals, others

Managing Executive
Officer, Executive
Manager of Management
Department of Strategic
Business, Innovation
Partners Division

Kazunari
TaguchiManaging
Executive Officer,
President of GMO
Epsilon, Inc.

6.13% (4,557,414 shares)

Foreign institutions, etc.

Treasury shares

28.96% (21,519,969 shares)

0.01% (5,076 shares)

Major Shareholders (as of September 30, 2019)

Takeshi
YoshiiManaging Executive
Officer, Executive
Manager of Management
Department ofSales #2, Innovation
Partners Division

27 (+ 4 by equity method)

Total number of issued shares:(Note) The figures reflect the 2-for-1 stock split carried out on October 1, 2018.

External Director

Macro Kiosk Berhad

Total number of authorized shares:

1.14% (848,595 shares)

Director

GMO-Z.com Payment Gateway Pte. Ltd.

Notes for Shareholders

Financial instruments
business operators

Akio
Sato

GMO Payment Service, Inc.

Stock Status (as of September 30, 2019)21.52% (15,986,005 shares) 42.24% (31,383,941 shares)

Masaya
Onagi

		

		

819 (consolidated)

Financial institutions

Hirofumi
Yamashita		Japan E-Commerce Consultant Association(JECCICA)		Business outline	Integrated payment related services
and financial services

Yuichi
Hisada		Japan Multi-Payment Network Protection
Association (JAMPA)

Stock
ownership
ratio (%)

Name of shareholder

Sharesowned

GMO Internet, Inc.

31,172,200

41.95

Japan Trustee Services Bank, Ltd. (Trust account)

5,013,500

6.74

The Master Trust Bank of Japan, Ltd. (Trust account)

3,118,900

4.19

Sumitomo Mitsui Banking Corporation

2,501,600

3.36

J.P. MORGAN BANK LUXEMBOURG S.A. 385576

1,255,500

1.68

Issei Ainoura

1,000,200

1.34

SSBTC CLIENT OMNIBUS ACCOUNT

992,801

1.33

STATE STREET BANK WEST CLIENT - TREATY 505234

976,248

1.31

STATE STREET BANK AND TRUST COMPANY 505103

894,008

1.20

STATE STREET LONDON CARE OF STATE STREETBANK AND TRUST, BOSTON SSBTC A/C UK LONDONBRANCH CLIENTS - UNITED KINGDOM

816,947

1.09(Note) The stock ownership ratio is calculated using total shares outstanding
less the treasury shares (5,076 shares).
(Note) The stock split carried out on October 1, 2018 increased the total
shares outstanding by 37,150,500 shares.
(Note) The ratio of 41.95% reflects the stock ownership ratio after GMO
Internet, Inc. partially divested GMO-PG shares on December 18, 2018.

Announcements
1. Points of note
(1) In principle, procedures such as change of shareholder address, bankremittance specifications for dividends, and purchase requests, are handled
by the account management institution (securities company, etc.) where theaccount was opened. Please contact the securities company or other suchinstitution at which you opened your account. Please note that the shareholder registry administrator (Mitsubishi UFJ Trust and Banking Corp.) does
not handle such matters.
(2) Unpaid dividends can be received at the main branch, or other branch
offices of Mitsubishi UFJ Trust and Banking Corp.
2. Dividend calculation statements
The enclosed “Dividend Calculation Statement” also serves as the “Notice ofPayment” created based on regulations specified in the Act on Special
Measures Concerning Taxation. After receiving payment of the dividend, it
can serve as confirmation of the dividend amount and as information used
when filing income taxes. Shareholders who receive dividends through theirsecurities accounts (pro-rated method for number of shares) should contact
the securities company that performs the transactions for details.
3. For procedures pertaining to shares registered in special accounts, pleasecontact the institution that administers special accounts, Tokyo Securities
Transfer Agent Co., Ltd.
Mailing address and phone number
2-8-4 Izumi, Suginami-ku, Tokyo 168-8522 Tokyo Securities Transfer AgentCo., Ltd. Business Center 0120-49-7009 (toll-free)* At the annual meeting of shareholders held on December 20, 2015, it was
decided that the Board of Directors would be the decision-making body for
dividends of surplus, and that the record dates for these dividends would
be December 31, March 31, June 30, and September 30. As a result, we areable to distribute dividends of surplus on four occasions throughout the year.
However, in order to ensure the retained earnings that our business structure
requires, our plan calls for the year-end dividend to be the single dividend of
surplus distributed during the year.

Annual Report 26th Fiscal Year 2018.10.1–2019.9.30

25

東証上場
GMO Payment Gateway, Inc.
https://www.gmo-pg.com/enTokyo FUKURAS Office (Head Office)
SHIBUYA FUKURAS 15F

1-2-3 Dogenzaka, Shibuya-ku, Tokyo, 150-0043, Japan
TEL: +81-3-3464-2740 FAX: +81-3-3464-2387
Humax Office

Humax Shibuya Bldg. 7F

1-14-6 Dogenzaka, Shibuya-ku, Tokyo, 150-0043, Japan
TEL: +81-3-3464-2740 FAX: +81-3-3464-2387
Osaka Grand Front Osaka Tower 23F

3-1 Ofuka-cho, Kita-ku, Osaka, 530-0011, Japan

TEL: +81-6-7634-3070 FAX: +81-6-6374-0150
Kyushu Tenjin Asahi Building 5F

東証 JASDAQ 上場

TOKYO PRO Mar

3-4-7 Tenjin, Chuo-ku, Fukuoka, 810-0001, Japan
TEL: +81-92-688-9018 FAX: +81-92-688-9019

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P R O Ma rketTOKYO STXCHANGKEE
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