Supplementary information
Financial results briefing for the Q4 of FY2018

November 13, 2018

GMO Payment Gateway, Inc.
(3769: Tokyo Stock Exchange section - 1 )https://corp.gmo-pg.com/en/Three business segments
Continuing 25% OP growth based on payment processing andperipheral businesses(Q1-4 FY2018 actual)

Payment enhancementbusiness
Online advertising service
Asia payment enhancementbusiness (MK)*and others

Sales
composition
12%

OP
composition

15%

20％
56％

85%

24％
Money Service Business(MSB)
GMO payment after delivery
RemittanceTransaction lending
Early payment service
Finance leaseand others

Payment processing
business
Online payment
Recurring payment
Card-present payment*
System development
Biz withbanks/Processing
and others*MK: MACROKIOSKGMO-FG: GMO Financial Gate, Inc.

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

2

Our ecosystem
An ecosystem where our value-adding services benefit ourmain business so both continue to growMore payment processing

Payment processing(Gross margin 85％)

Paymentprocessing
business

Money ServiceBusiness

Payment
enhancementbusiness
Customer growth

Mainbusiness

Value-adding services for the expansion of the main businessCopyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

3Business outline - the role of our group
Connecting merchants and payment companies on contract,
payment data and money flow
MerchantConsumer

Our Company & Service

Payment company

Merchants=Our Customers

40+ Credit cardcompany

102,484 stores(end of September 2018)

EC

Convenience store

BtoB・BtoC・CtoC

E-money

Public moneyOnlinePCNHK
NTA, automobile tax
Municipalities (e.g. Tokyo)

Subscription
Video distribution
Software, clothes
Smartphone

Service commerce

Cash on delivery
Carrier payment

Comprehensive payment service
Money service business
Online advertising(Demand generation)

Digital goods
Donation, travel, policy(end of September 2018)
Physical store

Wallet payment
Account transfer

GMO Payment
After Delivery
G lo b a l p a ym en t34,559 terminals

OfflineOnline banking

Comprehensive payment service
Money service business

BitCoin payment
Apple Pay

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

etc.

4

Revenue structure of credit card payment
Revenues determined by merchant type/size■Our four revenue types①■Revenues by merchant type/size

Initial (Initial revenue)
Initial introduction fees
Coefficient: Number of new merchants acquired
Revenue: Number of new merchants acquired
× _Yen (at the time of introduction)

Municipalities
Enterprise

Stock (Monthly revenue)②②①③

Customer support and maintenance fee
Coefficient: Number of merchants
Revenue：Operating merchants × _Yen

Middle-sized
merchants
Fee (Transaction processing revenue)③

Fee based on transaction volume②③

Coefficient: Number of payments processed
Revenue：Number of payments processed× _YenSpread (Merchant acquiring service revenue)④①Fee based on transaction value
Coefficient: Amount of payments processed
Revenue：Amount of payments processed× _%④Startup④

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

5

Two types of contracts
We introduced a new contract system and changed the flowof sales proceed
Direct contract
mainly for large companies
and municipalities

Payment
processing

Payment
processing
Our group
Credit cardcompany

2.8％ charge
Sales proceed

Payment company

Merchant

Representative
contract

0.5％ Spread(Merchant acquiring revenue)
3.0％ charge

mainly for SME’s but covers
some large companies

Sales proceed

Our group

2.5％ charge

Sales proceed
Credit cardcompany

3.2％ charge
Merchant*Numbers are provided for illustration purposes only.

(Charge that is applied under directcontracts with payment company)

Payment company
Flow of sales proceed/charge

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

6

Revenue breakdown
Target a balanced revenue growth by various initiatives
IFRS

J-GAAP（Million yen)

32,00030,00028,00026,000Spread24,00022,00020,00018,00016,00014,000Fee

12,00010,000
8,000
6,000

Stock

4,000
2,000

Initial0
2004/92005/92006/9Listedon theTSE※MK：MACROKIOSKGMO-FG：GMO Financial Gate Group

2007/92008/92009/92008
Launched
EarlyPaymentService

2010/92011/92012/92011
Launched
OnlineAdvertisingService2013/92014/92015/92016/920132014
2015
Launched Launched Renewed
Payment Transaction Early
After
Lending
Payment
DeliveryService2017/92018/9 2019/9E

2016
Launchedbusiness withbanks

GMO-FG and MK *became subsidiaries

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

7

Summary chart of Segments and Revenue models
Reporting in 3 Segments and 4 revenue models■Segments■Business model
Payment processing

Payment processing
business

Services for banks/Processing

Payment processing（MK）
Initial（Initial revenue）

System development

System development
GMO-FG
GMO payment after delivery

Payment processing (MK)Stock(Monthly revenue)

Transaction lending
Early payment service

Payment processing (MK)

Fee(Transactionprocessing revenue)

Shipping service
MACRO KIOSKGMO-FG：GMO Financial Gate

Remittance service

Payment processing (MK)

Online advertising service
SSL

GMO payment after delivery（Fee）

Shipping service

Finance lease

Paymentenhancementbusiness

Services for banks/Processing
Online advertising service

Remittance service
Money servicebusiness

SSLSpread(Merchant acquiring
service revenue )GMO payment after delivery (Spread)Transaction lending
Early payment service
Finance lease

MK：MACRO KIOSK

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

8

Growth potential of Ecommerce market in Japan
Lower Ecommerce ratio and higher cash payment ratio
than other advanced countries■Ecommerce ratio（％）■Card usage to private final consumption expenditure
16.2

UK

15.0

14.5

US（2017）

Credit card
usage rate

Debit card
usage rate

Credit+Debit usage
to private finalconsumptionexpenditure rate

South Korea

74 ％

19 ％

93 ％

UK

12 ％

53 ％

65 ％

US

31 ％

25 ％

56 ％

Australia(2016)

26 ％

20 ％

46 ％

Japan(2016)

17％

-17 ％

12.5

Japan
11.3
10.4
10.0

8.8

9.2
7.6

8.1

8.2
7.3

7.0

6.4

6.0
5.0
3.6

4.1

4.6

5.0

5.4

5.8

5.8
5.4
4.8
4.4

1.8

2.1

2008

2009

2.5

2.8

3.1

3.7

0.0
2010

2011

2012

2013

2014

2015

2016

2017

References：METI. “FY2017 Building infrastructure for information- and serviceoriented Japanese economy and society (Ecommerce market survey)”
U.S. Bureau of the Census. “The 1st Quarter 2018 Retail E-Commerce Sales Report”;
Office for National Statistics “Retail Sales, May 2018”*Rate=(Amount handled by CC or DC) / Private final consumption
expenditure*Estimated by GMO-PG with reference from CPSS Red Book “Statistics on payment, clearing
and settlement systems in the CPMI countries - Figures for 2017”
THE WORLD BANK ”Household final consumption expenditure (current USD)”

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

9

Cashless field expansion
Cashless payment trends in Japan is our growth accelerator
B2B

B2C

C2C

Enormous market
potential¥1,000 trillion

Narrowly-defined
B2C EC market

Developing market¥1 trillion¥16.5 trillion
EC ratio: 5.8%
（growing 10% pa）

OnlineMerchandising

Payment via
internet, etc.

Offline(card-present)

B2B
Credit cardpayment

2017
EC rate
5.8%
Market size ¥16.5T

2020E
2025E
7-8%
15-20%¥22-24T ¥45-50T

Service commerce
Digital content

Public fund・utility fee
・Local tax¥39 trillion
・National tax ¥62 trillion

Payment with areader at aphysical store

Consumer spending¥300 trillion

Flea market
appFlea market*References：METI. “FY2017 Building infrastructure for information- and service-oriented Japanese economy and society (Ecommerce market survey)”. Figures 2020 and after are our estimates.
*MIC “Breakdown of national tax and local tax revenue (FY2018 Budget and Local Government Finance Plan)”*THE WORLD BANK ”Household final consumption expenditure (current USD)”

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

10

Payment processing: Public due & utility payments
We have been cultivating card payments in this field since
the revision of the Local Autonomy Law in 2006
SapporocityLocal：Local Taxes (Automobile tax, light vehicle tax,governments fixed assets tax, etc.)
etc. Water bill, gas bill, hometown tax
National tax credit card payment website
NHK：National broadcasting subscription fee
Credit card usage rate at the end of FY2017:14.9%（yoy ＋1.2％）

Expansion expected to continue
Maintenance fee, cram school tuition fee
parking fee, school meal charge, etc.

FukuokacityTokyo
Aichi pref.
Osaka pref./city*Japan Broadcasting Corporation “Business Report for FY2017”

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

11Offline (card-present) payment
IoT services to go full scale to take in cashless & inbound demands■Offline payment

GMO Financial Gate delivers payment terminals for physical store payments
Embedded EMV *terminals

Revised Installment Sales Act:
Replacement demands for IC chip equipped
terminals from the conventional magnetic ones
Tokyo Olympics:
Cashless payment demands to surge as more
foreign visitors come to Japan

with PIN

with PIN

with PIN

without PIN*EMV: Unified standard for credit cards with IC chip determined by Visa andMasterCard

Future target and potential
Vending machine(Drink/food)

Ticket vending
machine(Railway company)

Auto payment
machine(Parking, hotel, hospital)

Office coffeemachine

Self check out, EVcharger, goods sellingmachine, laundromat,
touch pad for orders*These illustrations do not necessarily imply plans for future implementations.

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

12

Payment processing: Ginko Pay
Get more banks/companies onboard, connect them andbe an infrastructure■Ginko Pay
A smartphone app system that allows for immediate payments such as direct debit
targeting financial institutions
Tokyu Corporation, Bank of Yokohama andGMO-PG to start the development of a cashout service through ticket vending
machines at train stations (2019 spring-）

Resona Group
Japan Post Bank

Bank of Fukuoka

Ginko Pay

Bank of Yokohama

Shinwa Bank

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

13

Definition of Money Service Business (MSB)
Financial service that only payment service providers can deliverServices

Revenue types

Remittance Efficient and secure refund and remittanceprocessing for Ecommerce operator
service

MSB-related assets（Breakdown of operating andother receivables are as follows）

FeeーTransaction
lending

Handles daily transaction

SpreadShort-term loans receivable

Early payment
service

Improves cash flows by moving up
the date of payment to merchantSpreadAdvance payments-trade

Payment afterdelivery

Pays sales proceed without waitingfor deposit from consumer

SpreadFee

Accounts receivable-other

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

14

MSB: GMO Payment after delivery
Provided by GMO Payment Service, our subsidiary■Market size of deferred payment■GMO Payment After Delivery
Buyer can pay at post office or CVS after receiving goods
Payment terms is 2 weeks.

Annual growth rate of 40% or more
Market size for 2017: ¥420 billion (expected)

4,20bil（expected）

EC site＋44.8％②Credit check③Goods delivery / receipt⑤Deposit①Order④Mailing invoice/payment slip
Convenience store
Post office, bank

⑥PaymentConsumer

Payment services with 2weeks+
payment terms are also delivered.

FY2013

FY2014FY2015FY2016FY2017※ (source) “Current situation and future forecast of online
payment service providers 2018” issued by Yano ResearchInstitute Ltd.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

15

Overseas strategies
Target 50% overseas sales ratio by assisting JPN companies
foray into Asian market and our investment strategies■Investment target
Asia: Top payment-related company■Payment processing business
Providing payment services toJapanese companies that entered
Asian market (Z.com Payment)

US: Innovator

Portfolios

YoY

＋67％

Japan’s first Fintech fundtargeting payment-related
startups in Asia (JPY 2 billionfund)

USHong Kong
Invest in Fintech-related or
cutting-edge payment
service companies

TaiwanIndia

Thailand

VietnamPhilippinesMalaysia

SingaporeGDPApprox.¥250T
5-6% GrowthIndonesia
FY2015FY2016FY2017FY2018Transaction value in Asia soaring
GMO-PG overseas bases

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

16

Payment enhancement: Mobile payment andauthentication

Focus on investment in MACROKIOSK, acquiring of
Asian banks and big companies
Strategy: Going after scale, then profit

Company name Macro Kiosk Berhad
Location

Malaysia and 11 other countries in Asia

Headcount

253

Financial results Revenue<Specific actions>①Payment-related businessSet up sales teams in India and Europe②Business expansion in new countries
Provide payment service, collaborating with 2C2P, ourequity method affiliate③Development of new products:4,563 million yen

GMO-PG’s stake 70％④Entry into new areas by M&A

Acquisition cost Approx. 1,121 million yen
Businessmodel

SMS mobile solution (about 90％)delivered to 95％ of Malaysian banks

Carrier billing gateway (about 10％)delivered to 50+ major carriers in 12 countries

DUBAI

GUANGZHOUTAICHUNG
MACAU
HONG KONG
MANILABANGKOK

HO CHI MINHKUALA LUMPUR
SINGAPORE
JAKARTASYDNEY(as of the end of September 2018)
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

17

GMO-PG Group
GMO Payment Gateway’s subsidiaries and equity affiliates
GMO Payment Gateway, Inc.
＜ Consolidated subsidiary＞
Multi payment（targets small-sized merchant）（Financial results of FY2017 under JGAAP）

GMO Epsilon, Inc.

Revenue：2,617 million yen, Operating profit：1,807 million yen (J-GAAP)

GMO Medical Reservations Technology Co., Ltd.
Payment after delivery

GMO Payment Service, Inc.
Card-present payment

GMO Financial Gate, Inc.

（As of end of Sep. 2017）65.0％ stake

Global Card System
Overseas

GMO-Z.COM PAYMENT GATEWAY PTE. LTD.

（Singapore）

GMO-Z.com PAYMENT GATEWAY HONG KONG LIMITED（Headquartered in Hong Kong and a branch in Taiwan）

GMO Z COM PAYMENT GATEWAY MALAYSIA SDN.BHD.

（Malaysia）

GMO-Z.com PAYMENT GATEWAY (THAILAND) CO., LTD.

（Thailand）

Overseas

Macro Kiosk Berhad（As of end of Sep. 2017）70.0％ stake< Equity method affiliate >Multiple payment

SMBC GMO PAYMENT（As of end of Sep. 2017）49.0％ stake

Overseas

2C2P Pte. Ltd.

（As of end of Sep. 2017）32.0％ stake

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

18

Company outline■Name■Date of establishment■Location■Capital stock■Major shareholders■Management team

GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange 1st section)
March 1995
Humax Shibuya Building 7F, 1-14-6, Dogenzaka, Shibuya-ku, Tokyo Japan
4,712 million yen
GMO Internet, Inc., Sumitomo Mitsui Banking Corporation, Issei Ainoura ,etc
Chairman & Director
Masatoshi Kumagai
President & Chief Executive OfficerIssei Ainoura
Director, Executive Vice President
Ryu Muramatsu
Director, Executive Vice President
Satoru Isozaki
Senior Managing Director
Yuichi Hisada
DirectorTomoyuki Murakami
Director
Shinichi Sugiyama
Director
Yusuke Arai
Director
Masashi Yasuda
Director
Masaru Yoshioka
Director
Takehito Kaneko
Senior executive officer
Takeshi Yoshii
Senior executive officer
Takashi Mitani
Executive officer
Katsunari Mukai
Executive officer
Yoshikazu Yanagishima
Executive officer
Kazunari Taguchi
Executive officer
Tatsuhito Muramatsu
Executive officer
Kiyonobu Inayama
Executive officer
Shingo Ito
Executive officer
Yoshinori Inoguchi
Executive officer
Hirofumi Tozawa
Executive officer
Yasunori Hatada
External Director
Masaya Onagi
External Director
Akio Sato
Full-time auditor
Yasuhiro Kanda
AuditorTakashi Iinuma
External Auditor
Kazutaka Yoshida
External Auditor
Kazuhiko Okamoto■Auditor
Deloitte Touche Tohmatsu LLC■Consolidated subsidiaries GMO Epsilon, Inc., GMO Payment Service, Inc., GMO Financial Gate, Inc.,
GMO-Z.com Payment Gateway Pte. Ltd. (Singapore), Macro Kiosk Berhad, etc.
■Equity affiliates
SMBC GMO Payment, Inc., 2C2P Pte. Ltd., etc.

（As of end of September 2018）

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

19

Appendix

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

20

Business outline of payment processing company (1)Problems with online credit card payment in the early days ofEcommerce
Consumer

Paymentcompany

Merchant①order taking

Authorization（get approval number）②Enter each
into theCAT terminal③Make sales report to eachcredit card company（sales processing）

network④Mail sales report
to each credit
card company

Credit card company

Large volume of sales slips

Issues for merchants Order entry into CAT terminal and our system Sorting documents for each credit cardcompany⑤Check whether payment
has been received
Payment

 Insufficient check on incoming payment
 Human error
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

21

Business outline of payment processing company (2)Payment processing service adds operational efficiency to credit card
payment
Consumer

Paymentcompany

Payment
Processingcompany

Merchants①Order taking

Updatecard data
Real-time credit decision

NetworkSendsales data

②Check whetherpayment has beenreceived(data collation)

Sales processing

PaymentCredit card company

Credit・sales

In the early days of Ecommerce, credit card payment was processed offline
between merchant and credit card company, causing burden on both sides.
Payment processing companies were established to eliminate the burden on
both parties.

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

22