Supplementary information
Financial results briefing for the 3Q of FY2017

August 1, 2017

GMO Payment Gateway, Inc.
(3769: Tokyo Stock Exchange section - 1 )https://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 to register credit card
number in advance

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

2

Business outline of payment processing company(1)Problems with online credit card payment in the early days of Ecommerce
ConsumerShops（merchants）①OrderLarge volume of sales slips

TelFAX②Enter each into theCAT terminal

Post
cardnetwork③Make sales report to eachcredit card company（sales processing）④Mail sales report toeach credit cardcompany

Credit card company

Authorization（get approval number）

Internet

Problems in the business Entry at the order receipt: CAT terminal and our system Sorting for each credit card company
 Insufficient check on incoming payment⑤Check whether payment has been
received
Payment

 Human error

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

3

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

Payment processing company① Order

Update credit
card information

Tel

Post
card

network

Processing sales

Submit sales report

FAXInternet②Check whether
payment has been
received＜Real-time credit decision＞

Credit card company

Credit. Sales

Payment

In the early days of Ecommerce, credit card payments were processed
offline between merchants and credit card companies, causing burden on
both sides.
To solve this problem, payment processing companies were established,making 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 payment companies incontracts, payment information and money transactions
Consumer

Merchant

Our Company & Service

Payment company<merchants=Our Customers>

Online About 88,425 stores

Credit cardcompanies(as of June, 2017)

PCSmartphone

OfflineNarrowly defined EC・Online Shopping

Convenience stores

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

Cash on delivery

Service Commerce・Donation
・House rent
・Tuition fee
・Wi-fi charge

E-money

Carrier billing

Comprehensive payment
processing service
Money service business
Online Advertising(Demand generation)

Physical store

E-wallet
Account transfer

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

30,502 terminals(as of June, 2017)

Online banking

Comprehensive payment
processing service
Money service business

BitCoin payment
Apple Pay payment

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

etc.

5

Revenue model of credit card payments
Revenue model by merchant scale■Revenue breakdownMerchant＜Merchants＝our customers＞①

Initial (Initial revenue)
Initial introduction fees
KPI: Number of new merchants acquired

Revenue: Number of new merchants acquired
× _Yen (at the time of introduction)

Enterprise

Stock (Monthly revenue)②

GMO-PG

Customer support and maintenance fee
KPI: Number of merchants
Revenue：Operating merchants × _YenSME
Fee (Transaction processing revenue)③

Fee based on transaction volumeKPI: Number of payments processed
Revenue：Number of payments processed× _YenStartup

GMO Epsilon

Spread (Merchant acquiring service revenue)④

Fee based on transaction value
KPI: Amount of payments processed
Revenue：Amount of payments processed× _%Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

6

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

processed payments

processed payments

Our group
Credit cardcompany（2.8％）

Representative
contractwith merchants

Merchants

Payment company(3.0％）（2.5％）
Our group

0.5％

Spread(Merchant acquiringservice revenue)

Credit card

*Sales proceeds flow
Credit card company↓Our group↓
Merchantscompany（3.5%）
Merchants*Numbers are provided for illustration purposes only.

Payment company
Sales proceeds flow
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

7

Revenue breakdown
Action plans to realize balanced growth
Spread (merchantacquiring service revenue)
Payment processing
Payment after delivery
Transaction lending
Early payment service
Finance lease
GMO-FG・MKetc.

（million yen）
18,00016,00014,000Fee (transactionprocessing revenue)
Payment processing
Payment after delivery
Shipping services
Remittance Service
GMO-FG ･ MK
etc.

12,00010,0008,000

Stock (monthly revenue)
Payment processing
Online Advertising Service
GMO-FG
etc.

6,000

4,000

2,00002004/9 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
service2011
Launched
OnlineAdvertisingService

Initial (initial revenue)
Payment processing
System development
SSL
GMO-FGetc.

201420152016
2013
Launched Launched Renewed Acquired
FG andPayment TransactionEarlylending
payment MKafter
servicedelivery*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 Ecommerce ratio and high cash payment ratio■Ecommerce ratio（％）■Card usage ratio

UK

15.0

14.5

US（2015）

Credit card
usage rate
(A)

Debit card
usage rate
(B)

Card usage rate
(A+B)

UK

11 ％

40 ％

51 ％

US

25 ％

19 ％

45 ％

Korea

67 ％

17 ％

84 ％

Australia

31 ％

22 ％

53 ％

Japan

17 ％

-17 ％

12.5

Japan
11.3
10.410.0

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

2.8

3.1

3.70.0
2010

2011

2012

2013

2014

2015

2016

References：METI. “FY2016 Building infrastructure for information- and service-oriented
Japanese economy and society (Ecommerce market survey)”
U.S. Bureau of the Census. “The 4th Quarter 2015 Retail Ecommerce Sales Report”
Office for National Statistics “Retail Sales, March 2016”*Ratio=(Amount handled by CC or DC) / (Private final consumption
expenditure*Estimated by GMO-PG with reference from CPSS Red Book
THE WORLD BANK ”Household final consumption expenditure (current USD)”

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

9

Our approach to broadly-defined EC market
Bringing in online payments into new markets
B2B

B2C

C2C

Enormous market
potential;¥1,000trillion

Narrowly defined
B2C EC market

Developing market¥1trillion¥15.1trillion
EC ratio: 5.4%

（growing at an annual
rate of 10-15%）

OnlineMerchandising

EC rateMarket scale

Offline(card-present)

Flea marketapps

BtoB
credit card
payments2016
5.4%¥15.1T

Services,
digital contents

2020
8%
¥24T

2025
15%
¥45T

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

Consumer spending¥300trillion

Flea market*METI “Ecommerce market survey”

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 of the Local Autonomy Law in 2006

National Tax Credit Card Payment Site

LaunchedJanuary
2017

SapporoLocal governments : Local Tax (Automobile Tax,Light vehicle tax, Fixed assets tax, etc.)
etc.
Water bill, Gas bill, hometown tax
NHK: Broadcast subscription fee(Credit card usage rate at the end of FY2015: 12.8%)
Osaka

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

TokyoFukuoka

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 x IoT
Embedded EMV terminals■OP (Actual & Forecast) of GMO-FG group
Compatibledevices

Growth areawith PIN

without PIN

Target

EMV・cashless

Existing area

2,500K units

960K units
Railwaycompany

Number of mobile TRX

157K units

Gas station

Parking lotcompany

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 services that only payment processing companies
can provide
ConsumerMerchant

GMO-PG group

Payment company

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

Transaction
lending（④）

Credit card company
Convenience store
Electronic money
Mobile phone company,etc.

Financing money
for growth

RefundRemittance

Deals with daily transactions

Revenue model (Revenue breakdown)

①
②
③
④

Initial

Early payment

Early payment service(④)

Payment

Improves cash flows by moving up
the date of payment to merchants

StockFee
SpreadPayment after delivery（③④）
Pays sales proceeds without waitingfor payment from consumers“GMO payment
after delivery”
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

13

GMO Payment after delivery
Provided by GMO Payment Service, our subsidiary

No need for credit card
（Buyers can pay at post offices and CVS’s after receiving goods）
EC site②Credit③Goods delivery / receipt

check①Order

⑤Deposit④Mailing invoice

Convenience store
Post office, bank

⑥Paymentconsumer

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

Strategies for Asia
Strategic Investment in MACROKIOSK
Company name Macro Kiosk BerhadLocation

Malaysia and 11 countries across Asia

Headcount231（Malaysia:176, Asia:56）

Financialresults (FY2015)

Revenue
PBT:2,338 million yen:77 million yen

Advantage

Ⅰ. Stable revenue model
Ⅱ. Strong client base
（Banks, aviation, etc.)
Ⅲ. Development capabilities
Ⅳ. Taking in talented
management and staff

GMO-PG’s stake 70％
Acquisition
costBusinessmodelApprox. 1,121 million yen

80% of the services isfor financial institutions

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,
consolidation of MK
３ Segments

Payment processing
business

4 Revenue models

Payment processing

InitialSystem development
GMO Financial Gate etc

System development
etc

Stock(Monthly revenue)

Online Ad Service

etc

Payment processing（MK）

Transaction lending

GMO payment afterdelivery（Fee）

MSBFee(Transactionprocessing revenue)etc

SpreadSSL(Merchant acquiring
service revenue )Delivery serviceMKetc

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 service
business

Payment processing（MK）

GMO payment after
delivery（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 equity affiliates
GMO Payment Gateway, Inc.
＜ Consolidated subsidiary＞
Multiple payment（small scale）

GMO Epsilon, Inc.

（Financial results of FY2016）
Revenue：2,242 million yen, Ordinary profit：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 ）65.0％ stake

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 ）70.0％ stake< Equity-method affiliate >Multiple payment

SMBC GMO PAYMENT（As of the end of December 2016 ）49.0％ stake
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■Managing underwriter

Chairman & Director
Masatoshi Kumagai
President & Representative Director
Issei Ainoura
Executive Vice President
Ryu Muramatsu
Executive Vice President
Satoru Isozaki
Senior Managing Director
Yuichi Hisada
Director
Yasuhiko Kimura
Director
Tomoyuki Murakami
Director
Shinichi Sugiyama
Director
Yusuke Arai
Director
Masashi Yasuda
Director
Masaru Yoshioka
Senior executive officer
Takeshi Yoshii
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
External Director
Masaya Onagi
External Director
Akio Sato
AuditorYasuhiro Kanda
AuditorTakashi Iinuma
External Auditor
Kazutaka Yoshida
External Auditor
Kazuhiko Okamoto（Main）Nomura Holdings, Inc.,（Sub）Mizuho Holdings, Inc.

■Auditor

Deloitte Touche Tohmatsu LLC■Consolidated subsidiaries GMO Epsilon, Inc. GMO Payment Service, Inc., GMO Financial Gate, Inc.
GMO PAYMENT GATEWAY PTE. LTD. (Singapore), Macro Kiosk Berhad, etc.
■Equity affiliates
SMBC GMO PAYMENT, Inc. etc.

（As of June,2017）

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

18