Supplementary information
Financial results briefing for the Q3 of FY2018

August 10, 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
Payment enhancementbusiness

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

Inner circle: Sales composition
Outer circle: OP composition(Q1-3 FY2018 actual)

2%
Payment processing
business

12%

20％
56％
Money ServiceBusiness (MSB)
GMO payment after delivery
RemittanceTransaction lendingEarly payment service
Finance leaseand others

24％

Online payment
Recurring payment
Card-present payment*※System development
Biz with banks/Processing
and others

86％*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％)

Payment
processing
business

Money ServiceBusiness

Payment
enhancementbusiness
Customer growth

Mainbusiness

Value-adding services for the expansion of the main business

Copyright (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
Merchant

Consumer

Our Company & Service

Payment company

Merchants=Our Customers

40+ Credit cardcompany

93,450 storesEC(end of June 2018)

Convenience store

BtoB・BtoC・CtoC

E-money

Public moneyOnlinePC

NHKNTA, 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 June 2018)
Physical store

Wallet payment
Account transfer

GMO Payment
After Delivery
G lo b a l p a ym en t

33,701 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)

②②

①

③

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)④①

Fee based on transaction valueCoefficient: 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 proceedOur group2.5％ 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(Million yen)
28,00026,00024,00022,000Spread20,00018,00016,00014,00012,000Fee

10,000
8,000
6,000

4,000

Stock

2,000

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

2007/92008/92008
Launched
EarlyPaymentService

2009/92010/92011/92012/92011
Launched
OnlineAdvertisingService2013/9
2013
Launched
Payment
AfterDelivery

2014/92015/92014
2015
Launched Renewed
Transaction Early
Lending
Payment
Service

2016/92017/92018/9E

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

Payment processing
business■Business model

Payment processing

InitialServices forbanks/Processing（Initial revenue）

System development
GMO-FG

Etc.

Stock(Monthly revenue)

GMO payment afterdelivery
Remittance service
Money service
business

Fee

Early payment
service(Transactionprocessing revenue)

GMO-FG：GMO Financial Gate

Services forbanks/Processing
Online advertising
service

Etc.

GMO payment after
delivery（Fee）
Remittance service
Etc.

Payment processing (MK)Spread(Merchant acquiring
service revenue )Shipping service

MK：MACRO KIOSK

Etc.

Payment processing (MK)

Etc.

SSL

MACRO KIOSK

System development

Shipping service

Online advertising
servicePaymentenhancement business

SSL

Payment processing（MK）

Transaction lending

Finance lease

Payment processing（MK）

Etc.

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

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

Etc.

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 final
consumption
expenditure rate

South Korea

74 ％

19 ％

93 ％

UK12 ％

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 marketappFlea 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 andMasterCardFuture target and potential
Vending machine(Drink/food)

Ticket vendingmachine(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

NEWResona Group
Japan Post Bank

Bank of Fukuoka

Tokyu Corporation, Bank of Yokohama andGMO-PG to start the development of a cashout service through ticket vendingmachines at train stations (2019 spring-）
NEWGinko 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 deliver
Consumer

Merchant

GMO-PG group

Payment company

GMO-PG Remittance service
Efficient and secure refund and remittanceprocessing for Ecommerce operator

Transaction
lending
RefundRemittance

Credit cardcompany
Convenience store
Electronic money
Mobile phonecompany, etc.

Financing money
for growth

Handles daily transaction

Early payment service
Early payment

PaymentImproves cash flows by moving up
the date of payment to merchant

Payment after delivery
Pays sales proceed without waitingfor deposit from consumer“GMO payment
after delivery”
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

14

MSB: GMO Payment after delivery
Provided by GMO Payment Service, our subsidiary■GMO Payment After Delivery
Buyer can pay at post office or CVS after receiving goods
Payment terms is 2 weeks.
EC site③Goods delivery / receipt②Creditcheck①Order

⑤Deposit④Mailing invoice/payment slip

Convenience store
Post office, bank

⑥PaymentConsumer

Payment services with 2weeks+ payment terms are also delivered.
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 businessProviding payment services toJapanese companies that entered
Asian market (Z.com Payment)

US: Innovator

Japan’s first Fintech fundtargeting payment-related
startups in Asia (JPY 2 billionfund)YoY＋160％US
Hong Kong
Invest in Fintech-related or
cutting-edge payment
service companies

TaiwanIndia

Thailand

VietnamPhilippines

Malaysia

Singapore

GDP
Approx.¥250T
5-6% Growth

Indonesia

FY2015

fFY2016

FY2017

Transaction 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 BerhadLocation

Malaysia and 11 other countries in Asia

Headcount255

Financial results Revenue
GMO-PG’s stake 70％<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:2,646 million yen(Nine-month results consolidatedto GMO-PG Group under FY2017)④Entry into new areas by M&A

Acquisition cost Approx. 1,121 million yen
Businessmodel

SMS mobile solution (80％)
delivered to 95％ of Malaysian banks

Carrier billing gateway (20％)
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 June 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）

GMO Epsilon, Inc.
Payment after delivery（Financial results of FY2017 under JGAAP）
Revenue：2,617 million yen, Operating profit：1,807 million yen (J-GAAP)

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 Kongand 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 1995Humax 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 Officer
Issei Ainoura
Director, Executive Vice President
Ryu Muramatsu
Director, Executive Vice President
Satoru Isozaki
Senior Managing Director
Yuichi Hisada
Director
Tomoyuki 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 June 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 of EcommerceConsumerPaymentcompany

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 whether
payment has been
received(data collation)

Sales processing

Payment

Credit 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 onboth parties.

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

22