GMO Payment Gateway, Inc.
2023 Integrated Report
30th Fiscal Year (2022.10.1–2023.9.30)

Management
Philosophy

We Pursue Both Spiritual andMaterial Prosperity by Contributing to
the Advancement and Progress of Society
We contribute to the progress of society with a strong intention
to create and develop markets and transparency inexpanding businesses.
We define our partners as a group of people whom we can trust.
This group includes our employees, clients and business partners.
Our employees possess richness of spirit, advanced
problem-solving skills and a high level of professionalism.
They pursue richness of spirit through the exchange ofvalues with our clients.

GMO Payment Gateway, Inc.

Management
PolicyGLOBAL LEADERSHIP
A company that leads Japan with its high aspirations and presents new values to the world

BUSINESS MODEL
A company with outstanding potential and a 30-year growth trajectory that is
highly acclaimed by professional global investors

OWNERSHIP MODEL
A company that can achieve phenomenal growth through delegation andinstilling a sense of ownership to younger partners who seek new challenges

2023 Integrated Report1INNOVATION
Social Advancement andCustomer’s Growth throughCreation of Payment Innovations
Beginning with payment, one step in the flow of various
economic activities, the Company provides a wide array ofinnovations to corporates that support operational efficiencies
such as invoicing, cash management and salary payment toenhance corporate competitiveness. Promoting cashless
adoption contributes to the realization of a more convenientand comfortable society.

2

GMO Payment Gateway, Inc.

2023 Integrated Report3

GMO Payment Gateway in Our Daily Lives

Payments made outside the home

Payments made at home

Driving Cashless Migrationin Many Facets of Our Daily Lives
We Support the Convenience and Comfort of Society

stera terminal

4

GMO Payment Gateway, Inc.

2023 Integrated Report5Preface on the 2023 Integrated Report

CONTENTS

The 2023 Integrated Report aims to be a source for all stakeholders tofoster mutual understanding and to advance management by explaining
both financial and non-financial information on various initiatives aimed atraising the Company’s corporate value.
We have endeavored to comprehensively convey the value creationthat we pursue by explaining the materiality initiatives to achieve sustainablegrowth and the strategy to achieve the management target of 25% operating profit growth through the voices of the management, external directors
and our partners.
We hope this publication with further deepen the understanding of ourvalue creation to all stakeholders including shareholders.

Value Creation
Story

8

Message from the President

20

Business Environment

12

Track Record of Value Creation

22

Our Strengths

14

Value Creation Model

24

Business Segment

16

Sustainability

25

Business Portfolio

26

Rebundling

35

GMO Payment Service

28

GMO Payment Gateway

36

GMO Financial Gate

34

GMO Epsilon

50

Governance

Ryu Muramatsu
Director, Executive Vice President
General Manager of Corporate
Value Creation Strategy Division

Editorial Policy
The 2023 Integrated Report is edited to coherently present our value creation model by reporting on financial information such as financial results
and management strategy as well as non-financial information such as environment, society and governance (ESG) that form the bedrock of sustainablegrowth. This report is compiled and edited with the aim of explaining thevalue propositions the Company is providing to society to realize a sustainable society and how we intend to achieve sustainable growth to raise thecorporate value. The compilation of this report references the International
Integrated Reporting Framework recommended by the International
Integrated Reporting Council (IIRC) and the Ministry of Economy, Trade andIndustry’s “Guidance for Collaborative Value Creation”.

Business
Strategy

Cautionary note on forwardlooking statements
Information contained in this reportthat are not historical facts include
views and decisions based on information available at the time of writing
and represent future forecasts andplans. Such forward-looking statements contain certain risks and uncertainties that may result in actual
performance or results to differ fromthe statements made in this report.

38 	Roundtable Meeting ofFoundations ofValue Creation

External Directors

42

Environment

46

Human Capital

56

Consolidated Financial Highlights

57

Consolidated Financial Statements

60

Company Information

54 	Board of Directors andManagement Committee Members

For further details on sustainability-related information, please visit the Company’s website from the link below:

https://www.gmo-pg.com/en/corp/sustainability/

Data

Disclosure

Financial Information

Integrated ReportNon-financial Information

Information for Investors

PDF version

Sustainability

https://www.gmo-pg.com/en/corp/ir/

https://www.gmo-pg.com/en/corp/

https://www.gmo-pg.com/en/corp/sustainability/

newsroom/ir/integrated-report/

Abbreviations used in the report
GMO-PG refers to GMO Payment Gateway, Inc.
GMO-EP refers to GMO Epsilon, Inc.
GMO-PS refers to GMO Payment Service, Inc.
GMO-FG refers to GMO Financial Gate, Inc.
“Company” refers to GMO-PG and its consolidated group of companies consisting of domestic and overseas consolidated subsidiaries and equity method affiliates.
“Partners” is a phrase the Company uses for its employees to express respect towards them.
CP stands for Card Present transaction and refers to payments made at bricks-and-mortar stores by physically presenting a credit card or other non-cash devices.
The fiscal years presented in the graphs refer to the Company’s fiscal year ending in September.

6

GMO Payment Gateway, Inc.

2023 Integrated Report7Value Creation Story

MESSAGE FROM
THE PRESIDENT

Further Strengthening the Business
Foundation to Sustain a 25% Growth Rate andEnhance Corporate Value by Striving for
Sustainable Growth while Resolving Social
Challenges through Our Services Centered on
Payment

Issei Ainoura
President & Chief Executive Officer

Achieved 18 Consecutive Terms of Revenue and Profit IncreaseWe faced significant changes in the business environment during the fiscal year ending September
2023 (FY2023) due to the recovery trend in consumption with the normalization of economic activities
after the lifting of COVID-19 measures. On the other
hand, we faced headwinds from the surge in pricesof goods and inflationary pressures from tightening
labor supply. As a result, this was a difficult year
where we faced various challenges coupled withlow visibility on the outlook. Despite this, financial
results were resilient with both revenue and operating
profit posting over 25% growth year-on-year (YoY)
and exceeding initial guidance by 6.8% for revenue
and fully achieving the operating profit guidance.
On the business front, various initiatives aimed
at achieving sustainable growth made progress.
In the online domain of the Payment Processing
Business, we worked to expand project sizes bystrengthening relationships with representative
companies in each industry as well as updated

8

GMO Payment Gateway, Inc.

the mainstay payment product. In the CP domain,
given the tailwinds of consumption returning tophysical stores, recovery in inbound consumption
and the moves to tackle labor shortages, theCompany completed the installation of “stera terminals” at post offices nationwide, helping to drive
cashless penetration as well as significantly growrevenue. Both online and CP transaction value
grew by 31.8% YoY to approximately ¥15 trillion. In
the Money Service Business, we worked to expand
businesses such as GMO Payment After Delivery
while controlling credit costs and lending services
to overseas companies.
As a result, we have achieved 18 consecutive
years of higher revenues and profits since listingon TSE Mothers market in 2005. These results
were achieved thanks to the warm support fromour stakeholders including shareholders and I
would like to express my deepest gratitude for theircontinued support.

2023 Integrated Report9Value Creation Story

Message from the President

Growth Strategy and Strengthening the Business Foundation to
Achieve Sustainable Growth
We have committed to achieve the managementtargets for operating profit from FY2024 andonwards at a minimum growth rate of 20% perannum and a CAGR 25% growth over the mediumto long-term.
In recent years, the revenue structure has
become more volatile due to the timing of revenue
recognition of large-scale projects. This reflects ourefforts to develop applications centered on payment that respond to issues faced by large andmedium-sized business operators across various
industries and drive adoption within these industries, as well as undertake infrastructure projects
such as the contactless NFC payments for public

Promoting Sustainable Managementtransport services. For small business operators,
we worked to raise the pace of revenue growththrough services such as “fincode byGMO” thatcater to the needs of start-ups, the new Buy Now
Pay Later (BNPL) service “atokara” and bystrengthening ­collaboration with business partners,
as well as raising our sales efficiency.
As the Group’s services have diversified, we are
striving to expand cross-selling of services throughmutual collaborations and cooperation, thereby
establishing a solid position as the cus­tomer’s go-to
partner. In addition to achieving the financial targets
each year, we will also be sowing the seeds for
future growth in order to sustain this momentum.

FY2023 was the year in which we took great
strides in sustainability management. In addition tooperational aspects such as decarbonization initiatives and promotion of health management, theCompany improved its evaluation from externalbodies for expanding ESG disclosure.
In addition, the materiality issues to be prioritized have been identified and disclosed. The
Company is engaged in resolving a wide rangeof social issues such as depopulation, ensuring

the security of economic activities and reducing theenvironmental footprint by driving cashless penetration and supporting a diverse range of corporate
activities.
We will continue our endeavors to contribute to
the realization of a sustainable society and to further enhance corporate value.
We hope to secure your continued support andwish to express our deepest gratitude to our stakeholders including shareholders.

Our Track Record of Growth through Consolidated Management

Revenue by Company*1

Building a Strong Team with “Act Like the CEO”

(Unit: ¥ bn)
70

One of the phrases that aptly describes our spirit or
our “PG-ism” is “Act Like the CEO,” which meansthat all partners take ownership and act proactively
on their own initiative without waiting for instructions, are cognizant of changes occurring insideand outside the Company, and raise their voices to32023.9.30
risks and take 第countermeasures.
書 2022.10.1–In order to make
30期 統合報告
such behaviors take root, I hold direct dialogues
with partners on a daily basis. Continuing andemphasizing such efforts will build a strong organization and a corporategroup社that has no equal,
ートウェイ株式会
GMOペイメントゲ
2 canand thatovercome changes in the environment to achieve sustainable growth.

60

18 consecutive years of revenue and profit
increase since listing2016

22 years of consecutive revenue and profit
increase, including the pre-IPO years

Becomes a consolidated subsidiary

This ranks in the second place*2of Japan’s listed companies

50

2013
Established

40

30

2005

23.9.302022.10.1–20

3

2012

Joins PG group20

書第30期 統合報告

Established global offices

10

0

2005

GMO-PG

2006

2007

2008

2009

GMO-EP Consolidated*3

2010

Global2011

2012

GMO-PS

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
(Fiscal Year)

GMO-FG Consolidated*4*1 Revenue figures are before consolidated eliminations. Figures for global is the sum of lending and payment.
*2 Based on GMO-PG’s estimates*3 Figures present the sum of GMO-EP and GMO Medical Reservation Technology*4 Figures present the sum of GMO-FG and GMO Card System

10

23.9.30

20
書 2022.10.1–

GMO Payment Gateway, Inc.

第30期 統合報告32023 Integrated Report11Value Creation Story

Track Record of Value Creation
After commencing business specializing in credit card payment processing, the Company expanded its scope of business and is currently making inroads into markets through the three reportablesegments in order to expand its businesses and create new value.

FY2013

Payment Enhancement Business2011 Online marketing service¥25.0 bn

Money Service Business

FY2023

FY2024 guidance of operating profit of ¥25.0 bn
implies achieving the operating profit target of¥25.0 bn by FY2025, which was announced in2018, one year early.

25.0

2021 Instant Salary byGMO
2018 Rollout of BtoB financial-related services

Market capitalization*1¥46.0 bn¥Transaction value

Initial
Guidance of2018 Medical Kakumei byGMO

626.0 bn2018 Overseas Lending

2021 Impact finance to FinTech compan
ompanies engaged in financial inclusion

2015

Remittance Service*1 As of end September

20.0

2014

¥1.2 tr¥

Transaction Lending

14.9 tr2022	
Concluded
luded basic agree
agreement regarding provision of “Buy Now Pay Later service”

with Sumitomo Mitsui Card Company, Ltd.

Operating profit

2013 GMO Payment After Delivery¥2.0 bn¥

20.3 bn2020 Condo Pay byGMO GMO B2B
2B PayPa on Credit

2015

Expanded functionalityof Early Payment service

2008 Early Payment service

15.0

Payment Processing Business2020 Provide SMS Choice of Payment
yment to TEPCOEPCO Energy Partner, Inc.
2019 GMO Cashless Platform2019	
Joint development of next-generation payme
ayment platform
form “stera”“
with Sumitomo Mitsui

e Japan Co.,
Co Ltd.
Card Company, Ltd. and Visa Worldwide

10.0

2017 GMO-PG Processing Platform2017 Rollout of base system of Ginko Pay

2021	
Start of collaboration
ation withw JFR
FR Card
Ca Co., Ltd.

2012 Overseas payment businessEntered into the Unattended Market
2010	
Launched CP payment

Operating Profit*2

5.0

Shift from merchandise to non-merchandise
Expanded to services, digital content, subscriptions, etc.

(Unit: ¥ bn)

2006 Public dues/taxes and utility bills payment service2022 fincode
de byGMO
by

1995	
Specialized credit card payment

2008 PG Multi-Payment Service

processing business

1995

2005

2006

2007

Listed on TSE Mothers

2008

2009

2010

2023 Major update of PG Multi-Payment Service
2011

Change of listing to TSE First Section

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Change of market segment to TSE Prime(Fiscal Year)0

Supporting the transformation to a decarbonized society

Value Proposition to Society and Our Role in Society

DX Support

Supporting E-Commerce (EC) and Online migration

 ajor Social
M
EventsHistory

1997

Consumption tax
raised to 5%

2008

2011

Lehman Shock1995	Establishes Card Call Service, Inc., the prede-cessor of the Company
2000	
Issei Ainoura appointed Representative
Director and President

Great East Japan
Earthquake

2005 Changes corporate name to GMO Payment Gateway, Inc.

GMO Payment Gateway, Inc.

2020

2023

Consumption COVID-19 pandemic
tax raised
to 10%

COVID-19 reclassified to Class 5 ofinfectious diseases

2018 GMO Medical Reservations Technology Co., Ltd. joins Group

Establishes a USA corporate entity

2012	
Establishes Asian headquarters

2019 Establishes Indian corporate entity

in Singapore
2013	
Establishes GMO Payment
Service, Inc.

2020 GMO Financial Gate, Inc. lists on TSE Mothers market (currently Growth market)

Macro Kiosk Berhad is deconsolidated

2015

2021 Buffort Inc. joins Group

Establishes joint venture SMBC GMO PAYMENT, Inc.

*2 Macro Kiosk Berhad is classified as discontinued business due to its deconsolidation on FY2020. Figures for operating profit present the numbers for continuing­business only and exclude the numbers for discontinued business. Figures for FY2019 have been restated on the same basis.

12

2019

Consumption tax
raised to 8%

2010 GMO Financial Gate, Inc. joins Group

2004 Joins GMO Internet Group and integrates with Payment One, Inc.

GMO Epsilon, Inc. joins Group2014

2016	
2C2P Pte. Ltd., Southeast Asia’s major payment operator,

becomes an equity method affiliate
Macro Kiosk Berhad joins Group

2022 Buffort Inc. merged by absorption

Full divestment of 2C2P Pte. Ltd. shares

2023 Integrated Report13Value Creation Story

Value Creation Model
Business Model

OutputP.24–25

External
Environment

Input Management
Resources

P.26–37

An expanding ecosystem built on
positive feedback of value-added services
to the mainstay businessBusiness Activities

OutcomeP.22–23

Increase in payment processing

E-Commerce
BaaS
FinTechGlobalDepopulation
Labor
shortage

Payment
Processing
Business
Inflation

Strengths

Low economic
growthPayment processing

Payment
Enhancement
Business

Poverty

ClimatechangeResource
depletion

Sales
Capability

Financialinclusion

FinTechProvide payment infrastructure tovarious industries, an integral part ofcommercial transactions

SupportCapability

Digital content
Education

Technologicaladvance

E-Commerce

Value-added services
that contribute to thegrowth of the main
business

SystemDevelopment
Capability

Comprehensive
Capability
Investment
Capability

Automation andlabor-saving

Customer growth

Mainline business
Incomeinequality

Money Service
Business

A secure
and comfortablesociety

EnergyPublishing ealthcare andH
welfareFinancial ublic fees/Putilities

Water bills
Taxes

Logistics

Globalization

Priority themes of sustainability management
4

Human capital

2

Reliability

5Governance3

Decarbonization

Decarbonization

Regional
revitalization

Corporate Value

ApparelInnovation

SocialValuesOfflineManufacturing

1

Reduction ofsocial cost

Operating stores(online)146,539 stores

Revenue¥63.1 bn

Operating­terminals (CP)298,818 units

Operating profit¥20.3 bn

Transaction
volume6.20 bn

ROE

15.0%

Transaction value¥14.9 tr

Revenue &profit increase

As of FY2023



18 consecutive years
since listing

As of FY2023

P.16–19

14

GMO Payment Gateway, Inc.

2023 Integrated Report15

Value Creation Story

Sustainability
Basic Approach to Sustainability

Identification Process of Materiality Issues

As a leading company in the payment industry, the Company promotes business activities that support online and cashless migration, paperless operations, digital transformation (DX) and financial inclusion by building payment infrastructures
as well as providing payment and financial-related solutions and platforms. This is based on the “GMO-ism”*1 shared withGMO Internet Group, under which the Company upholds the management principle of “contributing to society to pursue
both spiritual and material prosperity for our partners.”

In order to contribute to the sustainable advancement of society and achieve a sustainable improvement in corporate value
by resolving various social issues through our business activities, the Company has identified materiality issues, using theprocedure stated below, that need to be prioritized for their medium- to long-term impact to the Company’s business.

The Company is engaged in resolving a wide array of societal issues, such as socioeconomic revitalization and enhancement of corporate competitiveness through the Company’s businesses that leverage innovations centered on payment that
support a diverse range of corporate activities.
Together with our stakeholders who support the Company’s business activities, we strive to contribute to the realization ofa sustainable society and our customers’ growth that in turn enhances the Company’s corporate value and sustains a highgrowth rate.

Governance Related to Sustainability

Identify those social issues that have high relevance to the Company’sbusiness by assessing societal trends and by referencing international
indicators such as Sustainable Development Goals (SDGs), Global
Reporting Initiative (GRI) standards and the Sustainability AccountingStandards Board (SASB).

STEP

Evaluate these issues based on the Company’s own perspective by taking
into account business opportunities and risks such as the contribution tofinancial performance and business growth, as well as incorporating perspectives of external stakeholders through dialogues with shareholders,institutional investors and ESG rating agencies.

STEP

Based on the above analysis and after discussions among management
including External Directors and by resolutions voted at the Board, theCompany has identified the materiality issues and compiled key themes ofsustainability management.

1

2

3

Materiality Matrix

High

The Executive Vice President, overseeing planning and operations, bears responsibility to promote sustainability management at the Board and to reflect / incorporate all sustainability-related issues into the Company’s management strategy
and management targets. The management team, including the President and Executive Vice President, carries out deliberations on policies related to sustainability activities including climate change, evaluates plans, reviews progress andreports to the Board, as well as compiles measures to reflect the feedback received from the Board. In addition, the Board
receives periodic reports from the Risk Management Committee on its discussions, verifications and findings to help itmonitor the impact of sustainability issues on the overall Company.

STEP

1

 romote financial inclusion byP
offering various payment methods and financial accessReduce environmental footprint
through cashless adoption2

 table and uninterrupted
S
operation of the payment
system infrastructure4

 rastic empowerment ofDhuman capital capable todriving a 25% growth2

 trengthen information secuSrity, the bedrock of a secure
payment transaction1

 eduction of social costs byRpromoting cashless adoption5

 onstructing a robust corpoC
rate governance structure tosecure a sound and sustain ahigh growth rate1

 econfiguring operationalR
processes and commercial
flows from a payment
perspective1

Improvement of service quality
and better customer experience through a seamless
payment process

3

The Company convenes the Risk Management Committee once every quarter to implement measures effectively and efficiently by incorporating sustainability-related risks into the overall risk management. Risk incidents are classified into six
categories according to a monetized evaluation based on the two metrics of monetary impact and frequency of occurrence. Forseeable risks and general risks are evaluated and selected across the Company by employees above a certain
position. Of those, risk incidents that exceed a certain threshold are designated as material risks, and each Division must
consider and implement responses.

4

 upport self-realization by proS
viding a work environment thatis healthy and motivating5

 ecure a fair and transparent
S
management through information disclosure1

 evitalization of local communiRties by building out the payment
infrastructure5

 horoughly adopt preventaTtive risk management tosupport high growth4

 ealize diversity and inclusionR
to further strengthen theorganization2

1

 espond to the decline in laborR
population with payment
automation

 liminate fraudulent
Etransactions as per
the Act on Prevention ofTransfer of Criminal
Proceeds, etc.

Responses to these material risks are further deliberated upon by the relevant Division after incorporating the opinions ofexternal experts. These responses are then examined and debated by the Risk Management Committee and reported to
the Board.
*1 GMO-ism is the collective name for GMO Internet Group’s unchanging goals, including “Venture Spirit Declaration.”

Importance to stakeholers

Risk Management Related to Sustainability

Importance to the company

16

GMO Payment Gateway, Inc.

High

2023 Integrated Report17

Value Creation Story

Sustainability

Key Themes of Sustainability Management
The materiality issues identified have been grouped into five domains to clarify the key themes of sustainability management. The Company will strive to contribute to a sustainable socioeconomic advancement and a sustainable improvement
in corporate value along these five themes.
Key Themes

1. Innovation

Social contribution through the sustainable growthof ­businesses centered on payment—Social advancement and customer’s growththrough creation of payment innovations—
Beginning with payment, one step in the flow of various
economic activities, the Company provides a wide arrayof innovations to corporates that support operational
efficiencies such as invoicing, cash management andsalary payment to enhance corporate competitiveness.
Promoting cashless adoption contributes to the realization of a more convenient and comfortable society.

2. Reliability—Sustainable operation of payment infrastructure to support society—As a company responsible for the social infrastructureof payment, the Company strives to improve the stability and reliability of operations in order to ensure
the safety and security of socioeconomic activities of
payment.

3. Decarbonization—Contribute to the Earth’s environment throughcashless adoption—

Materiality Issues

 econfiguring operational processes and commercial
R
flows from a payment perspectiveImprovement of service quality and better customer
experience through a seamless payment process
Respond to the decline in labor population withpayment automation
Reduction of social costs by promoting cashless
adoption
Promote financial inclusion by offering various
payment methods and financial access
Revitalization of local communities by building out
the payment infrastructure

 table and uninterrupted operation of the payment
Ssystem infrastructure
Strengthen information security, the bedrock of
a secure payment transaction
Eliminate fraudulent transactions as per the Act on
Prevention of Transfer of Criminal Proceeds, etc.

 educe environmental footprint through cashlessRadoption.

Management foundation to s
­ upportsustainable growth

Focus on CO2 emissions reductions through the transformation of paper-based and cash-based processes.

18

4. Human Capital—Pursue organizational capabilities thatembrace challenges and the commitment to
25% growth—
Focus on expanding the critically important human capitalbase as the highest priority undertaking of the organization as we seek to achieve sustainable growth that canovercome changes in the environment.

5. Governance—Institute a sound and responsible management—
Strengthen the governance structure to enhance theeffectiveness of oversight from external bodies and risktaking, in order to continue on a sound and stable pathof high growth

GMO Payment Gateway, Inc.

 rastic empowerment of human capital capable ofD
driving a 25% growth
Support self-realization by providing work environment that is healthy and motivating
Realize diversity and inclusion to further strengthen
the organization

 onstructing a robust corporate governance structureC
to secure a sound and sustain a high growth rate
Thoroughly adopt preventative risk management tosupport the high growthSecure a fair and transparent management throughinformation disclosure

Initiatives

Contribution to SDGs

•	Provide solutions that respond to issues in each industry through the industry-specific sales team structure•	Support the diverse sales channels of merchants, such as E-Commerce (EC) shops and delivery, throughpayment services• Implement contactless NFC payment at shops and public transport, as well as mobile orders•	GMO Medical Reservation Technology, Inc. provides reservation management system exclusively for
medical institutions• Promoting unattended payment at self-checkout counters and vending machines• Support recruitment efforts with Instant Salary byGMO•	Promote lending operation that are linked to payment, such as transaction lending and BtoB transaction, etc.
•	Contribute to improving the customer’s cash efficiency by providing lending that shortens the time lag
between payment and depositing the sales proceeds• Instant Salary byGMO realizes salary received at the employee’s preferred timing• Support access to EC for non-cardholders with Payment After Delivery service•	Investment and lending to FinTech companies promoting financial inclusion in India,
Southeast Asia and the United States.
•	Support cashless migration through BaaS business (“Ginko Pay” and acquiring support in regional areas)• A 24/7 system monitoring structure and system configuration that includes redundancy• Realized advanced level of information security measures• Support the strengthening of customer’s EC security• Continue to strengthen merchant management and screening systems• Promotion of a cashless society to reduce CO2 emissions from cash transactions•	Support customer’s decarbonization through paperless migration of invoicing anddigital transformation (DX)
• Promote payment processing using what is effectively renewable energy•	Implement talent development strategy and recruitment to secure the quantity and quality of talented
personnel to support the 25% growth•	Secure diversity of human capital (specialization, gender and nationality, etc.) to respond to diversifying
business domains• Promote health management•	Secure the diversity of Board and implement measures to raise effectiveness•	Secure effectiveness of the Special Committee comprised of External Directors forthe protection of minority interests•	Comprehensive risk management carried out by Risk Management Committee(realize an overall balance of risks and return)• Promote engagement through Investor Relations (IR) activities

2023 Integrated Report

19Value Creation Story

Business Environment
Expansion of EC Market

Progress of Cashless Migration

The EC market is expected to expand over the medium- to long-term with the development of logistics networks,
penetration of subscription services in daily lives and the implementation of Online-Merges-with-Offline (OMO), as Japan’sEC penetration rate still remains lower than developed countries such as the United States and Europe.

Japan’s cashless payments market is on an expansionary path, given the need to cater to inbound tourist and the gov­
ernment’s policy. Still, current cashless payment penetration remains low compared to developed countries of the UnitedStates and Europe, and therefore holds growth potential in the medium- to long-term as the means to resolve the social
issues faced by Japan such as depopulation and regional revitalization.

EC Penetration Rates of Developed Countries*
Cashless Penetration (Ratio to Private Final Consumption)*(%)(¥ tr)

UK
US
Japan

35
30

160

26.6%

25

120

20

14.6%

15
10

Cashless penetration(Left axis)	 Credit card
Debit card
E-money
QR code
26.8

24.1

21.3

29.7

32.5

50
40

36.0%
95%

30

65%

9.1%

20

62%

40

5

10

53%

0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(year)Development of logistics networks

0

2017

2018

2019

Subscription services

Fraud prevention, improving convenience, inbound tourists

OMO, D2C(during COVID-19 period) EC migration, public hygiene* Ministry of Economy, Trade and Industry, “FY2022 Global Survey Project Concerning Integrated Domestic and External Economic Growth Strategy Building(E-Commerce market survey)”
U.S. Census Bureau, “The 2nd Quarter 2023 Retail E-Commerce Sales Report.”
Office for National Statistics, “Retail Sales Index Internet Sales, October 2023.”

Expansion of Direct-to-Customer (D2C)

Growth Rates of Merchandise and Non-merchandise EC Market
MerchandiseNon-merchandise

60

40

20

0

−20

−40

COVID-19 period
20/1Q 20/2Q 20/3Q 20/4Q 21/1Q 21/2Q 21/3Q 21/4Q 22/1Q 22/2Q 22/3Q 22/4Q 23/1Q 23/2Q 23/3Q 23/4Q

GMO Payment Gateway, Inc.

2020

2021

2022

2023

2024

(year)2025

0

Response to labor shortage, regional revitalization
Leveraging data, decarbonization

Responding to labor shortage by implementing Attract inbound customers to stores, accomself-checkout counters and reducing cashmodation facilities and public transport
based operations

Penetration of subscription services for­purchasing daily goods

(%)

20

80

(%)

Future:80%
By 2025:40%(Right axis)* Cabinet Office, “System of National
Accounts”
Japan Consumer Credit Association’s
Credit Card Statistics
Bank of Japan’s Payment andSettlement Statistics
Payments Japan Association’s Code
Payment Statistics
Figures for Japan, South Korea, theUK and the United States are excerpts
from Payments Japan Association
Japan’s “Cashless Roadmap 2023.”
Figures for Taiwan are excerpted from
National Development Council.
Figures present actual numbers for
Tawan as of 2019, the UK and theUnited States as of 2021 and Japanas of 2022.

Expansion of Addressable Markets
During the pandemic period of
COVID-19, the merchandise EC
market grew rapidly from nesting
consumption while the nonmerchandise EC market wasdepressed from the significant
decline in travel / ticket sectors due
to travel restrictions. Since the liftingand easing of travel restrictions, themerchandise EC market continues
to be sluggish due to the unwindingof nesting consumption. On the other
hand, non-merchandise EC market
has returned to pre-COVID growth
rates thanks to the recovery of consumption in travel / ticket sectors.

Expand the scope of business by addressing cash transactions between individuals,
corporates and ­government entities
Flow of Money

Individual
Credit card
payment ofpublic dues
Smartphone app
for national taxes

CtoC (Inter-individual transactions)¥2 tr
Provide payment to C2C platforms

GtoC(tax payments, etc.)
Over ¥90 tr*1​

BtoC (consumption)¥300 tr

B: Business
G: Government​
C: Consumer
E: Employee

EC payment / CP / GMO Payment After Delivery /Industry-specific platform

Instant Salary
byGMO

BtoE (salary)¥231 tr*2

Companies

BtoB(inter-company transactions)¥1,000 tr

Government

AR Guarantee
GMO B2B Pay
on Credit

Companies*1 Ministry of Internal Affairs and Communications, “Breakdown of national and local taxes (Local Public Finance 2023)”*2 National Tax Agency, “FY2022 Statistical Survey of Actual Status for Salary in the Private Sector”

2023 Integrated Report21

Value Creation Story

Our Strengths
The Company’s advantage and source of growth is its comprehensive capability of integrating its sales­capability, system development capability, support capability and investment capability to support thegrowth of our customers.
Sales teams organized by industry work to accumulate knowledge bycomprehending the issues and commercial practices of each industry
in order to expand the product lineup and create new businesses to caterto a diverse range of customers across various industries.
By combining multiple payment and financial services aligned withthe customer’s issues and needs, the Company not only enables online
migration but also the resolution of a broad range of management issues
such as cost reduction, cash flow improvement, revenue increase, labor
shortage alleviation, etc.

Deploy“payment +α”
solutions

Sales Personnel*2

Logistics & RetailInsurance

Real Estate

Travel & Ticket

Digital Content

GMP*1

Telecom & Broadcast

Electric Power & Gas

Banks & Financial

Arrangement of Industry-specific Sales Teams

Identify the needs basedon understanding issues
unique to each industry

295

persons
As of end September 2023

Number of Engineers*

SystemDevelopment
Capability

Sales
Capability*1 GMP stands for global major players*2 Excludes external collaborators

The Company aims to support growth through investment, lending andbusiness alliances with promising start-ups that are leading society’s
reforms through new technologies and the creation of business models in
FinTech-advanced regions of the United States and Asia.
The Company aims to build relationships with an initial minority
investment into promising start-ups involved in payments and financial
and business operations that have a high affinity to payment, and consider increasing its equity stake after assessing growth and synergy
creation.

The System Division’s highly specialized personnel provide a one-stop
solution from development to payment processing.
This division has established an overwhelming advantage to provide
applications to realize business reforms at a low-cost and short time-tomarket, by leveraging their vast track record and know-how.
In addition, the Company is highly acclaimed for the reliability of
its payment infrastructure such as the operational stability of its payment
processing systems that process ¥15 trillion worth of payments per annum
and compliance to stringent international standards for information
security, etc.

247

persons
As of end September 2023

Comprehensive
Capability
Investment
Capability

Hong Kong
Vietnam

SupportCapability

India
ThailandPhilippines

Malaysia
Singapore
Indonesia

GMO-PG officesInvestees of GMO-PG and
GMO Global Payment Fund** Refers to the VC fund jointly operated with the Company acting as a General Partner.

22

GMO Payment Gateway, Inc.

2017
Start providing the one-stop
payment solution “GMO-PG
Processing Platform” to financial
institutions and business
operators

2020
Start providing “SMS Choice ofPayment” to TEPCO Energy
Partner, Inc.

2023
Implemented new connectivity
method “OpenAPI-type” to theonline comprehensive payment
service “PG Multi-Payment
Service”

The Company provides the payment function that supports the customer’s
daily sales proceeds, and strives to advance the support systems toresolve issues and incidents immediately and thoroughly. The Company
was awarded the highest evaluation for customer support quality by aninternational accreditation organization as a result of this plan-do-check-act(PDCA) operation.
The Corporate Support Division comprises of highly experienced
personnel from Accounting / Finance, Legal & Compliance and Human
Resources, which enables a sound and secure management as a listedcompany.
 he first company in the payment
Tprocessing industry to be awarded
a 7-star rating from HDI Support
Center international certification.*

United States

Taiwan2014
Exclusive BtoB payment systemdevelopment, operationand maintenance of“Visa Business Pay”

* Excludes external collaborators

Offices and Investees
Tokyo

Major Development Milestones

Feedback the ­cutting-edge
expertise of ­investees
into the Company’sbusinesses

Support merchants’
growth by continuously
improving customer
support quality

 warded the highest 3-star forA
Quality for six consecutive years
from HDI** HDI refers to a world’s largest membership organization for IT support services.

2023 Integrated Report

23

Value Creation Story

Business Segment

Business Portfolio

The Company provides value-added services that contribute to the expansion of revenues at merchants thatutilize the core payment processing service. This establishes a virtuous feedback cycle, whereby increasing
payment transactions lead to the expansion of the core business.

The Company's businesses covers a wide domain centered on payment through its major four companies

Payment Processing Business
The Company provides a comprehensive payment system for merchants to enable their customers to use various payment methods such as credit cards and Payment After Delivery.
Structure of Payment Processing Service
Number of Merchants

Consumer

146,539 stores40+ credit cardcompanies
Convenience store
payment

CP payment terminals:

298,818 terminals



Account transfer

As of end-September 2023.

Network

Credit assessment/revenue
Receiving order

Credit screening,
sales proceeds, renew
card information

Sales processing

CP payment

Bank transfer
E-money

Transmission ofsales proceeds
dataDeposit confirmation(data matching)

Carrier billing

Services

Payment After Delivery
QR codeID-based payment

Deposit of sales proceeds

Multi-currency

Billing of purchase amountPre-paid

Debit of purchase amountMoney Service Business and Payment Enhancement Business
The Company provides services that contribute to the merchant’s growth and expansion of payment transactions.

Payment After Delivery business

OnlineMaincustomers(payment method)

Online payment

Payment processing business

Major
business

Payment companies

Payment Processing Company

Online payment:Company
namePayment processing business
Card Present

Local governments, large andmedium-sized companies

SME

Non-merchandise, merchandise

Mainly merchandise, expanding into non-merchandise

Non-merchandise, merchandise

Payment Processing Business

Payment Processing Business

Payment Processing Business•	PG Multi-Payment service	Pay-as-you-go (merchandise,
digital content, etc.)	Recurring payment (public dues,
utility bills, etc.)•	Ginko Pay base system•	GMO-PG processing platform•	GMO Cashless Platform•	Z.com Payment(overseas payment service)•	Epsilon payment service•	fincode byGMO•	CP payment
	Attended payment
	Unattended payment (IoT)

Money Service Business

Money Service Business

Money Service Business• Remittance service• Transaction lending• Overseas lending• Early Payment service• GMO B2B Early Payment• Instant Salary byGMO• Remittance service• Transaction lending• Early Payment service• GMO B2B Early Payment• Cycle byGMO• GMO Payment After Delivery• GMO Pay On Credit•a tokara

Payment Enhancement
Business

Payment Enhancement
Business• Online advertising service• SSL service• Delivery service• Delivery service• Medical Kakumei byGMO

Physical stores, unattended
machine providers

EC operators, consumers

Omni-channel strategy

Service Line-up

Money Service
Business

Payment
Enhancement
Business

GMO Payment After
Delivery
GMO Pay On Credit

Remittance service

Pays the sales proceeds
before collecting fromthe purchaser

Realizes an efficientand secure remittance/
refund processing

 edical Kakumei
MbyGMO nline advertisingO
service

Provides seamless
operation fromreservation to payment

Online advertising
operation and analysis
to improve revenues formerchantsO verseas lending /Transaction lending arly Payment
E
serviceInstant Salary
byGMO

Lending of growth capital

Improve cashflow bybringing forward
the deposit dateRealizes salary to be
paid at the preferredtimingCoverage of diverse customers

Revenue Model

1

Breakdown by Segment

22%
Payment After
Delivery/Pay On
Credit (GMO-PS)

2%

11%

Online payment(GMO-PG)

Operatingprofitbreakdown

88%

Online payment(GMO-EP)

CP payment(GMO-FG)

Payment Processing Business

24

1%

76%
Revenuebreakdown

GMO Payment Gateway, Inc.

Expanding payment methods
Sharing of customer base

Money Service Business

Payment Enhancement Business 

Actual figures for FY2023

2
3
4

Initial(initial revenue)

Payment terminal sales

Municipalities, some large
enterprises

2

Sales of payment terminals

3
1

Stock

(fixed revenue)

Monthly recurring fixedchargeLarge and medium-sizedcompanies

2
Fee(transaction
processing revenue)

Spread(merchant revenue)

Charges based on­transaction volume

Charges based on­transaction value

3

4Start-ups,
Small business2

42023 Integrated Report25

Business Strategy

Rebundling
The Company has been expanding its product lineup to enable the DX and online migration of ­operations­formerly carried out by hand or on paper. Bundling these functionalities into a single package ­supports thegrowth of our customers (merchants). A full-fledged effort is underway to enlarge project sizes through the­rebundling*1 of payment and financial functions from the customer’s perspective.

Our Value Proposition and Functions Provided
Strengthening online
sales
Reducing the burden of
payment operations
Creation of new UI / UX

Convenient payment at
physical stores
Respond to labor
shortage

QR code payment at
physical stores

P.28–33

GMO-EP

P.34

GlobalP.33

Merchant

Improve cash cycle
Salary prepayment

Online payment

Strengthen personnel
recruitment

Complete payment on
the smartphone

Attracting customers

GMO-PGSMS Choiceof Payment

Secure growth capital

Early
Payment

Onlineadvertising
supportTL*2

Payment after receiving
goods
Merchant

Merchant

Payment
After Delivery

CP payment

Pay On Credit

GMO-FG
P.36–37

Making refunds andremittances easier

Payment After Delivery
Making invoicing operations
efficient

GMO-PS
P.35

GMO
Cashless
Platform

RemittanceBaaS
support*3

Promote proprietarycashless businessResolving labor shortage

Salaryprepayment

Merchant

BaaS support
Merchant

Online payment
Early Payment

 xample of Supporting Customers
E(Merchants) Growth
Merchant

Strengthen ecosystem by launching
cashless business

Remittance service
Responds to user’s refund and cash
withdrawal needs

Image of customers (merchants) revenue growth*1 Rebundling: To unbundle financial services into their constituent functions (unbundling) and then rebundle the functions to meet specific customer’s needs.
*2 TL stands for Transaction Lending*3 BaaS stands for Banking as a Service

26

GMO Payment Gateway, Inc.

2023 Integrated Report27

Business Strategy

GMO Payment Gateway

Size of Target Market of Broader EC
BtoC EC

Supporting Customer Growththrough Sales of Industry
Specific Solutions Based onLarge-Customer and Mass
Strategies

Merchandise EC¥13.9 tr*1
Narrowly-defined EC¥22.7 tr*1

Broader EC
Approx. ¥60 tr*2

Market Size by Industry*3

Cashless Penetration (Credit Card)*3

64%

Travel ¥17 trElectric power, gas, water

¥15 tr

Healthcare¥5 trReal estate (rent)

¥12 tr18%

Local/national taxes

¥111 tr

16%

Tatsuya Koide

Insurance

¥30 trSenior Managing Executive Officer
General Manager of Innovation Partners Division

Education

¥5 tr

32%
24%

12%
5%

*1 Ministry of Economy, Trade and Industry “FY2022 E-Commerce Market Survey.” The narrowly-defined EC includes merchandise EC and some services and digital content.
*2 Figures are estimates of the Company, and presents the sum of the BtoC EC market and the cashless market size of the target markets.
*3 Based on the Company’s estimates using market statistics.

28

Support Problem-solving through Industry-Specific
Proposals

Deploying the Large-Customer andMass Strategies

The Company’s business opportunities are expanding
with the heightened need at every company to increase
revenues, achieve DX in business operations and secure
human capital. In order to identify such needs and issues
at the customer in a timely fashion and guide them towards
a solution, a sales representative from the industry-specificsales team is assigned to each customer to conduct inperson sales activity. Such in-depth customer touchpoints
leads to accumulating insight on industry trends andrequirements that can be reflected into our proprietaryproduct development. For example, the mainstay PG
Multi-Payment Service implemented the new connectivity
method “OpenAPI-type” this fiscal year. This is the resultof shaping the product to resolve customer’s issues suchas the “inability to test new payment methods due todevelopment cost constraints and scheduling.” This has
been well received by customers, with feedback such as,“able to concentrate on main tasks by reducing the development man-hours,” and “results in revenue improvement
by implementing optimal payment methods.” Gathering
information and insights through the frequent dialogues
with the vast customer base is the driving force behind
preemptive product enhancements and the creation of
new businesses.

As the scale of business expands, enlarging the size of
projects is a requisite in order to sustain a 25% operating
profit growth. The Large-Customer and Mass strategies
are the pillar of driving business by deploying solutions
adapted to that customer’s attributes. In order to support
the growth of a diverse range of customers, it is important

GMO Payment Gateway, Inc.

 he Crux of Growth Strategy: Large-Customer andT
Mass Strategies
Large-Customer
Enterprises
Financial institutions
Municipalities
Global companies

High value
added,
high unit price

Mass
Companies /Individuals facing growth issues
SMEs
Start-ups
Consumers
Employees / workers

Problem-solving
Low unit priceto bundle various payment and financial-related services
tailored to the customer’s needs, as providing a single­off-the-shelf payment product is insufficient.
The Large-Customer strategy provides high valueadded solutions to improve productivity and help companies that drive social reforms to differentiate themselves
further. The strategy is to establish the solution as anindustry standard together with the industry’s top companies and increase its adoption within the industry.
The Mass strategy aims to provide problem-solving
solutions that enhance the balance sheet, profit & loss
and cashflow of SMEs and start-up customers looking togrow their businesses. This strategy aims to raise thesales efficiency through KPI management and introduce
products that are aligned with the customer needs.

postage as well as CO2 emissions. We intend to makeinroads into non-merchandise domains that are lagging incashless migration, infrastructure domains such as financials and railways, and the massive BtoB (inter-company
transactions) market. I believe we can provide a diverse
range of support to enable DX and improve cash flows forinter-company transactions where inefficient payment
using paper-based invoices and administrative operations
still remain. By training sales partners that can proactively
make proposals and have the intelligence to create newvalue, we intend to grow together with customers as apayment platformer that brings about social innovation.

A Payment Platformer Armed with a Strong Solution
I believe that the time has arrived where companies in thepayment industry are selected based on the ability of theirsolution to resolve each customer’s problems. We intend
to contribute to social advancement by supporting not only
EC and online migration of payments but also DX and theefficiencies of business operations closely related to payment. A good example is the SMS Choice of Payment provided to ­electric power companies, which adds value by
reducing the cost of billing operations such as printing and2023 Integrated Report29Business Strategy

GMO Payment Gateway

TOPIC: E xpansion of the Utility Domain by Capturing Customer Needs

Major Update of PG Multi-Payment Service
Q: What was the feedback from customers on
the value of the new connectivity method“OpenAPI-type”?
Japan has a diverse range of payment methods aswell as diverse customer needs. Adding a new payment method required some amount of development man-hours and costs but this update has

Multi-Payment Service
Department
Management
Department ofPayment Service
Systems Division

and Responding to Changes in the Business Environment

reduced that to one-tenth*1 and enabled a quick andflexible implementation. As a frontrunner in thisindustry, this update has garnered positive feedback
from many customers. This has also increased the
product’s appeal to global companies by adopting
the global standard for connectivity specification.
Q: W hat hardships were encountered in this­project and what personal growth have youachieved?
This was the largest and most challenging project, asI joined as a new grad recruit and was inexperienced
and had to built up my experience as an engineer
from the ground up. It was a struggle to comprehend
specifications I was not accustomed to and to alignand liaise with internal and external parties. This has
been a huge asset to be able to experience the process of building a product from scratch and I havegained new technological expertise.

General Manager,
Utility & Public Sector Sales Department
Management Department of Sales #2
Innovation Partners Division

Key Person Interview: Outlook and Reflections on the Utility Domain, a Key
Growth Driver of the Priority Initiatives*1 Based on the Company’s estimate.

BaaS Support
Support the Rollout of Cashless Business at Low Cost and Speedy Time-to-Market
Financial institutions such as banks and credit card
­companies are strengthening BaaS (Banking as a Service)initiatives, which provide financial functions as a service.
The Company provides the “GMO-PG Processing
Platform” to support these BaaS initiatives. However, therequirement for system stability and advanced security canbe an impediment or burden to achieving a prompt business deployment for financial institutions and ­businesses
that have a ­customer base, and that are looking to newly
commence or strengthen their cashless business. The
service clears these requirements and is low-cost, thereby
significantly reducing the burden to the customer. Given the
backdrop of rising cashless penetration, the need for thisservice is rising as companies look to undertake theirproprietary cashless business in order to consolidate theirecosystem. This service is expected to return to a highgrowth phase as multiple large-scale projects are likely to­commence operations from FY2024 and beyond, including
large-scale projects for credit card issuing support.

BaaS Support Service Revenue

FY2023 % YoY
Total

+12.6%
Ginko Pay base system



GMO-PG Processing
Platform

+22.1%

18

19

20

21

22

23 (ﬁscal year)

Ginko Pay base system
GMO-PG Processing Platform (Issuing)
GMO-PG Processing Platform (Acquiring)30

GMO Payment Gateway, Inc.

−3.6%

Making Inroads into the Public Utility Domain
The Company’s full-fledged entry into the utility
domain began in 2006 to provide credit card payment
for NHK’s public broadcast charges. In the same year,with the amendment of the Local Autonomy Act thatderegulated credit card payments for public taxes andpublic utility charges, we were consigned to provide
credit card payment for water charges for the Bureauof Waterworks Tokyo Metropolitan Government.
Following the support provided to NHK and Tokyo
Government, the Company began to develop systems
that were customized to the customer’s specifications,raising the flexibility of the Company’s development
capability. By leveraging the track record built in the
public utility domain and the system development
capability, the electric power industry was designatedas the next target.

Applications that Address the Industry’s Issues
Given the business opportunity presented by the full
liberalization of the electric power industry in 2016 andhaving started to reach out to the large power companies from a few years before, we were able to makeleads into them with proposal-based sales activities
by forming an integrated team consisting of sales anddevelopment members. As a result, one of the strategic initiatives that contributed to accelerate the business expansion was “SMS Choice of Payment”
provided to TEPCO Energy Partner, Inc. With theimplementation of smart meters in 2020 leading to theabolishment of meter-readers, power companies faced
the necessity to post-mail the payslip to the user, which
was formerly delivered by the meter readers. In
response, the Company developed “SMS Choice ofPayment” that will send the invoice information on SMS
instead of post-mailing the payslip and settling the billusing cashless payments. This enabled the customer
to achieve paperless operation for invoicing and digitaltransformation in addition to cashless payments.
Penetration within the Industry
Thanks to the high acclaim for the proposal capability
and progressiveness, the Company was not only able
to expand business within the same company but alsosteadily raise penetration within the electric powerindustry. Going forward, we will work to expand theservice to gas utilities and other industries that still use
paper-based payslips, and continue to create highvalue-added services by focusing on changes inindustry structures and through the dialogues withcustomers.

2023 Integrated Report31Business Strategy

GMO Payment Gateway

FinTechGlobalEnter New Domains by Responding to Diverse Financial Needs to Support theCustomer’s Growth
The Company addresses the funding demand unmet byconventional financial services and the need for fundtransfers by providing services such as Early Payment toimprove cash flow, lending service and remittance anddeposits to individual accounts. These services are primarily offered to merchants using our payment processing
service. In particular, the Company is focusing on the
Remittance service to capture the expanding business
opportunities arising from online migration of payments
and the emergence of new business models. In addition,
the Company is strategically expanding financial services
related to inter-company transactions and salary payments to make inroads into the vast and new domains of
BtoB and BtoE (money flows from companies to employedindividuals) markets. The Instant Salary byGMO, a salary

prepayment service, continues its high growth by meetingthe companies’ needs to bolster recruitment. In Spring
2024, the Company plans to launch a new service throughthe collaboration with Payroll Inc., whereby the salaryequivalent to the work completed can be used in a VISA
credit card. Going forward, we aim to enter new domainsof HRTech x FinTech through such collaborations.
The proceeds from the Euro-Yen Convertible Bond
with Stock Acquisition Rights issued in the past is being
effectively deployed to expand FinTech services to support our customer’s growth by creating services that meetmerchants’ needs under a macro environment of ­inflationand other factors as well as to shift assets towards highmargin services.

Build a Powerful Team andSupport Global Innovation
through Investment andLending to Promising
FinTech Start-ups

Ryu Muramatsu
Director, Executive Vice President
General Manager of Corporate Value Creation Strategy Division

Instant Salary byGMO Team Leverages BtoE FinTech to Tackle Social Challenges
Q:	What are the team’s attractive points and senseof accomplishment in the work?
It was a precious experience to drive the entire­process of launching a new business, all the way
from drawing up the business plan, sales prospecting and admin flow up to defining the system specifications, with the support of the Company’s resources.
The sense of accomplishment was in building up therelationship with ­companies, the employer, andresponding to their requirements, while keeping in
mind that the end users are individuals. This was
also the ­challenging aspect of this project. Instant
Salary byGMO is still in its early stages and is­therefore required to have a flexible operation. It isbecause there are no barriers within the team thatenables us to freely express ­opinions and agilely
tackle the issues that results in a high pace of growth.
This kind of teamwork is the most attractive point.
Q:	What do you think is the differentiated value of
the Company’s services?
The service’s appeal lies in the strength of reliability,
including the system and security aspects, which are
underpinned by the collaboration between Sumitomo
Mitsui Financial Group, Inc., a comprehensive financial group, and the Company, the No. 1 payment
company. In addition, as we look ahead to new areas
such as salary payments in digital money forms,
there is expectation for the Company to expand thescope of the service and create new value.

32

GMO Payment Gateway, Inc.

Q:	What is the vision for further businessexpansion?
Salary prepayment service is an effective solution tostrengthen recruitment given the decline in labor
population that is causing almost all industries toface labor shortages at work sites. This service has
only just started and there is significant headroom
to adopt this service at companies, primarily large
companies. The entire team will act as one to drive
the digitalization of ­salary-related operations, notonly limited to salary prepayment, so that theCompany’s name is the first to be mentioned in thesalary domain, just like it is in payment.

Instant Salary byGMO Team
Corporate Planning / New Business Creation Department
Corporate Planning Management Department
Corporate Value Creation Strategy Division

The Company supports the growth of promising and highgrowth FinTech start-ups through investment and lending
in the United States and Asian countries for the purposeof acquiring cutting-edge business expertise, capturing
economic growth overseas and seeking partners for the
expansion of overseas payment business. Currently, afunding winter is underway, with the funding environment
becoming increasingly challenging for start-ups given the
backdrop of rising US interest rates. The Company sees
this as an opportunity to accelerate its strategy by leveraging our strengths and reinvesting the funds generated
from previous investments.

portfolio by increasing loan amounts to existing borrowers
with favorable performance. This approach has generated
a high return of approximately 11%. The Company intends
to build a high-quality portfolio by focusing on the highgrowth market of India and the large market in the UnitedStates, based on each country’s economic and regulatory
conditions. The Company’s strength in identifying promising start-ups comes from its own experience in expanding
FinTech business and the insights and expertise acquired
from the track record of investing and lending to multiple
regions with differing levels of progress in business andtechnology. Additionally, we have built a deep and mutuallyrespectful relationship that goes beyond just providing
funds, by being able to have ongoing deep-rooted ­dialogue
with investees and the Company, a FinTech provider.

Q: What are the strengths and key features of
the Company’s investment and lending strategy?

Q: What are your thoughts and intentions on­contributing to society through business?

Given the investment environment, we are strategicallyselecting between lending, minority or majority equity
investment. We attempt to find prospective companies bystrengthening the access to various start-ups and ecosystems. The investment policy is to begin with a minority
stake and to gradually raise the stake by carefully weighing the investee’s ability to achieve goals and their affinity
with the Company. For lending, while diversifying new borrowers through small-amount loans, we aim to expand theCurrently, FinTech companies in India and the Pacificregion are emerging as the new financial infrastructure
capable of supporting economic growth. Developing­countries are facing a shortage of growth funds and theCompany can expand Japan’s presence by providing
ample funds to such companies. I aim to build a strong
team that plays a vital part in building Japan’s position andto expand the business ten-fold from current levels.

Q: What is the aim of the Company’s overseas
business?

2023 Integrated Report33Business Strategy

GMO Epsilon

The Challenge to Change
In the recent few years, the merchandise EC market’s
SME domain continues to be sluggish due to the backlashfrom the nesting consumption windfall. As a result, we arealso adversely affected. It is necessary to proactively
embrace change and challenge ourselves in order toreturn to a growth trend under these market conditions.
Merchandise business operators—our customers—
account for around 20% of the entire SME domain andthere is another domain that includes a diverse range ofsectors such as restaurants, accommodation, services
and ­medical institutions. We will be aggressively expanding into domains where our services are needed by­customers and through important measures such asreforming our revenue model.

34

GMO Payment Gateway, Inc.

Business Strategy

GMO Payment Service

Embracing Change to
Become the Innovator that
Drives Digitalization in the
SME Domain

Continue to Evolve theBusiness Model from Payment
Processing to Payment
Business and Payment After
Delivery to BNPL

Tomoyuki Murakami

Katsunari Mukai

President and CEO
GMO Epsilon, Inc.

President and CEO
GMO Payment Service, Inc.

The online payment infrastructure “fincode byGMO,”
which targets start-ups and was launched in May 2022,
has received acclaim for its high flexibility and highscalability and is the spearhead for entering into thenon-merchandise domain. We are focusing efforts toacquire anchor customers in each sector to lead thegrowth. Additionally, “Cycle byGMO,” a revenue-linked
business-use credit card, is a FinTech service we are
expanding that enables cashflow improvements for customers. We intend to continue to challenge ourselves tochange without being constrained by precedent.
Return to Growth and Business Opportunities in the
SME Market
SME business operators are the bedrock of Japan’s eco­nomy and comprise the bulk of all business operators,
although they face issues in leveraging digitalization andoverall sluggish growth. There is a huge business opportunity to drive digitalization, given that SMEs need to raisebusiness efficiency due to the demographics of an aging
and low-birth rate population. GMO-EP’s payment processing services support customer growth by making their business and cash more efficient and raising turnover cycle.
Additionally, GMO Medical Reservation Technology, Inc.
provides an online reservation system to medical ­clinics,
thereby supporting the digitalization of medical ­institutions
and contributing to making medical services more convenient.
We aim to return to a 25% growth rate by ­capturing andresolving the issues in the SME market.

Accelerate Growth by Unlocking Synergies
GMO Payment After Delivery is a convenient payment
method that replaces cash payments and is popularamong consumers that prefer not to use a credit card or
are non-cardholders. Demand is expanding in Japan
given the high ratio of cash payments and is a market withhigh potential with the Payment After Delivery market continuing to grow at 10% per annum.
The strength of GMO Payment After Delivery is that itis one of the many services of GMO-PG consolidated
group of companies, a comprehensive payment player.
This makes it possible to propose and support operations
related to payment including Payment After Delivery.
This one-stop response to various needs makes us the­customer’s choice. Additionally, we can accelerate growthand expand the customer base steadily by leveraging thecredibility, relationships and resources accumulated by the
GMO-PG consolidated group of companies.

some parts of merchandise products, but the new service
can be used as a smartphone app and addresses a wider
scope of products including non-merchandise services byscreening users. This enables the diversification of therevenue model, too. Expanding the new service will
enable GMO-PS to establish a solid position in the
Payment After Delivery market. Moreover, Payment After
Delivery is a business that directly faces the individualuser unlike the payment processing business. We will
­further accumulate know-how of consumer business bybuilding a membership base through the new BNPL
­service “atokara.”

Advancing the Business Model
We will launch the new BNPL service “atokara” together
with Sumitomo Mitsui Card Company, Ltd. This service
will expand the addressable domains by bringing together
the Payment After Delivery know-how and base system of
GMO-PS together with Sumitomo Mitsui Card Company’s
credit card know-how, to offer long duration installment
payment also usable for CP transactions. The use of theexisting GMO Payment After Delivery was limited to only

2023 Integrated Report35

Business Strategy

GMO Financial Gate

FY2023 % YoY

GMO-FG: Revenue by Business Model*1
Total

+54.5%

Maximize the Value ofCashless to Become theInfrastructure Company that
Creates a New Payment
Standard

Recurring-model*2



Initial+55.2%18

Kentaro Sugiyama
President and CEO
GMO Financial Gate, Inc.

Realize Above-Market Growth Rate by Capturing
Business Opportunities
The Government has set a cashless penetration target of
40% by 2025 and 80% in the future, and we forecast theCP cashless market to reach ¥128 trillion in 2025.* In
addition, the need for labor-saving and unmanned operations is likely to increase from changes in the environment
such as advances in IoT and depopulation. In this business environment, we have continued to exceed themarket growth rate thanks to the strength of our one-stop
service from sales of payment terminals all the way to our
payment processing center function, and the success of
our proprietary alliance to provide the high value-added­service of “stera,” the next generation payment platform,

36

GMO Payment Gateway, Inc.

formed by the collaboration between Sumitomo Mitsui
Card Company, Ltd. and Visa Worldwide Japan Co., Ltd.
* Based on Company estimates using market statistics.

Lead Society’s Innovation by Creating Value from
Cashless
The aim is to be the infrastructure provider for cashlesstransactions throughout Japan, by providing CP cashless
payment platform to various industries and by entering
new domains such as MaaS (Mobility as a Service) whichis expected to grow going forward, biometric authentication, terminal-free payment, etc. There is still much room
for leveraging cashless and hence to contribute to theadvancement of companies and overall society. For
example, self-checkout machines enable the store staff toallocate time for product explanation rather than cashierwork, thereby strengthening customer touchpoints. In particular, we are accumulating know-how in improving store
operations through cashless operations by responding to
the requirements of large business operators with nationwide store coverage. I remember the strong sense of awe
when I put my train ticket into the gate at an unmanned
train station, although this has become the norm now.
We want to be the pioneers to create a new society bybringing forth such dramatic changes.

+53.0%

19

20

21

22

23

(ﬁscal year)

Stock
Fee
SpreadInitial*1 Figures show the consolidated financial performance of GMO-FG.
*2 Recurring-model revenue is the sum total of stock, fee and spread revenue, and excludes the initial revenue whichmostly consists of payment terminal sales.

Focusing on Strengthening Business Foundation as a
Social Infrastructure
We are working to strengthen the business foundation andare determined to be the social infrastructure provider.
The first step is to strengthen the organization. In addition
to talent recruitment, organizational changes have been
made, including the names of divisions in order to clarify
the human resources and functions necessary formedium-to-long term growth. The highest attention inorganizational operation is given to ensure that all

Since FY2020, initial revenues havegrown even under the travel­restrictions imposed by the COVID-19­pandemic that depressed CP­transactions. This was due to strategically ­marketing payment terminals, in­particular the “stera terminal” by capturing the market’s cashless needs,
demand for business ­operational­efficiency and infection prevention.
The lifting of travel restrictions
and the reopening has activated CP­consumption, causing a significant
growth of recurring-model revenue,
which is the revenue arising fromrecurring transactions on the payment t­erminals sold. Going forward,
the proportion of recurring-model­revenue to total revenue is expected
to increase further.

partners engage with the same intensity and passion
across all divisions. The aim is to build an organization
where all of us act as one and face the client. The second
step is to strengthen the payment processing center. With
the scale of payment processing expanding yearly, it isnecessary to have ample allowance to ensure a stable
operation that lives up to the standards of a social infrastructure. We intend to secure the social infrastructure bymaking regular investments to improve the performanceand availability to process large amounts of paymenttransactions.

Implementation of Approximately 26K Units of “stera terminal” toJAPAN POST Co., Ltd.
Q:	What sense of accomplishment comes fromsupporting the cashless migration for society?
There is great significance in installing stera terminals at post offices that are used by every individualof all ages across Japan especially given that rural
areas are lagging behind in cashless penetration.
I am looking forward to seeing cashless penetration
make progress in rural areas as users experience
the convenience of cashless payments throughstera terminals. Going forward, we will continue tocontribute to cashless penetration.

work from the first year as a new grad recruit andthere were many hardships and tense moments as
failure was not an option. I hope to grow further insales and treasure the kind of ­communication thatincorporates the ­concerns and queries of others.
Alliance Group #1
Solution Partners Division
GMO Financial Gate, Inc.

Q: What did you learn from this project?
It was necessary to be cognizant and ‘think aheadto the next step and act’ as we proceeded with theimplementation test while anticipating various­circumstances. There was a tangible sense ofaccomplishment being assigned to a challenging
2023 Integrated Report37Foundation of Value Creation

Roundtable Meeting of External Directors

Sustainability Management Towards
Sustainable Growth andCorporate Value Enhancement
Materiality issues were identified this fiscal year in order to contribute to the sustainable advancement of­society and enhance corporate value. The External Directors have assembled to discuss the ideal ­sustainability
management to strive for.

Promoting Businesses Centered on Payment Resolves Societal Issues andthe Company’s Growth
Q. What is the evaluation of the materialities identified?

OkamotoMateriality expressed differently is a company’s raison d’etre. The Company can take pride thatits business aligns with the societal needs to reduce CO2
emissions and the pursuit of DX and FinTech that the
government is promoting.
Hokazono
It is often the case that societal issues andthe direction the business faces are in opposite­directions. But in the discussions during the compilation­process, I could tangibly feel that the Company faces thesame direction.
Kai
Indeed. While the demands to respond tosocial challenges have been around from before,

Kazutaka Yoshida
External Director
Head of Audit and Supervisory Committee
Nomination and Remuneration Committee

Kazutaka Yoshida

Kazuhiko Okamoto

Q. Is there a large expectation for payment companies to contributeto society through cashless migration?
Kai
Payment is a requisite activity in every company. Payment takes place after the order intake andplacement, contracting and tying into the accounting process. The Company addresses payment and the adjacent operations as well, thus helping to resolve issues atvarious industries. The Company contributes to society
by supporting the efficiencies of the entire corporate
management by promoting cashless and data migrationof payment.
YoshidaFrom the individual and stores’ perspective,
cashless leads to improving efficiency and convenience.
It can be said that the Company contributes to society byproviding the platform to realize these benefits.
Hokazono
The accounting process has become significantly smoother with the introduction of the corporatecard. In the past there were fraudulent incidents at rural
offices far removed from the headquarter’s oversight, butsuch incidents are becoming rare nowadays.
OkamotoYes, crime prevention too. This can prevent
violent crimes targeting cash as well as spur-of-themoment crimes as well. It is conceivable that fraudulent
acts by employees occur in areas where physical cash ishandled resulting in the cost burden of recruitment andYumi Hokazono

Fumio Kai

training of new personnel. Cashless can alleviate labor
shortages as well as rationalize business processes. In
addition, during the COVID-19 years, the contactless
NFC payment method was a blessing. How much of the
COVID-19 virus could be found on Bank of Japan notes?
Cashless is also a plus for maintaining safety andhygiene in daily life.
YoshidaWe were reminded often as children to wash
our hands after handling physical cash.
Kai
Cash is a physical object that requires
transport and handling that incurs costs as well as emits
CO2. When we have a positive interest rate, there will bea move to avoid holding cash that does not accrue
interest. This may result in increasing social cost as the
movement of Bank of Japan notes increases fromcurrent levels.
OkamotoCasting of coins also uses considerable
energy and consumes metal.
Kai
Conveying the broad-based significance of
cashless in a comprehensible way is needed. There ismuch expectation of resolving various social issues thatlead to growth opportunities and business opportunities
for the Company.

Yumi Hokazono
External Director
Audit and Supervisory Committee
Nomination and Remuneration Committee

Previous positions include Executive Officer of IBM Japan,
Inc. and Senior Executive Officer and General Manager ofTechnology Division of JSOL Corporation. Appointed asExternal Auditor in December 2016 and reappointed asExternal Director from December 2021.

Representative of Yumi Hokazono Certified Public
Accountant Office since July 2013, after working at Showa
Ota & Co. (now Ernst & Young ShinNihon LLC). Appointed
as External Auditor in December 2018 and reappointed asExternal Director in December 2021.

Kazuhiko Okamoto

Fumio Kai

External Director
Audit and Supervisory Committee
Head of Nomination and Remuneration Committee

External Director

Previously held positions include Vice President in chargeof Japan and South Korea of GNEX division of American
Express Japan Co., Ltd., Representative Director andother positions at Visa Worldwide Japan Co., Ltd.
Appointed as External Auditor in June 2017 and reappointed as External Director from December 2021.

38

there are still companies which see this as a cost burden.
In the case of the Company, the mainline business of creating innovation centered on payment is itself a social
contribution, and ties into personal development too. Thisis a very advantageous position. The material issues compiled aptly describes the key features of the Company andbroadly consists of two parts. The first is to respond to thedemands of efficiency, security and decarbonization. The
next part is on human capital and governance that is the
bedrock of the high growth and the ability to respond to
the needs of the time. I think it succinctly describes the­direction and needs to be cherished.

Promoting Efficiency, Convenience, Security, Hygiene and Decarbonization throughCashless Migration

GMO Payment Gateway, Inc.

Previously held positions include Associate DirectorGeneral of Institute for Monetary and Economic Studies
of Bank of Japan; General Manager of Akita Branch of
Bank of Japan, General Manager of Deposit Insurance
Department of the Deposit Insurance Corporation of Japan.
Currently the External Director of FIDEA Holdings Co., Ltd.
Appointed as External Director in December 2021.

2023 Integrated Report39Foundation of Value Creation

Roundtable Meeting of External Directors

Vested with the Mission to Ensure Society’s Safety and Security and to Uphold the Reliabilityof a Social Infrastructure
Q. What are the points to focus on as a social infrastructure provider?

Kai
Payment is required to be safe and certain.
The Company strongly emphasizes the security and certainty of transactions which leads to the security of economic activities. I believe the Company has developed asystem that properly understands the customer’s needs
and has realized a stable operation of the system.
However, the requirements for securing reliability changes
according to the times such as the increased incidents ofcyber-attacks. We expect the Company to agilely respondto the changes and be the force that leads society.
Okamoto
The Company’s payment platform could
cause social disruption if there were any mishaps. This isimportant from an economic security standpoint as well.
The primary requirement is to maintain and ensure thestructures and systems that underlies security, so that
there is no disruption in case of a cyber-attack. There arecases in the real world where major disruptions haveoccurred. Reliability that is painstakingly built can crumble quickly and it will take a huge amount of cost andtime to recover. It is important to have a stringent framework and educational programs so that such events
never take place.
YoshidaReliability is the axis in considering the
response to the social requirements of the times, as theCompany bears the heavy responsibility of operating thesocial foundation of payment systems. System development is moving away from building a system based on
the customer’s specifications and moving towards anage that combines the existing ERP and SaaS systems
appropriately. Having an existing platform and a trackrecord is the strength of the Company. It is important tomaintain the reliability in order to expand the customer
base that utilizes the system. Given the difficulty insecuring engineers due to depopulation and an aging
society, it is necessary to effectively utilize systems, byunderstanding the customer’s demands and translating it
onto existing systems. Said differently, perhaps reliability
can be secured without having to make something new.

Human Resource Strategy is the Highest Priority in the Pursuit of Growth; Enhancing theOrganization’s Attractiveness as the Platform for Individual Growth
Q. What are you views on the HR initiatives that plays an important rolein supporting sustainable growth?

Kai
Going forward, securing human capital willbe critically important. It is necessary to firmly securetalent looking 5 or even 10 years out, given that the40

GMO Payment Gateway, Inc.

higher age groups are exiting the workforce. Investors
are also focusing on this issue, and it is necessary toconcretely explain the strategy.

YoshidaThis is a fundamental point, and it is important to communicate the appeal of the Company in orderto encourage people to want to join and work here. The
next important point is to retain those who join. Recently,
it has become easier to freely change jobs and therefore
I stress the importance of further developing the structure to ensure that talented personnel are retained andare fully contributing.

Hokazono
Another important point is to provide a conducive work environment for working mothers.
Supporting those with the will to work is important.
OkamotoI agree. People would not leave a company
if they can share in the growth and find the work exciting.
Structures and wages are important but so are psychological aspects such as the sense of accomplishment
and providing an opportunity for personal growth.

Pursue the Optimal Structure Aligned with Growth and Continue to Enhance Risk
Management and Internal Controls
Q. What progress and challenges are there regarding strengthening governanceto s­ upport growth?

OkamotoI am keenly aware of taking the viewpoint of
non-controlling interests as an External Director. The
Company has a triple-listing structure, which is unusualfrom a shareholder’s perspective, and the Company
needs to maintain and secure a governance structurethat responds to these concerns and expectations. It isnecessary to convey this to each company.
Kai
There has been progress during this fiscal
year. In risk management, risk incidents were deeply analyzed to draw up countermeasures, including preventing
similar incidents occurring at other divisions. It is important to proactively respond, and preemptive considerations have commenced on scenario analysis forprevention and identification of preventable accidents.
Reporting to Board meetings has also improved. There
was progress made in internal controls as well. The
framework for the Board to inspect issues together withthe perspectives of the External Directors, following thecomprehensive evaluation by the executives, is­functioning well. I think the required standards are inplace, but the high pace of growth means that such
systems will need ­constant updating.
YoshidaThe basic policy of internal control systems
has not changed much, and one lesson learned is toregularly revise the system through a PDCA cycle toincorporate changes in the environment, business­conditions and human capital. This fiscal year, rules anddetailed regulations have been developed for reporting
material incidents to management level by each divisionand group company. Going forward, we are focusing on
how this is put into practice.
Hokazono
The efficacy of organizational auditing has
improved by making a dual reporting line for the Internal
Control Office.
Kai
It is even more important to focus on changes
in conditions because of the high growth. Improving
engagement and the problems with reporting stem from
communication issues between all partners and the
management. The Company’s rapid growth has resulted
in a diverse range of personnel and the scale hasreached close to 1,000 people. This suggests that thelogic and methodology of organizational operation may
change. We will work to seek the optimal structure basedon the growth phase through trial-and-error of regulations and organizational changes.
OkamotoInvestors expect the Company to balance thetwin aspects of a start-up spirit and the responsibility thatcomes with being in a position to operate an ­infrastructure.
We focus on how to balance the level of ­governancerequired by capital markets while pursuing growth.

2023 Integrated Report41Foundation of Value Creation

Environment

Response to Climate Change
The Company promotes online, cashless and paperless migration which has a lower
environmental footprint compared to conventional payment services. In financial-related
services, the Company provides lending service to support the growth of business operators that provide online business and FinTech services in Japan and overseas, whichhave a low environmental impact. The Company will work to reduce the environmental
impact of society and customers, support the transition to a sustainable society and aim
to realize a sustainable society through its businesses.
In addition, the Company has endorsed TCFD recommendations on January 2023 andwill work to expand its information disclosure regarding climate change based on TCFD
recommendations.
For information disclosures based on TCFD recommendation, please refer to the website below.
https://www.gmo-pg.com/en/corp/sustainability/environment/

Contributing to Society’s
Decarbonization
The Company will contribute not only to reducing GHG emissions from its businesses but
also to reduce GHG emissions for overall society by promoting cashless migration. Cashbased payments emit CO2 at each step of the process, from the printing / minting of paperbills and coins, manufacture of ATMs, etc., to the payment, usage and disposal of cash.
The analysis disclosed by Payments Japan Association in August 2023 showed a calculation result that CO2 emissions for cashless payments is one-third that of cash ­payments,
confirming that cashless usage has a smaller environmental impact. Similarly, researchdone in the UK and Netherlands also showed that promoting cashless migration can
reduce CO2 emissions.

Cashless Roadmap 2023 released by Payments Japan Association
CO2 Emission for Cashless for a ¥1,000 Payment is 0.34 Grams
The latest Cashless Roadmap 2023 ­presented
an estimation of CO2 emission for cash andcashless payments by utilizing ­various publicly
available data.
Although these values may not be accurate given that the estimates were calculated
without all data being available, it was possible to estimate that the CO2 emissions for a¥1,000 payment is 1.06 grams for cash use
compared to 0.34 grams in the case of cashless use. This estimation confirms that using
cashless in daily life has a lower environmental impact. As a result, this confirms that cashless usage is a more environmentally friendly
behavior.

42

GMO Payment Gateway, Inc.

Processing Payments of ¥15­trillion* Annually Using Effectively
Renewable Energy to Realize
the Company’s Carbon Neutrality*
and to Contribute* in Reducing theCustomer’s CO2 Emissions
1

2

3

Lead Japan’s CO2 Emissions
Reductions by Promoting
Cashless Payments* with
Low Environmental Impact
4Comparison of CO2 emission for cash andcashless (for ¥1,000 use)

Cash

Cashless

1.06g(Source) Payments Japan Association, “Cashless
Roadmap 2023.”*1 Figures are for FY2023 and on a consolidated basis.
*2 Zero emissions for the Company’s own business activities (Scope 1 and 2). Market standards are applied for Scope 2.
*3 This refers to Scope 3 emissions by merchants that use the Company’s payment service.
*4 According to the analysis results by Payments Japan Association and released on August 2023, CO2 emissions using
cashless payments is one-third that of cash payments.

2023 Integrated Report43Foundation of Value Creation

Environment

Initiatives to Reduce theCompany’s Own GHG Emissions

Initiatives to Reduce
Supply Chain GHG Emissions

The Company is promoting initiatives to reduce GHG emissions to contribute to realizing
a sustainable society. In FY2022, the Company implemented what is effectively­renewable energy for its major data centers that consume the bulk of electricity in the­business. As a result, the Company achieved what is effectively zero GHG emissions
from its own operations, including offices and all other data centers (Scope 1 and 2) in
FY2023. The Company intends to maintain its effective zero GHG emission up to FY2030.
Note that, we have received third-party certification by a verification organization inorder to secure the credibility of reported information on GHG emissions (for Scope 1 and
2 in FY2022 and FY2023; Scope 3 in FY2022).

In order to tackle GHG emissions from the supply chain, the Company has establisheda target to reduce Scope 3 (Category 1 and 11) emissions for newly operating payment
terminals by 55% per terminal by FY2030 against the baseline of FY2021. This targetaligns with the Paris Agreement.
The Company is undertaking engagement with the supply chain to reduce GHG emissions related to the purchase and usage of payment terminals (Scope 1 and 11), which
are essential to provide CP payments and account for the bulk of Scope 3 emissions, aswell as GHG emissions related to software development (Category 2).
More concretely, the Company is engaging with payment terminal manufacturers to
implement appropriate measurement and reduction of GHG emissions during­manufacturing and electric power consumption during the usage of the terminals.
Similarly, the Company is engaging with system development companies to appropriately measure and reduce GHG emissions (Category 2) related to ­software development.

stera terminal

GHG Emissions (Scope 1 and 2)

GHG Emissions (Scope 3)(Unit: tons-CO2)

Scope 2: Market standards (Scope 1 is zero)

2,000(Unit: tons-CO2)

Category 1 Purchased goods and services
Category 2 Capital goods
Category 11 Use of sold products
Others

25,00020,0001,500

Established target to reduce Scope 3 emissions(Category 1 and 11) from newly operating terminals by

FY2023

Achieved zero
GHG emissions
for Scope 1 and 2

1,000

500

15,00055% by FY2030 againstthe ­baseline of FY2021

10,000

5,000

To be
measured
0

44

19

GMO Payment Gateway, Inc.

20

21

22

23 (ﬁscal year)

0

21

22

23

30 (ﬁscal year)

2023 Integrated Report45

Foundation of Value Creation

Human Capital Strategy

The Source of Growth = ­Company is People

Human Resource Strategy and KPIs to Realize Sustainable Growth

The Company quantitatively measures the level of utilization of human capital and the development status of programs
and work environment. The KPIs* are dynamic KPIs that can be revised to reflect changes in the external environment andpenetration of human resource strategy. The progress of KPIs is monitored based on discussions at the Human Resource
Strategy Meeting and improvements in concrete initiatives, etc.
* KPIs apply to GMO-PG non-consolidated and are actual figures for FY2023.

Respecting Diversityof Our Human
Resources“To hire people and train them as a whole company”
Recruitment of human resources with the highest potential is conductedby the entire Company acting as one, which fosters an organizational­culture that respects diversity.
Initiative Strengthening development capability
KPI

Number of Engineers
FY2023 actual

FY2024 target

212 persons

230 persons

Initiative Supporting work and childcare
KPI

Ratio of childcare leave by male employees
FY2023 actual

FY2024 target

70.3%

Satoru Isozaki

Kiyonobu Inayama

Executive Vice President
General Manager of Corporate Support Division
Chief Well-being Officer

Executive Officer
Executive Manager of Human Resource
Management Department
Corporate Support Division

The Company is promoting investment into humancapital based on the view that the source ofgrowth is people for a service-oriented businesssuch as cashless payments.
The aim is to exceed the stakeholder’s expectations by encouraging the growth of each partnerby “respecting the diversity of our humanresources,” “supporting a self-designed
career,” and “improving well-being,” so thateach partner can take pride in their work, feel asense of accomplishment and be able to exercise
their full potential.

Behind sustainable growth lies not only thestrength of the business model but also the corporate culture of “Company is People.”
The capability to grow can be raised if all partners move in the same direction, and this can beachieved by sharing key phrases such as “ActLike the CEO” and “Responsibility of others is
also yours” which are summarized in theBusiness Principles that describes the attitudes
and behaviors we seek in partners.

A high degree of effectiveness and ­motivationis secured by sharing the partner’s­opinions at the Human Resource Strategy
Meeting,* a strategic meeting dedicated tohuman resource issues and attended by all
management members convened oncea week.

46

GMO Payment Gateway, Inc.

Initiative Employee satisfaction survey (GPTW)KPIManagement

Partners

Given the basic stance of “design
your own career,” the Company supports an individual’s growth such as acompany-wide survey on employee
satisfaction and career design system(career survey), creating dialogue
opportunities with partners, leverages
the partner’s opinions to carry out
workstyle reforms, improves the work
environment and, facilitates new job
assignments and divisional transfers.

Support for
Self-designing
Careers

Number of Great Place to Work Certification
FY2023 actual

9 consecutive times

FY2024 target

10 consecutive times

Initiative Support for talent development
KPI

Hours of training received
FY2023 actual

31.2 hours per person

ImprovingWell-being

Human Capital Strategy Structure* Participants are Executive Vice President,
Senior Managing Executive Officer, GMO-EP
President, GMO-PS President, GMO-FG
President and Human Resources.

“The Company is a place to foster personal growth”
The Company has developed a proprietary human resource development
program for all partners to be business leaders that can drive a sustainablebusiness growth.

100%

FY2024 target

35.0 hours per person“Well Being with Partners”
A wide-array of programs based on “diet,” “healing,” “movement” and“medicine” is available to support the healthy and active lifestyle of partners.
Initiative Prevention of excessive work
KPI

Average overtime hours
FY2023 actual

22.9 hours per month

FY2024 target

Below 20.0 hours per month

Initiative Maintenance and improvement of health
KPI

Ratio of annual health check-up and stress test recipients
FY2023 actual100%

FY2024 target

100%2023 Integrated Report47

Foundation of Value Creation

Human Capital Strategy

Please refer to the website below for more information on human resource
strategy such as data, training programs and employee welfare programs.

https://www.gmo-pg.com/en/corp/sustainability/social/

Voices of Our Partners

Track Record of Human Resource Strategy
Number of Partners (Consolidated) and Turnover Rate
(Unit: people)

What is the in-company
short-term study
program?
This is an inter-divisionaltransfer program to p
­ rovidecareer change experienceand growth opportunities
to partners as well as vitalize the cross-divisional
collaboration.

Number of Partners (Consolidated) and Gender Breakdown(Unit: %)900

263 persons

15

825

600

10

825 persons

7.1
300
0

From Sales to HR

Talent Development Department
Human Resources Management Department
Corporate Support Division

From Sales to Corporate Planning

Corporate Planning / New Business Creation Department
Corporate Planning Management Department
Corporate Value Creation Strategy Division

Male
Female519

20

Number of partners (left axis)

21

0

23 (fiscal year)22562 persons

Turnover rate (right axis)(As of end-September 2023)* Figures for FY2019 are calculated by excluding MACROKIOSK,
which was deconsolidated in FY2020.

External Evaluation

Q. T hrough this program, were you able to gain career experience, grow professionally andrealize ­cross-divisional collaboration?

Support to balance workand childcare

ManagerGroup #2 Utility & Public Sector Sales
Department
Innovation Partners Division

Executive Officer

Accounting / Finance Management Department
Corporate Support Division

Q. D
 o you see a change in the awareness andwork environment with regard to childcare
leave for men?
As a Manager, I had concerns for customers and theteam. However, thanks to the warm encouragement, I wasable to delegate work and this became the trigger for theteam to take the initiative in handling work. Being able tospend precious time with my family when my first childwas born, which was a learning experience, raised myawareness towards child-raising. I hope to balance mywork with the help of this system. The work environment isalso encouraging as three men have taken childcare leave
during the past six months. (LEFT)

48

GMO Payment Gateway, Inc.

The Company is expanding various support measures to create long-term
career development suchas staggered working
hours, shortened workinghour system and work fromhome schemes, as well asa full-time kid’s room
“GMO Bears” (nursery),a specialized consultation
desk and subsidies forbabysitter use.

Q. Are you able to continue working in a­management position and have a child using
this system?
Taking childcare leave and returning to work wentsmoothly thanks to the understanding and support of mymanagers and team members. I am grateful for this andfeel the organization’s reliability. There are many membersin the division who are raising children, and by having myown child I realized that I had not fully ­appreciated the difficulty of balancing work and childcare. Being in the same
position, I want to consciously build a work environmentthat allows people to work to their full potential while­raising ­children. (RIGHT)☆

てGreat Place to Work
Certification: 9 consecutive
times

す

サ

ま

I applied for this program to work in the division that­creates new businesses in order to supplement my sales
capabilities and grow rapidly. Just as the slogan “all-­handson-deck approach to recruiting and mentoring” says, theguidance I received was very hands-on on a daily basis,and the proximity with management enabled me to learn
from a company-wide and management perspective. I aim
to use what I learned to quickly develop in new domains
and become an asset that can resolve issues just as the
Directors do. (RIGHT)

2 年認定

る み ん

子育

I had been interested in recruitment and training throughthe many interactions in these areas, and decided to apply
after considering my long-term career at the launch of thisprogram that embodies the “PG-ism” of “be proactive andgrab the opportunity.” I learned from the many interactions
on management organization and people’s thoughts at
Human Resources. It is very gratifying to see the younger
generation evolve and I hope to contribute to propagating“PG-ism” and talent development when I return to Sales.
(LEFT)

202

く

ポートして

い

Kurumin Certification
Ratio of men receiving
childcare leave: 70.3%
Ratio of women receiving
childcare leave: 100%

Ratio of women in management positions: 15.6%

Average overtime hours: 22.9 hrs / month
Ratio of annual health check-up and stress test recipients: 100%

* Figures for women in management position are stated on a consolidated basis, allother figures are stated on a non-consolidated basis. Above figures are actual figures
for FY2023.

2023

Established the Health Declaration “Well-being with Partners”
and opened in-company fitness gym “GMO OLYMPIA”

2022

Launch of No.1 & STEAM Talent
Recruitment – New Grad Recruit Annual
Wage ¥7.1 Million Program

2021

Compiled “Business Principles”

Implemented Work From Home Program
Implemented In-Company Short-Term
Study Program

2020

This summarizes the norms on attitudes and behaviors expected frompartners. It includes the most important 11 items by using key words/
phrases such as “respond to trouble-shooting until appreciated by thecustomer,” which may seem unique but is a sensible keyword andothers phrases such as “Act Like the CEO” and “Responsibility of othersis also yours,” etc.

A cross-divisional transfer to provide partners
with a career change experience and growth
opportunity as well as realize greater collaboration within the organization.

2019

Implemented hourly-increments for annual
paid leave

2018

Implemented bitcoins for a part of salary
distributions

2017
2016

Implemented staggered commuting system
Commenced employee satisfaction survey (GPTW)

2015

Implemented workstyle reforms and improving work environment
based on employee feedback.

2014

Implemented special leave andallowance for family support(infertility treatment)
Implemented to support partners thatneed to visit hospitals regularly for
infertility treatment.

2013
2012

2011

Implemented PG Award
Implemented defined contribution pension plan
Kid’s room “GMO Bears”
Opened synergy café “GMO Yours”

2010
Implemented parental care allowance2009

Implemented on President Ainoura’s strong belief that partners should cherish a sense of gratefulness, based on the thought that “those who cannot take care of their parents (or people whohave cared for them) would not be able to have compassion for the customer.”

2023 Integrated Report49

Foundation of Value Creation

GovernanceCorporate GovernanceContinual Improvement of Governance

Basic Views (Implemented)

Based on its management principle, the Company implements governance systems that can effectively and efficiently realize thisprinciple. The Company’s basic view on corporate governance is to implement measures and develop necessary management
oversight systems for sound progress while simultaneously securing the legal compliance and efficiency of management.
Corporate governance is positioned as one of the highest priority management issues.
Structure of Corporate GovernanceIndependence Standard for External Directors In making the decision for designating External Directors as independent directors, the Company selects those who fulfill the
proprietary standards set forth in the Independent Standards and Rules for External Directors.

General Meeting of Shareholders
Selection, dismissal

Selection, dismissal

Selection, dismissal

Audit and Supervisory Committee(four External Directors that are members of Audit andSupervisory Committee)

Accounting auditor

Evaluation of the Effectiveness of the Board The Company strives to improve the effectiveness of the Board by incorporating evaluation and analysis once a year at theBoard meeting, carried out primarily by the Audit and Supervisory Committee. More concretely, the Company works to ensure
the Board’s effectiveness based on a broad perspective that is not limited to the composition and operations, but also includes
the organizational design, nomination and remuneration by incorporating objective and quantifiable methods, such as questionnaires completed by all Directors.
   Concurrently, the issues revealed in the evaluation process are continuously addressed through formulating and executing
on improvement measures, in order to further enhance the Board’s functioning.

Board of Directors

Collaboration

Audit andSupervision

Directors(11 Directors of which one is an External Director)

Selection, dismissal

Instruction Elect, dismissal and supervision

Selection,
dismissal

Representative Director
ReportReportManagement
Committee

Instruction

ReportCollaboration

Internal Audit Office

Audit

Instruction

AnswerNomination andRemuneration
Committee

Selection,
dismissal

Answer

Special
Committee

ReportEach Division

Risk Management Committee

Accounting
Audit

GMO Payment Gateway, Inc.

Collaboration

Audit

Information Sharing

Auditor

Consolidated group of companies

Methods and Procedures for the Selection of Directors and the Nomination and Remuneration Committee The process of selecting Directors is based on a comprehensive decision that takes into consideration a candidate’s knowledge, experience and skills to effectively carry out the role and responsibilities, as well as incorporating the results of a 360degree evaluation by management and other Directors and being mindful of diversity (nationality, gender and age) and theappropriate size of the Board. Candidates for Directors will be selected based on these policies and following the deliberationsof the Nomination and Remuneration Committee, will be formally ­proposed to the Board for decision. Organizational chart 5

Board of Directors and Management Committee
In order to appropriately respond to changes in the business environment and to strengthen the management’s supervisory­function, the Company separates the supervision and execution functions. The following initiatives have been implemented:
 he Board of Directors makes decisions on important management matters and legal issues, supervises the execution ofT
duties by Directors and works to ensure the fairness, efficiency and transparency of the decision-making process.
Organizational chart 1In order to strengthen management oversight through the separation of supervision and execution, the Management
Committee is charged with the decision-making function for the deliberation on and execution of important operational­matters based on the basic policies stipulated at the Board of Directors meeting. Organizational chart 2

Audit and Supervisory Committee The Audit and Supervisory Committee consists of four External Directors. Based on the Rules of the Audit and Supervisory
Committee, each member must share and conduct the task of attending the Board of Directors meetings and other important
meetings and operations, investigations of financial conditions, etc. The Committee receives necessary reports from theInternal Audit Office and supervises the execution of duties by the Board (excluding members of the Audit and Supervisory
Committee). Organizational chart 3

Director's Remuneration and the Nomination and Remuneration Committee The Director’s remuneration is designed with the purpose of heightening the incentive to contribute not only in the short term
but also to the medium- to long-term financial performance improvements so as to enable a sustainable enhancement of ­corporate
value. The remuneration is comprised of a fixed remuneration amount that is paid monthly for carrying out duties and the Director’sbonus that is linked to that fiscal year’s financial performance and an equity remuneration which is linked to medium- to long-term
financial performance. Additionally, remuneration for Directors of the Audit and Supervisory Committee is solely ­comprised of a
fixed remuneration amount from the perspective of emphasizing the Committee’s independence from ­management.
   In order to secure the transparency of the remuneration determination process and the appropriateness of the ­remuneration
amount, the Company has instituted the Nomination and Remuneration Committee that is chaired by an External Director, toact as the advisory body to the Board etc. The remuneration amount (including the bonus payments) for Directors (excluding
members of the Audit and Supervisory Committee) is determined by the Board after due deliberations conducted at theNomination and Remuneration Committee.
   It is determined that the remuneration amount for each individual Director decided by the Board basically aligns with theNomination and Remuneration Committee’s report following the Committee’s multi-­faceted considerations to ensure consistency with the policies in determining remuneration.
   Note that the remuneration policy of the Company stipulates that the remuneration of Director's holding concurrent positionsat other companies within the Company's group will be paid by the main corporate entity. Organizational chart 5

Engagement through IR Activities
In order to achieve the purpose of corporate governance, theCompany strives to increase management’s transparency
through timely disclosure of management information andinvestor relations activities to shareholders and investors.

Women Board MembersProportion of Board by Term of Office

External
Directors

Women
Directors

5 persons

3 persons

33.3%

Over 10 years

1 to 3 years

4 persons

9 persons

20.0%

Activity

No. of events

 arnings announcement and Financial
E
Results Briefing meetings

4 times
Approx. 400 meetings

1-on-1 meetings

15 times

Participation in broker conferences

Special Committee The Special Committee acts as an advisory body to the Board of Directors and consists of five External Directors vested withthe responsibility to deliberate on important transactions and actions that have a conflict of interest between controlling andnon-controlling shareholders. Organizational chart 4
Ratio of External Directors

FY2023 IR Activities(October 1, 2022–September 30, 2023)

 umber of meetings companies includingNgroup meetings

Approx. 590 meetings

Inclusion in ESG Indexes* FTSE Russell (the trading name of FTSE International Limited andFrank Russell Company) confirms that GMO Payment Gateway,
Inc. has been independently assessed by third-party research,and has satisfied the requirements to become a constituent of the
FTSE4Good Index Series, FTSE Blossom Japan Index and FTSE
Blossom Japan Sector Relative Index.

7 to 9 years

1 person50

GMO Payment Gateway, Inc.

4 to 6 years

1 person2023 Integrated Report51

Foundation of Value Creation

GovernanceRisk Management

Business and Other Risks and Responses

Status of Risk Management Structure

In order to tackle the various risks associated with business operations, the Company has developed a risk management structure to secure stable growth and business continuity by optimizing and deploying costs required to carry out preemptive measures
on a permanent basis.
Specifically, the Risk Management Committee has been established, comprised of the heads of ­divisions at GMO-PG and its
consolidated companies, to carry out risk assessment, the formulation and execution of countermeasures, as well as monitoring.
This Committee comprehensively evaluates and manages various risks including compliance risks such as anti-­corruption, natural disaster-related risks including climate change and risks associated with system security, among others.
The Board of Directors supervises the effectiveness and appropriateness of corporate-wide risk management based on periodic reports on the discussions and evaluations of the Committee.
Note that, due to the above initiatives, there have been no scandals nor material wrongdoing during FY2023. Organizational chart 6

Category

Risk

Responses

Business
Environment

Changes in trend in the payment
processing industry

Early response to changes, further improvements in simplifying
implementation and the safety and security of transactions

Stagnation of the EC market

Promote the sound expansion of the EC market through responding to laws
and regulations and strengthening information security measures

Changes in competitiveenvironment

Continuously improve competitiveness through the development and launch of
products and services that meet the merchant’s needs, provide value-added
services, customer support system and the configuration and operation of astable core system, etc.

Obsolescence of services due totechnological innovation

Respond to technological innovation through pursuing even more resilient
services, strengthening marketing activities for developing new services,
obtaining information regarding the latest technology and services by opening an
office in Silicon Valley and other means; investing activities into start-ups, etc.

Changes in laws and regulations

Strengthen information-gathering ability through attorneys and externalorganizations, expand Compliance Division, buildout management structure tooversee anti-money laundering, etc.

Depressed consumption due tosurge in prices

Strengthen the Company’s business model to be resilient against macroeconomic impacts, establish a diverse merchant-customer foundation andbusiness operations based on stable revenues

Decline in the number of merchants

Strengthen alliance-model businesses, thorough customer response, andleverage characteristics of systems and services that are sticky

Disruption of information processing
center network

Connection to multiple networks

Changes and termination of
payment processing contracts

Build a stronger relationship through enhancing functionality and closer
collaboration with credit card companies

Chargeback risk from fraudulent
billing of revenues, bankruptcies ofmerchants, etc.

Screening by credit card companies at the time of contract with merchants,
post-contract screening and confirming lists on website for Specified
Commercial Transactions Act and monthly management of credit delinquencies

Injunction request and damage
compensation due to infringementof intellectual property

Build out the dispute resolution system and strengthen internal management
structure and awareness-raising

Deterioration of investee’s business
management

Detailed due diligence at the time of selecting prospective investees andregular monitoring

Deterioration of financial
performance and occurrence of
misconduct at subsidiary

Establish rules for affiliated companies, management guidance by dispatching
Directors, strengthen monitoring of financial conditions, changes in external
environment and business performance on a monthly and quarterly basis

Credit risk

Prudent screening according to stipulated rules, diversification of debtors

Sudden changes in businessenvironment in countries ofoverseas businesses

Strengthen monitoring of local offices, diversification of investment and loans

Business suspension from natural
disaster and terrorist activities

Build out BCP structure, respond with redundancies in system configuration

Increase in employee turnover anddelays in recruitment and talentdevelopment

Continue to carry out stable new grad and mid-career recruitment ofspecialized talent, expand in-company training programs, evaluation system
and welfare benefits

Operational and business risk

Document and standardize administrative procedures and internal rules,
systematize administrative work and operations

Inability or delays in procuring
payment terminals

Diversify procurement sources from multiple manufacturers

System failure and information
security

Compile information security policy and establish an information security
committee. Adopt security measures against unauthorized access, a 24-hoursystem surveillance structure, redundancy measures of system configuration,
insurance policy enrollment and develop internal rules on operations

Possibility of personal information
leakage and its impact

Acquire PrivacyMark and relevant certifications on information security

Information leakage of credit card
information at the merchantPromote services that store credit card information at the Company and not at
the merchant, strengthen management of merchant’s that store information

Information Security
Basic View

The Company’s mission is the realization of a secure and convenient cashless payment for consumers and business ­operators byaiming to become the infrastructure of Japan’s payment process. In conducting corporate activities aligned with this mission, theCompany is engaged in information security measures based on the awareness that protection of information assets from external threats is the highest management issue as well as in utilizing the proprietary information assets.
Specifically, necessary measures are in place such as internal rules, 24-hour system surveillance and security measuresagainst malicious infiltration both from within and outside the Company to prevent cyber-attacks and computer viruses and othermalicious infiltration of computers.
Additionally, yearly educational and awareness-raising activities are scheduled to ensure that these measures take root.
Thorough education is periodically conducted at the start of employment using compliance training programs to ensure a deeper
understanding of procedures, the purpose of security rules, basic policies and rules stipulated under the information security management system (ISO27001). These are combined with awareness raising videos on information security measures. Additionally,
improving the effectiveness of risk assessment is also carried out by inviting external experts to participate in the Risk Management Committee and by assigning employees with specialized knowledge to the Internal Audit Office.

Business
Activities

The following accreditations on information security have been received as part of the efforts to enhance risk assessment
structure.
Acquired­accreditation forcompliance for
ISO27001

Acquired accreditation for compliance for ISO/IEC 27001:2013 (JIS
Q27001:2014), the global standard for information security management
applicable to all of the Company’s business locations.

AcquiredPrivacyMark
certification

In recognition of the appropriate measures to safeguard personal­information, the Company received the PrivacyMark certification thatsignifies compliance with the Japanese Industrial Standard for personal
information protection, JIS Q15001:2017.

Fully PCI DSS
Compliant

52

GMO Payment Gateway, Inc.

The Company’s services are in full compliance with version 3.2.1 of the
PCI DSS global security standard for the credit card industry, which was
jointly formulated by the five global credit card brands: JCB, American
Express, Discover, MasterCard and Visa. As such, we are delivering
peace of mind to all of our customers, in addition to securing credit card
payments.

Information
Security

2023 Integrated Report53Foundation of Value Creation

Board of Directors and Management Committee Members(As of Annual Shareholder’s Meeting held on December 17, 2023)

Members of the Board of Directors

Members of the Management Committee

Issei
AinouraMasatoshi
KumagaiRyu
Muramatsu

ShinichiSugiyama

Tatsuya
Koide

Yuichi
HisadaPresident and Chief
Executive Officer

Chairman and Director

Director, Executive
Vice President

Senior Managing
Executive Officer

Senior Managing
Executive Officer

Senior Managing
Director

SatoruIsozaki

Masashi
YasudaHirofumi
Yamashita

Takashi
MitaniTomoyuki
Murakami

Takeshi
Yoshii

Director, Executive
Vice President

Director

Director

Senior Managing
Director

Managing Executive
OfficerManaging Executive
Officer

Teruhiro
Arai

NorikoInagaki

Yuki
KawasakiKatsunari
Mukai

Director

Director

Director

Managing Executive
Officer

TakashiShimahara

Fumio
Kai

Kazutaka
YoshidaDirector

External Director

External Director

Directors’ Skill Matrix
Position

Issei Ainoura

President and Chief
Executive Officer

Osamu
OhkawaExternal Director

External Director

External Director

Risk
Management

Legal
Affairs

Treasury
Payment
andProcessing
Accounting Business

Finance

GlobalInvestment
ESG and(M&A)
Sustainability

Attendance
Attendance
Attendance
rate of Audit
rate ofrate ofandNomination and
Board
Supervisory Remuneration
meeting*2
Committee*2 Committee*2

94%

–

–

–

–

100%

–

–

Satoru Isozaki

Director, Executive
Vice President
Director, Executive
Vice President

100%

–

100%

Masashi Yasuda

Director

100%

–

100%

Hirofumi Yamashita Director

100%

–

–

Ryu Muramatsu

Yumi
Hokazono

IT andSecurity

100%

Masatoshi Kumagai Chairman and Director

KazuhikoOkamotoPractice of Corporate
GMO-ism*1 Management

Teruhiro Arai

Director

94%

–

–

Noriko Inagaki

Director

100%

–

–

Yuki Kawasaki

Director

100%

–

–

Takashi Shimahara

Director

94%

–

–

Fumio Kai

External Director

100%

100%

–

100%

100%

100%

94%

94%

100%

100%

100%

100%

–

–

–

Kazutaka Yoshida
Kazuhiko Okamoto
Yumi Hokazono
Osamu Ohkawa

External Director
Audit and Supervisory
Committee
External Director
Audit and Supervisory
Committee
External Director
Audit and Supervisory
Committee
External Director
Audit and Supervisory
Committee*1 GMO-ism is the collective name for GMO Internet Group’s unchanging goals, including “Venture Spirit Declaration.”*2 Number of Board meetings convened is 17; Number of Audit and Supervisory Committee meetings convened is 19; Number of Nomination and Remuneration Committee meetings
convened is 2.

54

GMO Payment Gateway, Inc.

2023 Integrated Report

55

Data

Consolidated Financial Highlights

Consolidated Financial Statements

Achieved 18 consecutive terms of revenue and profit increase since listing in 2005
Achieved operating profit of ¥20.3 billion from large-scale projects, entering new domains
and creation of new services
Revenue

Operating Profit(Unit: ¥ mil)

(Unit: ¥ mil)

25.5% YoY

70,00025.0% YoY

25,00063,11960,00020,311
20,31220,00050,00010,00020,0005,000

10,00009 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (fiscal year) otal Assets, Total Equity, Ratio of Total Equity
T
Attributable to Owners of Parent

0

09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (fiscal year)

ROA and ROE(Unit: %)(Unit: ¥ mil, %)292,346

300,000

60

40

50

250,000

30
200,000

31.6

150,000
100,000

20

63,119

Cost of sales(16,662)(23,133)

Gross profit

33,63539,985278

303(17,604)(19,892)

(60)

(83)

Operating profit 2

16,24920,312Financial income

1,621

1,021

Financial expense

(230)

(804)

 Equity method­investment gains

184

107

Other income

50,000

20

11

12 13

14

15

16

17 18

19

20

21

22

16,932— Profit before income
taxes 334,756

20,636

Income tax expenses(10,395)(6,813)

Profit24,361

13,822

24,152

13,475208

347

24,361

13,822

15.0

Owners of parent

7.3

Non-controlling interests

1010 Gain from sales of
equity method
investment

Profit attributable to:10

050,29840
30

94,804(Unit: ¥ mil)Revenue 1

Other expenses

30,0000FY2022
FY2023
From October 1, 2021 From October 1, 2022
to September 30, 2022 to September 30, 2023

 Selling, general andadministrative expenses

15,00040,000Consolidated Statement of Profit and Loss0
23 (fiscal year)

0

10

11

12

13

14

15

16

17

18

19

20

21

22

23
(fiscal year)

Total equity (right axis)
Total asset (left axis)R atio of total equity attributable to owners of parent (right axis)

Ratio of pretax profit to total assets (ROA)
Ratio of net profit to total equity attributable to owners of parent (ROE)

Dividend Per Share

Towards achieving a high ROE

ProfitKey Points of Consolidated Statement of Profit
and Loss
1 Revenue

In the Payment Processing Business, online payment showed anincrease in payments in the ticket / travel sector within the non-­merchandise domain from the normalization of economic activity,
despite the adverse effect on small-scale merchants in the merchandise domain due to the unwinding of demand from nesting consumption. In addition, the CP domain benefited from the expansion of the
cashless payments market and the high level of payment terminal­shipments driven by a large-scale project. As a result, the Payment
Processing Business segment grew 26.2% YoY.
The Money Service Business segment grew 23.6% YoY from the
expansion of lending service to overseas FinTech operators and thegrowth of GMO Payment After Delivery from acquiring large­merchants and the impact of changes in the commission rate.
The Payment Enhancement Business segment grew 21.9% YoYfrom the heightening demand for Medical Kakumei byGMO, a reservation management system exclusively for medical institutions.
As a result of the above, revenue reached ¥63,119 million, andincrease of 25.5% YoY.
2 Operating Profit

Payment Processing Business segment profit increased by 20.3%
YoY from the growth of the high-margin online payments and the
expansion of CP transactions, despite the one-time expenses in Q2
that was partially reversed in Q3.
Money Service Business segment profit increased by 11.6% YoYfrom the favorable trends in remittance service and Instant Salary
byGMO, despite the increase in credit-related costs for GMO
Payment After Delivery and provisioning for some overseas
borrowers.
Payment Enhancement Business segment profit increased by
65.6% YoY thanks to the growth of Medical Kakumei byGMO provided
by GMO Medical Reservation Technology, Inc.
As a result of the above, operating profit reached ¥20,312 million,
an increase of 25.0% YoY and operating profit margin was 32.2%.
3 Profit Before Income Taxes
Profit before income taxes reached ¥20,626 million, a decrease of
40.6% YoY due to recording gains on sales of equity method investment of ¥16,932 million from the transfer of all the shares of former
equity method affiliate 2C2P Pte. Ltd. and other factors.

Consolidated Statement of Comprehensive Income(Unit: Yen)180

1.	Establish a high margin and high capital­efficiency payment business

160
140
120
100

89

80
60
40

18

Ordinary dividend

56

3.	Continue with stable shareholder returns
together with capital efficiency and securing
necessary internal reserves
4.	Continuously achieve high growth by effective
deployment of capital

20
0

2.	Pursue ROIC (Return on Invested Capital) thatexceeds capital cost in each business

19

20

Special dividend

GMO Payment Gateway, Inc.

21

22

23 (fiscal year)

ProfitOther comprehensive income   Items that will not be reclassified to profit or loss    Fair value of financial assets measured throughother comprehensive income     Share of other comprehensive income of equity method affiliates     Total of items that will not be reclassified to profit or loss   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 not be reclassified to profit or loss   Other comprehensive income after income taxes
Comprehensive income
Comprehensive income attributable to:   Owners of parent  Non-controlling interests  Total(Unit: ¥ mil)

FY2022
From October 1, 2021
to September 30, 2022

FY2023
From October 1, 2022
to September 30, 2023

24,361

13,822

669

332

5,986
6,655

459
792

5,060
(186)
4,874
11,53035,891

3,047
—
3,047
3,839
17,66235,671219
35,891

17,316346
17,6622023 Integrated Report

57

Data

Consolidated Financial Statements

Consolidated Balance Sheet

Key Points of Consolidated Balance Sheet

FY2022(As of September 30,
2022)



(Unit: ¥ mil)

FY2022(As of September 30,
2022)

FY2023(As of September 30,
2023)

AssetsLiabilities

Current assets

Current liabilities  Cash and cash
equivalents

113,967

133,658

FY2023(As of September 30,
2023)  Accounts payable– trade

5,595

6,555

  Accrued expenses

23,28025,371  Trade and otherreceivables

13,964

18,953  Deposits received

91,41097,231  Advance payments

54,422

63,387  Borrowings

17,00020,395  Accrued revenues

30,33133,395  Inventories

1,532

2,405

  Deposits to affiliates
and subsidiaries

16,5005,300  Other financial
liabilities  Income taxes payable,
etc.

320

  Other current liabilities

4,281

5,138

147,820

163,290  Corporate bonds

19,67819,763  Borrowings

6,000

8,955

  Other financial
liabilities

2,342

2,128

130

130

  Deferred tax liabilities

5,642

1,221

  Other non-current
liabilities

2,531

2,051

650

  Other current assets

620

717

   Total current liabilities   Total current assets

244,256

258,467

Non-current liabilities

3,542

3,353

  Goodwill and intangible
assets

6,942

9,310

  Investments accounted
for using equity method

8,608

9,194

  Provisions  Trade and otherreceivables

3,501

3,622

  Other financial assets

5,095

6,615

  Total non-current
liabilities

36,32634,251  Deferred tax assets

1,342

1,700

Total liabilities

184,146

197,541  Other non-current
assets11783  Capital stock

13,323

13,32329,15033,879  Capital surplus

15,272

15,247  Retained earnings

49,42450,768  Treasury stock(1,152)(1,153)  Other items of equity

10,255

14,088  Total non-current assets

Equity  Total equity attributableto owners of parent  Total assets

GMO Payment Gateway, Inc.

273,407292,346

Liabilities
Total liabilities increased by ¥13,395 million compared to endof previous term to reach ¥197,541 million. This was due toAssets87,122the increase in accrued expenses from the increased transactions of GMO Payment After Delivery and increases in deposits received and borrowings.
EquityTotal equity increased by ¥5,544 million compared to end of­previous term to reach ¥94,804 million. This was due to recordingof profits of ¥13,822 million and other comprehensive income of¥3,839 ­million and the decline in retained earnings of ¥12,134
million from dividends.

Liabilities and Equity(Unit: ¥ mil)

388

320

12,917  Property, plant andequipment

1,014

7,888

  Provisions

AssetsTotal assets increased by ¥18,939 million compared to end of
previous term to reach ¥292,346 million. This was attributable tothe increase in cash and cash equivalents due to the expanding
Payment Processing Business, increase in advances paid related
to Money Service Business and the increase in trade and otherreceivables.

(Unit: ¥ mil)

4,916  Other financial assets Non-current assets

58(Unit: ¥ mil)

92,274  Non-controllinginterests

2,137

2,530

Total equity

89,26094,804

Total liabilities andequity273,407292,346

273,407292,346
Current assets
258,467

Current assets
244,256

Non-current
assets33,879Non-current
assets29,150
FY2022(As of September 30, 2022)

292,346

273,407

FY2023Current
liabilities
147,820

Current liabilities
163,290

Non-current
liabilities
36,326

Non-current
liabilities
34,251Equity89,260Equity94,804FY2022(As of September 30, 2023)(As of September 30, 2022)

FY2023(As of September 30, 2023)

Consolidated Statement of Cash Flows
Operating cash flow amounted to ¥6,128 million. This was mainly
due to cash outflows from an increase in trade and other receivables, increase in accrued revenues and income tax payments,
which were offset by cash inflow from profit before tax, depreciation and amortization, an increase in accrued expenses and theincrease in deposits received.
Investing cash flow amounted to ¥17,762 million. This was
mainly due to cash outflows from deposits into restrictedaccounts, the acquisition of intangible assets and deposits into

deposits to subsidiaries and affiliated companies, which were­partially offset by cash inflows from withdrawals from restricted
deposits and the ­withdrawal of deposits to subsidiaries and­affiliated companies.
Financing cash flow amounted to –¥6,419 million. This was
mainly due to cash inflows from a net increase in short-term andlong-term borrowings, which were offset by cash outflows from
­dividends paid.



FY2022
From October 1, 2021 to September 30, 2022

(Unit: ¥ mil)

FY2023
From October 1, 2022 to September 30, 2023

Net cash provided by (used in) operating activities

7,656

6,128

Net cash provided by (used in) investing activities(2,443)

17,762

Net cash provided by (used in) financing activities

2,635(6,419)Translation differences of cash and cash equivalents

1,596

2,218

Increase or decrease in cash and cash equivalents

9,443

19,690

Balance of cash and cash equivalents at the­beginning of the period

104,523

113,967

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

113,967

133,6582023 Integrated Report

59

Data

Company Information
Company Overview (As of September 30, 2023)
Name

GMO Payment Gateway, Inc.
Listed exchange:
Tokyo Stock Exchange Prime Market(Securities code: 3769)

Establishment

March 1995

Head office

SHIBUYA FUKURAS 15F
1-2-3 Dogenzaka, Shibuya-ku
Tokyo 150-0043, Japan

Consolidated
paid-in capital¥13,323 million

Consolidated
capital surplus¥15,247 million

Number of
employees

825

Stock Status (As of September 30, 2023)
Business outline Comprehensive payment-related services andfinancial services
Memberships

Japan Consumer Credit Association (JCA)
Japan Multi-Payment Network Promotion
Association (JAMPA)EC Payment Forum
Japan E-Commerce Consultant Association(JECCICA)

Major
subsidiaries

GMO Epsilon, Inc.
GMO Payment Service, Inc.
GMO Financial Gate, Inc.
GMO-Z.COM PAYMENT GATEWAY PTE. LTD.

Number ofaffiliates

14 consolidated subsidiaries
3 affiliates accounted for using equity method

Total number ofauthorized shares

Total number ofshares issued

102,400,000 shares

76,557,545 shares

Numbers of Shares by Shareholder Category
No. of shareholders

7,348
Financial institutions

Other domestic institutions

Individuals and others

24.40% (18,678,305 shares)

40.84% (31,266,973 shares)

4.32% (3,309,799 shares)

Financial instruments

Foreign institutions

Treasury shares

29.37% (22,483,527 shares)

business operators

0.01%(5,366 shares)

1.06% (813,575 shares)

Major Shareholders (As of September 30, 2023)
Notes for Shareholder
Business year

October 1st to September 30thof the following year

Record date ofdividends ofsurplus

December 31, March 31, June 30 and
September 30

Annual meetingof shareholders

Annually in December

Shareholder
registryadministrator

Sumitomo Mitsui Trust Bank, Limited

Administrator’scontact
information

Sumitomo Mitsui Trust Bank, Limited,
Stock Transfer Agency Business Planning
Department
8-4, Izumi 2-chome, Suginami-ku, Tokyo
0120-782-031 (Toll free)

Shares owned (shares)

Stock ownership ratio (%)

GMO Internet Group, Inc.

31,172,200

40.72

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

7,237,200

9.45

Notices published athttps://corp.gmo-pg.com/en/ir/

Custody Bank of Japan, Ltd. (Trust account)

6,303,900

8.23

Sumitomo Mitsui Banking Corporation

2,501,600

3.26(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)

STATE STREET BANK WEST CLIENT - TREATY 505234

969,848

1.26

SSBTC CLIENT OMNIBUS ACCOUNT

957,822

1.25

STATE STREET BANK AND TRUST COMPANY 505001

878,798

1.14

GOVERNMENT OF NORWAY

816,224

1.06

Issei Ainoura

800,000

1.04

THE BANK OF NEW YORK 134088

767,400

1.00

Name of shareholder

Listed exchangeTokyo Stock Exchange

Method of public
noticesThrough electronic public notices

Announcements
1. Points of note(1) In principle, procedures such as change of shareholder address, bank remittance specifications for dividends, and purchase requests are handled by the accountmanagement institution (securities company, etc.) where the account was opened. Please contact the securities company or other such institution at which you
opened your account. Please note that the shareholder registry administrator (Sumitomo Mitsui Trust Bank, Limited) does not handle such matters.
(2) Unpaid dividends can be received at the main branch of Sumitomo Mitsui Trust Bank.
2. Dividend calculation statements
The “Dividend Calculation Statement” also serves as the “Notice of Payment” compiled as per regulations specified in the Act on Special Measures Concerning Taxation.
After receiving payment of the dividend, the Notice can serve as confirmation of the dividend amount and as information used when filing income taxes. Shareholders who
receive dividends through their securities 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, please contact the institution that administers special accounts, Tokyo Securities Transfer AgentCo., Ltd.
Mailing address and phone number
Securities Transfer Agent Co., Ltd. Business Center
2-8-4 Izumi, Suginami-ku, Tokyo 168-8522 Tokyo
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 are able 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.

60

GMO Payment Gateway, Inc.

* The stock ownership ratio is calculated using total shares outstanding less treasury shares (5,366 shares)

Share Price Trend(Unit: ¥)17,50015,00012,50010,000
7,500
5,000
2,500
0

2015

2016

2017

2018

2019

2020

2021

2022

2023

* A 1:2 stock split of ordinary shares was carried out effective October 1, 2018. The share price prior to this date is adjusted on the same basis.

2023 Integrated Report61GMO Payment Gateway, Inc.
Tokyo

FUKURAS Office (Head Office)
SHIBUYA FUKURAS 15F
1-2-3 Dogenzaka, Shibuya-ku, Tokyo, 150-0043 JAPANTEL: +81-3-3464-2740
Humax Office
Humax Shibuya Building 7F
1-14-6, Dogenzaka, Shibuya-ku, Tokyo, 150-0043 JAPANTEL: +81-3-3464-2740

Osaka

Grand Front Osaka Tower B 23F
3-1 Ofuka-cho, Kita-ku, Osaka, 530-0011 JAPANKyushu

B-Lot Daimyo Building 5F
2-2-13 Daimyo, Chuo-ku, Fukuoka, 810-0041 JAPAN

Information for Investors
https://www.gmo-pg.com/en/corp/ir/

Corporate Movie

Creating the future through payment

https://www.gmo-pg.com/corporate-movie/youtube

Printed in Japan