Supplementary information
Financial results briefing for the Q2 of FY2018

May 11, 2018

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

Online advertising service
SSL
Shipment service
Asia payment
enhancement business(MK)* and others

Money Service
Business (MSB)

Inner circle: Sales composition
Outer circle: OP composition(H1 FY2018 actual)

1%

13％

Payment processing
business

20.7％
20％

Online payment
Recurring payment
Card-present payment*
System development

55％

25％
25.0％

Biz with banks/Processingand others

GMO payment after delivery

RemittanceTransaction lending
Early payment service
Finance lease and others

86％*MK: MACROKIOSKGMO-FG: GMO Financial Gate, Inc.

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

2

Business outline - The role of our group
We connect merchant and payment company in contract,
payment information and money flow
Consumer

Merchant

Our Company & Service

Payment company<merchants=our customers>

Online About 88,673 stores

40+ Credit cardcompanies(end of March, 2018)

PCSmartphone

EC in narrow sense・Online shopping

Convenience stores

Public money
・National Broadcasting・Prefectures(Tokyo, Osaka)

Cash on delivery

Service commerce・Donation・Travel・Insurance
・House rent
・Tuition fee
Offline ・Wi-fi charge

E-money

Carrier billing

Comprehensive paymentrelated service
Money service business
Online Advertising(Demand generation)

Physical store

E-wallet
Account transfer

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

32,855 terminals(end of March, 2018)

Online banking

Comprehensive paymentrelated service
Money service business

BitCoin payment
Apple Pay payment

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

etc.

3

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

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

Enterprise

Stock (Monthly revenue)

②

②

①

③
GMO-PG’s
coverage

Customer support and maintenance fee
Coefficient: Number of merchants
Revenue：Operating merchants × _YenSMEFee (Transaction processing revenue)③

Fee based on transaction volume
Coefficient: Number of payments processed
Revenue：Number of payments processed× _YenSpread (Merchant acquiring service revenue)④

Fee based on transaction value
Coefficient: Amount of payments processed
Revenue：Amount of payments processed
× _%

①②

③Startup④

GMO Epsilon’scoverage④

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

4

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

PaymentprocessingPaymentprocessing
Our group
Credit cardcompany

2.8％ charge
Sales proceed

Payment company

Merchant

Representative
contract

0.5％ Spread(Merchant acquiring revenue)
3.0％ charge

2.5％ charge

mainly for SME’s

Sales proceed

Our group

Sales proceed
Credit cardcompany

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

(Charge that is applied under directcontracts with payment company)

Payment company
Flow of sales proceed/charge

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

5Revenue breakdown
Target a balanced revenue growth by various initiatives
Spread (merchant acquiring
service revenue)
Payment processing (MK)GMO Payment after delivery
Transaction lending
Early payment service
Finance lease
Offline payment (GMO-FG), etc.

(million yen)
28,00026,00024,00022,00020,000Fee (transaction processingrevenue)
Payment processing (MK)GMO Payment after delivery
Shipping service
Remittance service
Offline payment (GMO-FG), etc.

18,00016,00014,00012,000Stock (monthly revenue)
Payment processing (MK)Biz with banks/Processing
Online Advertising Service
Offline payment (GMO-FG), etc.

10,0008,000
6,000

4,0002,0000
2004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9E
Listed on
the TSE

2008
Launched
Earlypayment
service2011
Launched
OnlineAdvertisingService2013
2014
2015
Launched Launched
RenewedPayment Transaction Early
afterlending
payment
deliveryservice

Initial (initial revenue)
Payment processing (MK)
System development
SSL
Offline payment (GMO-FG), etc.

2016
Acquired
FG and MK*MK: MACRO KIOSK, GMO-FG: GMO Financial Gate

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

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

UK

15.0

14.5

US（2016）

Credit card
usage rate

Debit card
usage rate

Credit+Debit usage
to private final
consumption
expenditure rate

UK

12 ％

56 ％

68 ％

US

26 ％

20 ％

46 ％

South Korea

77 ％

20 ％

97 ％

Australia

32 ％

27 ％

59 ％

Japan

18 ％

-18 ％

12.5

Japan
11.3
10.4
10.0

8.9

9.2
7.6

8.1

8.2
7.3

7.0

6.4

6.0
5.0
3.6

4.14.6

5.0

5.4

5.8

5.8
5.4
4.8
4.4

1.8

2.1

2008

2009

2.5

2.8

3.1

3.7

0.0
2010

2011

2012

2013

2014

2015

2016

2017

References：METI. “FY2017 Building infrastructure for information- and serviceoriented Japanese economy and society (Ecommerce market survey)”
U.S. Bureau of the Census. “The 4th Quarter 2017 Retail Ecommerce Sales Report”
Office for National Statistics “Retail Sales, February 2018”*Rate=(Amount handled by CC or DC) / Private final consumption
expenditure*Estimated by GMO-PG with reference from CPSS Red Book “Statistics on payment, clearingand settlement systems in the CPMI countries - Figures for 2016”
THE WORLD BANK ”Household final consumption expenditure (current USD)”

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

7

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

B2C

C2C

Enormous market
potential¥1,000 trillion

Narrowly-defined
B2C EC market

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

OnlineFlea market
app

Merchandising

Payment via
internet, etc.

2017
EC rate
5.8%
Market size ¥16.5T

Offline(card-present)
Payment with areader at aphysical store

B2B
Credit cardpayment

Service commerce
Digital content

2020E
8%
¥24T

2025E
15%
¥45T

Public fund・utility fee・Local tax¥39 trillion
・National tax ¥61 trillion

Consumer spending¥300 trillion

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

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

8

Expansion of public fund and utility payment
We have been cultivating card payments in this field since
the revision of the Local Autonomy Law in 2006

National Tax Credit Card Payment Site

LaunchedJanuary
2017

Sapporocity

Local governments : Local Tax (Automobile Tax,light vehicle tax, fixed assets tax, etc.)
etc.
water bill, gas bill, hometown tax
NHK: Broadcast subscription fee(Credit card usage rate at the end of FY2016: 13.7%)

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

FukuokacityTokyoAichi pref.
Osaka pref./city*Japan Broadcasting Corporation “Business Report for FY2016”

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

9Offline (card-present) payment
Take in cashless & inbound demands, IoT services to go into full swing
Railway company

Beverage maker

Cashless payments for commerce
at office on the expansion
Employee card payment

TargetTicket machine

960K units

Vending machine

Resona debit payment

2,500K units
Ito-EnGas station

Parking lot company

Employee card payment dataDebit card payment data
Purchase data

1,570K units

200K units*These illustrations do not necessarily imply plans for future implementations.

18/3

17/9

17/6

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

17/12

17/3

16/9

16/6

16/12

16/3

15/9

15/7

15/12

15/4

15/1

14/7

14/4

14/10

14/1

13/7

without PIN
13/4

with PIN

13/10

with PIN

Smartphone payment TRX value (¥)

13/1

with PIN

Smartphone payment TRX volume

12/10

Compatible
terminals

Embedded EMV terminals

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

GMO-PG group

Payment company

GMO-PG Remittance service（③）
Efficient and secure refund and remittanceprocessing for Ecommerce operator

Transaction
lending（④）
RefundRemittance

Credit cardcompany
Convenience store
Electronic money
Mobile phonecompany, etc.

Financing money
for growth

Handles daily transaction

The Group’s revenue types

①
②
③
④

Initial

Early payment

Early payment service(④)

Payment

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

StockFeeSpread

Payment after delivery（③④）
Pays sales proceed without waitingfor deposit from consumer“GMO payment
after delivery”
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

11

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

Credit payment without credit card
（Buyer can pay at post office or CVS after receiving goods）
EC site②Credit③Goods delivery / receipt

check①Order

⑤Deposit④Mailing invoice/payment slip

Convenience store
Post office, bank

⑥PaymentConsumer

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

12

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

US: Innovator

Japan’s first Fintech fundtargeting payment-related
startups in Asia (JPY 2 billionfund)YoY＋160％

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

TaiwanIndia

Thailand

VietnamPhilippines

Malaysia

SingaporeGDPApprox.¥250T
5-6% GrowthIndonesia

FY2015

fFY2016

FY2017

Transaction value in Asia soaring
GMO-PG overseas bases
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

13MACRO KIOSK (Payment enhancement)
Acquiring Asian banks and major merchants andstrategic investment in MACROKIOSKStrategy: Go after scale, then profit

Company name Macro Kiosk BerhadLocation

Malaysia and 11 other countries in Asia

Headcount

247

Financial results Revenue
GMO-PG’s stake 70％<Specific actions>①Payment-related businessSet up sales teams in India and Europe②Business expansion in new countries
Provide payment service, collaborating with 2C2P, ourequity method affiliate③Development of new products:2,646 million yen(Nine-month results consolidated
to GMO-PG Group under FY2017)④Entry into new areas by M&AAcquisition cost Approx. 1,121 million yenBusinessmodel

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

Carrier billing gateway (20％)
delivered to 50+ major carriers in 12 countries

DUBAI

GUANGZHOUTAICHUNG
MACAU
HONG KONG
MANILABANGKOK

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

14

GMO-PG Group
GMO Payment Gateway’s subsidiaries and equity affiliates
GMO Payment Gateway, Inc.
＜ Consolidated subsidiary＞

Multi payment（targets small-sized merchant）

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

GMO Payment Service, Inc.
Card-present payment

GMO Financial Gate, Inc.

（As of end of Sep. 2017）65.0％ stake

Global Card System
Overseas

GMO-Z.com Payment Gateway Pte. Ltd.

（Singapore）

GMO-Z.com Payment Gateway Hong Kong Limited（Headquartered in Hong Kongand a branch in Taiwan）

GMO Z com Payment Gateway Malaysia Sdn.Bhd.

（Malaysia）

GMO-Z.com Payment Gateway (Thailand) Co., Ltd.

（Thailand）

Overseas

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

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

Overseas

2C2P Pte. Ltd.

（As of end of Sep. 2017）32.0％ stake
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

15

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

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

（As of end of March 2018）

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

16

Appendix

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

17

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

TelFAX②Enter each into theCAT terminal

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

Credit card company

Authorization（get approval number）

InternetIssues in the business Double entry when receiving order: CAT terminal and our system Sorting documents for each credit card company
 Insufficient check on incoming payment⑤Check whether
payment has been
receivedPayment Human error

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

18

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

Payment processing company① Order

Update credit
card information

Tel

Postcardnetwork

Processing sales

Submit sales report

FAXInternet②Check whether
payment has beenreceived＜Real-time credit decision＞

Credit card company

Credit. Sales

Payment

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

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

19