Supplementary information
Financial results briefing for the Q1 of FY2018

February 13, 2018

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

Online advertising service
SSL
Shipment service
MACRO KIOSKPayment processing
business

20.7％

54.3％
Money Service
Business (MSB)

25.0％

Online payment
Recurring payment
Card-present payment
System development
Biz with banks/Processing

GMO payment after delivery

RemittanceTransaction lending
Early payment service
Revenue composition for Q1 FY2018
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 86,136 stores

Credit cardcompanies(end of December, 2017)

PC

Smartphone

OfflineNarrowly defined EC
・Online Shopping

Convenience stores

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

Cash on delivery

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

E-money

Carrier billing

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

Physical store

E-wallet
Account transfer

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

32,191 terminals(end of December, 2017)

Online banking

Comprehensive payment
processing service
Money service business

BitCoin payment
Apple Pay payment

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

etc.

3

Revenue streams of credit card payment
Revenue streams by merchant scale■Our four revenue streams①MerchantInitial (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

GMO-PG

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

SME
Fee (Transaction processing revenue)③

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

GMO Epsilon

Spread (Merchant acquiring service revenue)④

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

4

Two types of contract forms
We introduced a new contract system and changed the flowof sales proceed
Direct contract
with merchant

Payment
processing

Payment
processing
Our group
Credit cardcompany

2.8％ charge
Sales proceed

Payment company

Merchant

Representative
contractwith merchant

0.5％ Spread(Merchant acquiring revenue)
3.0％ charge
Sales proceed

Our group

2.5％ charge

Sales proceed
Credit cardcompany

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

(Charge that is applied under directcontracts with payment company)

Payment company
Flow of sales proceed/charge

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

5

Growth potential of Ecommerce market in Japan
Low Ecommerce ratio and high cash payment ratio among
advanced countries■Ecommerce ratio（％）■Card usage to private final consumption expenditure
16.3

UK

15.0

Debit card
usage rate

Credit+Debit usage
to private finalconsumption
expenditure rate

UK11 ％53 ％64 ％US26 ％20 ％46 ％South Korea

79 ％

20 ％

99 ％

Australia

34 ％

28 ％

61 ％

Japan

17 ％

-17 ％（2016）

14.5

USCredit card
usage rate

12.5

Japan
11.3
10.4
10.0

9.2
7.6

8.1

8.2
7.3

7.0

6.4

6.0
5.0
3.6

4.1

4.6

5.0

5.4

5.4

5.8
4.8
4.4

1.8

2.1

2008

2009

2.5

2.8

3.1

3.70.0
2010

2011

2012

2013

2014

2015

2016

2017

References：METI. “FY2016 Building infrastructure for information- and serviceoriented Japanese economy and society (Ecommerce market survey)”
U.S. Bureau of the Census. “The 3rd Quarter 2017 Retail Ecommerce Sales Report”
Office for National Statistics “Retail Sales, January 2018”*Rate=(Amount handled by CC or DC) / Private final consumption
expenditure*Estimated by GMO-PG with reference from CPSS Red Book “Statistics on payment, clearing
and settlement systems in the CPMI countries - Figures for 2016”
THE WORLD BANK ”Household final consumption expenditure (current USD)”

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

6

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

(million yen)
28,00026,00024,00022,00020,000Fee (transactionprocessing revenue)
Payment processing
Payment after delivery
Shipping services
Remittance Service
GMO-FG ･ MKetc.

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

10,000
8,000
6,000

4,000
2,00002004/9 2005/9 2006/9 2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9E
Listed on
the TSE

2008
Launched
Earlypaymentservice

2011
Launched
OnlineAdvertisingService2013
2014
2015
Launched Launched
RenewedPayment Transaction Earlyafterlending
payment
deliveryservice

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

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

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

7

Our approach to broadly-defined EC market
Cashless moves in Japan is our growth accelerator
B2B

B2C

C2C

Enormous market
potential¥1,000 trillion

Narrowly-defined
B2C EC market

Developing market¥1 trillion¥15.1 trillion
EC ratio: 5.4%
（growing 10-15% pa）

OnlinePayment via
internet, etc.

2016
EC rate
5.4%
Market size ¥15.1T

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

Flea marketapp

Merchandising

B2B
Credit cardpayment

Service commerce
Digital content

2020
8%
¥24T

2025
15%
¥45T

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

Consumer spending¥300 trillion

Flea market*References：METI. “FY2016 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 tax card payments since
the revision of the Local Autonomy Law in 2006

National Tax Credit Card Payment Site

Launched
January
2017

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

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

Tokyo

Fukuoka

Kyoto*Japan Broadcasting Corporation “Business Report for FY2016”

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

9

TargetBeverage maker
Railwaycompany
Gas station

Parking lot
company

2,500Kunits
960Kunits

200Kunits
1,570Kunits

These illustrations do not necessarily imply plans of future implementations.

Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.
17/9
17/7
17/11
17/9

17/5
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17/1

16/11
17/1

16/9
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16/5
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16/1
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14/10
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13/10
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15/8
15/915/9
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14/6
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14/2
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14/4

13/10
13/10
13/12
13/12

13/8
13/8

13/6
13/6

with PIN

13/8
13/8

with PIN

13/2
13/2
13/4
13/4

Embedded EMV terminals

13/6
13/6

Compatible
terminals
12/10
12/10
12/12
12/12

without PIN

13/2
13/2
13/4
13/4

EMV and cashless-payment compatible terminals

12/10
12/10
12/12
12/12

Offline (card-present) payment

Focus on a new growth area of card-present market: Payments x IoT
Mobile phone payment
Mobile phone transaction volumewith PIN

Mobile phone transaction value (yen)10Definition of Money Service Business (MSB)
Financial service that only payment processing company
can provide
ConsumerMerchant

GMO-PG group

Payment company

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

Transaction
lending（④）

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

Financing moneyfor growth

RefundRemittance

Handles daily transaction

Revenue model (Revenue breakdown)①②③④

InitialEarly payment

Early payment service(④)

PaymentImproves 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 paymentafter delivery”
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

11

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

No need for credit card
（Buyer can pay at post office and CVS after receiving goods）
EC site②Credit③Goods delivery / receipt

check①Order⑤Deposit④Mailing invoice

Convenience store
Post office, bank⑥Paymentconsumer

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

12

Overseas strategies
Target: 50% of revenue to come from overseas throughexpansion of payment services and investment strategies■Investment target
Asia: Top payment company■Payment processing business
Providing payment services toJapanese companies that entered
Asian market through Z.com Payment

US: Innovator

YoY

＋160％

Japan’s first Fintech fund targeting
payment-related startups in Asia
(JPY 2 billion fund)

USHong KongThailand

Investing in Fintech startups
and cutting-edge PSPs

TaiwanVietnam
Philippines

Malaysia
Singapore
Indonesia

FY2015FY2016FY2017

Transaction value in Asia soaring
Overseas bases of GMO-PG

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

13

MACRO KIOSK (Payment enhancement)
Strategic investment in MACRO KIOSK
Company name Macro Kiosk Berhad

Location

Malaysia and 11 other countries in Asia

Headcount239

Financial results Revenue
GMO-PG’s stake 70％(as of the end of Dec. 2017)

Advantages ①Stable revenue model②Solid client base(bank, aviation company, etc.)③Excellent development④Talented management and staff:2,646 million yen*Consolidated to GMO-PG Group’s
results under FY2017

Acquisition cost Approx. 1,121 million yenBusinessmodel

GUANGZHOU

80% of the services isfor financial institutions

DUBAI

MACAU

MANILABANGKOKKUALA LUMPUR
SINGAPORE

TAICHUNG
HONG KONG

HO CHI MINH

JAKARTASYDNEY

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

14

Summary chart of Segments and Revenue models
Reporting in 3 Segments and 4 revenue models
３ segments
Payment processing
business

４ revenue models

Payment processing

InitialServices forbanks/Processing（Initial revenue）

System development
GMO-FG

StockEtc.

(Monthly revenue)

GMO payment afterdelivery
Remittance service
Money service
business

MSB

Fee(Transactionprocessing revenue)

Early payment
service

GMO-FG：GMO Financial Gate

Services forbanks/Processing
Online advertising
service

Etc.

GMO payment after
delivery（Fee）
Remittance service
Etc.

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

MK：MACRO KIOSK

Etc.

Payment processing (MK)

Etc.

SSL

MACRO KIOSK

System development

Shipping service

Online advertising
service
Paymentenhancement business

SSL

Payment processing（MK）

Transaction lending

Finance lease

Payment processing（MK）

Etc.

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

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

Etc.

15

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 Payment Gateway Pte. Ltd.

（Singapore）

GMO Payment Gateway Hong Kong Limited（Hong Kong and Taiwan）

GMO Payment Gateway Malaysia Sdn. Bhd.

（Malaysia）

GMO 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.

16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 OfficerIssei Ainoura
Director, Executive Vice President
Ryu Muramatsu
Director, Executive Vice President
Satoru Isozaki
Senior Managing Director
Yuichi Hisada
Director
Tomoyuki Murakami
Director
Shinichi Sugiyama
Director
Yusuke Arai
Director
Masashi Yasuda
Director
Masaru Yoshioka
Director
Takehito Kaneko
Senior executive officer
Takeshi Yoshii
Senior executive officer
Takashi Mitani
Executive officer
Katsunari Mukai
Executive officer
Yoshikazu Yanagishima
Executive officer
Kazunari Taguchi
Executive officer
Tatsuhito Muramatsu
Executive officer
Kiyonobu Inayama
Executive officer
Shingo Ito
Executive officer
Yoshinori Inoguchi
Executive officer
Hirofumi Tozawa
Executive officer
Yasunori Hatada
External Director
Masaya Onagi
External Director
Akio Sato
Full-time auditor
Yasuhiro Kanda
AuditorTakashi Iinuma
External Auditor
Kazutaka Yoshida
External Auditor
Kazuhiko Okamoto■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 PAYMENT GATEWAY PTE. LTD. (Singapore), Macro Kiosk Berhad, etc.
■Equity affiliates
SMBC GMO Payment, Inc., 2C2P Pte. Ltd., etc.

（As of end of Dec. 2017）

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

17

Appendix

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

18

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

Postcardnetwork③Make sales report to eachcredit card company（sales processing）④Mail sales report toeach credit cardcompany

Credit card company

Authorization（get approval number）

Internet

Issues 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
received
Payment

 Human error

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

19

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

Payment processing company① Order

Update credit
card information

Tel

Post
cardnetwork

Processing sales

Submit sales report

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

Credit card company

Credit. Sales

Payment

In the early days of Ecommerce, credit card 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.

20