Supplementary information
Financial results briefing for the 4Q of FY2017

November 6, 2017

GMO Payment Gateway, Inc.
(3769: Tokyo Stock Exchange section - 1 )https://corp.gmo-pg.com/en/

Online payment
Our group business field is mainly online payment
Offline（card-present)
payment

Online payment（ Point ）（ Point ）Must present credit card
Must provide signature
Use terminals such as
POS terminal & CATterminal

No need to present credit card
Use postcard, telephone, fax
Use Internet
Use automatic payment
machine to register credit card
number in advance

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

2

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

TelFAX②Enter each into theCAT terminal

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

Credit card company

Authorization（get approval number）

Internet

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

 Human error

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

3

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

Payment processing company① Order

Update credit
card information

Tel

Post
card

network

Processing sales

Submit sales report

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

Credit card company

Credit. Sales

Payment

In the early days of Ecommerce, credit card payments were processed
offline between merchants and credit card companies, causing burden on
both sides.
To solve this problem, payment processing companies were established,making it easier to do business.
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

4

Business outline - The role of our group
We connect merchants and payment companies incontracts, payment information and money transactions
Consumer

Merchant

Our Company & Service

Payment company<merchants=Our Customers>

Online About 82,349 stores

Credit cardcompanies(end of September, 2017)

PCSmartphone

OfflineNarrowly defined EC
・Online Shopping

Convenience stores

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

Cash on delivery

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

E-money

Carrier billing

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

Physical store

E-wallet
Account transfer

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

31,669 terminals(end of September, 2017)

Online banking

Comprehensive payment
processing service
Money service business

BitCoin payment
Apple Pay payment

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

etc.

5

Revenue model of credit card payments
Revenue model by merchant scale■Revenue breakdown

Merchant＜Merchants＝our customers＞①

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

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

Enterprise

Stock (Monthly revenue)②

GMO-PG

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

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

GMO Epsilon

Spread (Merchant acquiring service revenue)④Fee based on transaction value
KPI: Amount of payments processed
Revenue：Amount of payments processed× _%Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

6

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

processed payments

processed payments

Our group
Credit card

2.8％ charge
Sales proceeds

Merchants

Representativecontract
with merchants

company

Payment company3.0％ charge
Sales
proceeds

Merchants*Numbers are provided for illustration purposes only.

2.5％ charge
Our group

0.5％

Sales
proceeds

Spread(Merchant acquiringservice revenue)（3.2％ charge）

Credit cardcompany

Payment company
Sales proceeds flow

Charge rate

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

7

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

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

18,00016,00014,00012,00010,000Stock (monthly revenue)
Payment processing
Online Advertising Service
GMO-FG
etc.

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
Earlypayment
service2011
Launched
OnlineAdvertisingServiceInitial (initial revenue)
Payment processing
System development
SSL
GMO-FGetc.

2014201520162013Launched Launched Renewed Acquired
FG andPayment TransactionEarly
lending
payment MKafterservice
delivery*FG：GMO Financial Gate/GCS, MK：MACROKIOSK

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

8

Growth potential of the EC market in Japan
Low Ecommerce ratio and high cash payment ratio■Ecommerce ratio（％）■Card usage ratio

UK

15.0

14.5US（2016）

Credit card
usage rate
(A)

Debit card
usage rate
(B)

Card usage rate
(A+B)

UK12％

57 ％

69 ％

US(2015)

25 ％

20％

45 ％

Korea

77％

20 ％

96 ％

Australia32％27 ％59 ％Japan20 ％

-20 ％

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

3.7

0.0
2010

2011

2012

2013

2014

2015

2016

References：METI. “FY2016 Building infrastructure for information- and service-oriented
Japanese economy and society (Ecommerce market survey)”
U.S. Bureau of the Census. “The 2nd Quarter 2016 Retail Ecommerce Sales Report”
Office for National Statistics “Retail Sales, September 2017”*Ratio=(Amount handled by CC or DC) / (Private final consumer
spending*Estimated by GMO-PG with reference from CPSS Red Book
THE WORLD BANK ”Household final consumption expenditure (current USD)”

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

9

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

B2C

C2C

Enormous market
potential;¥1,000trillion

Narrowly defined
B2C EC market

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

OnlineEC rateMarket size

Offline(card-present)

Flea marketappsMerchandising

BtoB
credit cardpayments

2016
5.4%
¥15.1TServices,digital contents

2020
8%
¥24T

2025
15%
¥45T

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

Consumer spending¥300trillion

Flea market*METI “Ecommerce market survey”*MIC “Breakdown of national tax and local tax revenue (Budget and Local Government Finance Plan)”

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

10

Expansion of public funds and utility payments
We have been cultivating tax card payments sincethe revision of the Local Autonomy Law in 2006

National Tax Credit Card Payment Site

LaunchedJanuary
2017

SapporoLocal governments : Local Tax (Automobile Tax,light vehicle tax, fixed assets tax, etc.)
etc.
water bill, gas bill, hometown tax
NHK: Broadcast subscription fee(Credit card usage rate at the end of FY2016: 13.7%)
OsakaExpansion expected to continue
Maintenance fees, cram school tuition feesparking fees, school meal charges, etc.

Tokyo

Fukuoka

Kyoto*Japan Broadcasting Corporation “Business Report for FY2016”

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

11Offline(card-present) payment
Focus on a new growth area of card-present market: Payments x IoT
EMV and cashless-payment compatible terminals

Mobile phone payment
Mobile phone transaction volume

Embedded EMV terminals
without PIN

with PIN

with PIN

with PIN

200Kunits

1,570Kunits

17/5

17/3

17/1

16/9

16/11

16/7

16/5

16/3

16/1

15/9

15/8

15/11

15/6

15/4

15/2

14/8

14/12

14/6

14/10

14/4

14/2

13/8

13/12

13/10

13/6

13/4

13/2

17/9

960Kunits

17/7

2,500Kunits

17/9

Parking lot
companies

17/7

Gas stations

Mobile phone transaction value (yen)

17/5

17/3

17/1

16/11

16/9

16/7

16/5

16/3

16/1

15/11

15/9

15/8

15/6

15/4

15/2

14/12

14/10

14/8

14/6

14/4

14/2

13/12

13/10

13/8

13/6

13/4

13/2

12/12

These illustrations do not necessarily imply plans of future implementations.

12/10

TargetRailwaycompanies

12/12

12/10

Compatible
terminals
Beverage makers

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

12

Definition of Money Service Business (MSB)
Financial services that only payment processing companies
can provide
Consumer

Merchant

GMO-PG group

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

Transaction
lending（④）

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

Financing moneyfor growth

RefundRemittance

Handles daily transactions

Revenue model (Revenue breakdown)

①
②
③
④

Initial

Early payment

Early payment service(④)

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

StockFeeSpread

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

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

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

check①Order

⑤Deposit④Mailing invoice

Convenience store
Post office, bank

⑥Payment

consumer

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

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

AdvantageLocation

Malaysia and 11 other countries in AsiaHeadcount240

Financialresults

Revenue:2,646 million yen*Figure reflected to consolidated GMO-PG group results
under 2017

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

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

GUANGZHOUDUBAIBusiness
model

80% of the services isfor financial institutions

MACAU

MANILABANGKOKKUALA LUMPUR
SINGAPORE

TAICHUNG
HONG KONG

HO CHI MINH

JAKARTA20%SYDNEY

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

15

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

MSBFee(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.

16

GMO-PG Group
GMO Payment Gateway’s subsidiaries and equity affiliates
GMO Payment Gateway, Inc.
＜ Consolidated subsidiary＞
Multiple payment（small scale）

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

GMO Payment Service, Inc.
Card-present payment

GMO Financial Gate, Inc.

（As of the end of September 2017）65.0％ stake

Overseas

GMO Payment Gateway Pte. Ltd.

（Singapore）

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

GMO Payment Gateway Malaysia Sdn. Bhd.

（Malaysia）

GMO Payment Gateway (Thailand) Co., Ltd.

（Thailand）

Overseas

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

SMBC GMO Payment, Inc.

（As of the end of September 2017）49.0％ stake
Copyright (C) 1995 GMO Payment Gateway, Inc. All Rights Reserved.

17

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

GMO Payment Gateway, Inc. (3769; Tokyo Stock Exchange section-1)
March 1995
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 & Representative Director
Issei Ainoura
Executive Vice President
Ryu Muramatsu
Executive Vice President
Satoru Isozaki
Senior Managing Director
Yuichi Hisada
Director
Yasuhiko Kimura
Director
Tomoyuki Murakami
Director
Shinichi Sugiyama
Director
Yusuke Arai
Director
Masashi Yasuda
Director
Masaru Yoshioka
Senior executive officer
Takeshi Yoshii
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. etc.

（As of September,2017）

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

18