Rakuten, the e-commerce giant often thought of as Japan’s answer to Amazon.com, has started accepting account applications for a forthcoming cryptocurrency exchange to be known as “Rakuten Wallet.” Pre-registration is only available to customers with the company’s Rakuten Bank, and the company’s announcement doesn’t provide details of when or whether the service will be available to others. Rakuten has previously said its exchange will open for business in June 2019, and will incorporate a mobile app for trading cryptocurrencies.
Rakuten, with roughly USD $9 billion in revenue in 2018, is actually tiny compared to Amazon, with its 2018 revenue of $233 billion. But Rakuten’s decision to support cryptocurrency could significantly accelerate adoption at the consumer level. Though the company operates worldwide, its Japanese home base is a major force in crypto, with yen trading accounting for more than half of bitcoin purchases in some periods. Japan was the home to the first major (though ill-fated) crypto exchange, Mt. Gox, and bitcoin’s creator adopted the Japanese pseudonym Satoshi Nakamoto, though they are not considered likely to be Japanese. Japan is also credited with having some of the most advanced regulations surrounding cryptocurrency, and Rakuten Wallet will operate with clearance from Japanese financial authorities.
Rakuten is a diverse company, but its focus on e-commerce is a major driver of its support for crypto. Some branches of the company have been experimenting with accepting bitcoin payments since at least 2015. In a statement from August 2018 (cited by CoinDesk), Rakuten said that “the role of cryptocurrency-based payments in e-commerce, offline retail and in p2p payments will grow in the future.”
That would align with some of the explicit goals of bitcoin’s creator. Credit cards, by far the most common payment method used in e-commerce now, suffer from the risk of chargebacks, in which customers demand refunds through their bank or credit card provider. This introduces the risk of fraud—bitcoin creator Satoshi Nakamoto even cited these “reversals” as a problem with existing online payments in the original bitcoin whitepaper. Credit card networks also charge high fees to retailers, sometimes topping three percent—high enough to have a serious impact on retailers’ profit margins.
Though it remains to be seen whether cryptocurrency can provide less expensive online payments over time, the prospect has long been held out as a motive for crypto adoption by merchants. It could allow them to provide discounts for shoppers who pay in crypto, creating a clear motive for adoption by average users. Running its own exchange, among other things, gives Rakuten a chance to make it easier for non-experts to buy and manage cryptocurrency, potentially increasing how much it benefits from those advantages.
On top of that, of course, Rakuten is likely motivated by the fact that exchanges themselves can make a lot of money even in the short term, especially if the crypto market heats up again—which many experts and observers believe is already happening.
As Cointelegraph points out, Rakuten isn’t the only mainstream Japanese tech company to enter the crypto-trading space. Yahoo! Japan (a separate company from the Yahoo! purchased by Verizon in 2017) also owns 40 percent of a forthcoming crypto exchange called TaoTao.