A solution that pays off

Smartpay improves online payment transactions for shoppers and merchants

FEBRUARY 2022 Investing in Japan / Text by Toby Waters / Photos by Benjamin Parks

Many online purchase and payment experiences in Japan are not optimal. Common complaints include a complex checkout process, a lack of trust in the website, and sites freezing or crashing. This contrasts sharply with the increasingly optimised and seamless experiences in the West. But attitudes in Japan could soon change, thanks to services such as Smartpay.

Removing friction

Founded in 2021, Smartpay is a buy now, pay later (BNPL) solution, designed to make shopping online easier for both sellers and shoppers. Though digital pay later solutions have been around for the past few years, Smartpay has several benefits that make it more accessible and easier to use compared with existing offerings, according to Naoya Otsubo, Smartpay’s Japan country manager.

“In Japan, the cart abandonment rate — the percentage of people who add items to online shopping carts but never complete that purchase — is very high, around 87%,” he says. “The reason can be summarised in one word: friction. This friction can result from many things, like having to make too many clicks, having to fill in forms, or simply having to take your card out of your wallet to put in payment details.”

Smartpay, instead, allows customers to make purchases with a single click, then pay back the amount in three automatic instalments, which are charged to their credit cards. With this solution, shoppers only have to enter their credit card information once and can then use the Smartpay service with any online retailer that has adopted the platform. It even supports Apple Pay and Google Pay.

One of the biggest ways Smartpay differentiates itself from its competitors is that customers are not charged any late fees or transaction fees. This is sure to further encourage online transactions by increasing conversion, order value, and repeat customers.

“I worked with BNPL providers before, heading up product management and engineering, both in Japan as well as globally. While the existing Japanese pay later solutions can solve specific problems for merchants, these providers forgot about the shopper and what best serves them,” says Pieterjan Vandaele, founder of Smartpay. “Shoppers want to have a seamless and transparent experience without additional costs. We’re the only BNPL provider that splits payments in instalments by default, without subsequent fees.”

Smartpay has drawn inspiration from the high-quality service that Japan’s physical shops are known for. Vandaele is committed to making online transactions similarly seamless and simple.

“All foreigners living in Japan know that the retail experience is unlike anything else in the world. When we go shopping in our home countries, many of us wonder, ‘Why is everybody so rude? Why do they hold the money with only one hand?’,” he says. “What we set out to do with Smartpay is to make sure that the online retail experience in Japan brings delight to shoppers as much as the offline experience they are used to.”

Also, with backing from the SMBC Group — one of Japan’s biggest and longest-established financial institutions — shoppers and merchants alike can rest assured that the Smartpay service is reliable and secure.

Better for sellers

It’s important that the service appeals not just to shoppers, but to merchants, as well. In addition to an increase in sales as a result of a higher number of completed transactions, the service is designed to make it easy for smaller retailers in Japan to move online.

“The quality of Japanese products is very high. Not only in Tokyo, but also in rural areas, where you can buy beautiful kimono, nice glassware, and other amazing products,” says Otsubo. “However, when you consider e-commerce, those products are not always selling as well as they could. This is another major reason we decided to start this company — we want to help them to do better.”

It isn’t just the system itself that needs to appeal to merchants, but it has to be easy for them to integrate into their existing online platforms. Smartpay has been designed in such a way that it can be used after inputting only one line of code, so businesses of any size can offer it as a payment option.

“Merchants aren’t IT experts just because they have a website, so we need to make everything extremely easy,” Vandaele explains. “We set out to be a partner to merchants. We succeed when our merchant partners succeed. Now, we must make sure that Japanese merchants get better at converting people browsing online into buyers by helping them bridge the gap in their understanding of how to do e-commerce.”

In March, Smartpay will launch a fintech e-commerce academy to educate sellers on how to make the most of their online presence. Merchants can sign up for free and, through a set of modules, the course will guide them through everything they should know to help them improve their online sales.

Smartpay can also be beneficial for businesses based in Europe that are looking to start selling their goods in Japan. Rather than needing to form a domestic branch, or sell rights of sale to a local partner, they can make sales in Japan, in Japanese yen, which Smartpay will deposit into their bank account in the equivalent amount in euros.

Cutting through the noise

In addition to Vandaele, the firm was also founded by Sam Ahmed, who previously was head of fintech, e-commerce, and payments at Facebook. His experience and skills have been recognised by Drum Magazine, which named him one of the top 50 people in the digital industry in the APAC region.

“Sam has a unique knack for novel marketing, getting potential customers to pay attention, and giving real meaning to a brand. This is especially important in today’s noisy digital world,” Otsubo says. “Sam is not only passionate about doing this for Smartpay, but for each of our merchant partners, as well.”

At the core of Smartpay is “customer obsession”, according to Vandaele. This people-first approach of the firm’s leadership team is what has drawn some of the most capable fintech talent in the Asia–Pacific region to Smartpay.

“We care about our employees as much as we do about the shoppers and merchants who use our product,” Otsubo says. “By focusing on people before revenue, I believe we can change e-commerce in Japan.”

Vandaele adds: “Seeing all our stakeholders — shoppers, sellers, and employees — succeed is how we define our own success.•