Market Insight

Line enters mobile payments war by launching Line Pay

December 18, 2014  | Subscribers Only

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Japanese messaging app Line has rolled out its mobile payments service Line Pay globally with the release of the 4.8 version of its app. The service allows users to make payments with registered credit cards, or by adding money from associated banks. Features include:

  • Support for iPhone, Android and PC.
  • Requires a separate 7-character password from Line accounts or Apple Touch ID for authentication.
  • Payment options will be first available for the Line Store for digital content, and will expand into physical goods via Line in the future.
  • A Share Payment feature will be available as part of a future update to allow splitting bills among Line friends, and person to person(P2P) bank transfers.
  • Partners in Japan include Mizuho Bank and Sumitomo Mitsui Bank.

Our Analysis

Established in 2011, Line claimed 170 million monthly active users as of October 2014.

The new payments service is part of Line’s international strategy; the company delayed its planned IPO in September 2014 in order to prioritize efforts to expand its international business. Line currently claims it has over 10 million users in 11 countries: including 30 million in India; 25 million in the US; and 10 million in Colombia.

Line has been actively diversifying its revenue stream and features beyond communications; first with stickers and games and more recently with other content such as music. Line Pay allows Line to move further beyond its core business. Line’s main revenue comes from its integrated gaming platform, selling digital content such as stickers, and branded merchandise. In the third quarter of 2014, Line’s revenue reached JPY 20.9 billion ($190m), a 104% increase year-on-year.

It is facing competition from other messaging apps in the region such as China’s WeChat and South Korea’s KakaoTalk, both of which have launched similar payments services and are pursuing international expansion.

Messenger apps are evolving beyond communications into platforms -- payment services provide incentives for consumers to use the apps and retain loyalty. As Line already has a large user base, the network effects may appeal to brands and business owners to take advantage of the channel. To succeed, Line needs to differentiate its services and pay attention to users’ security concerns.

Acquiring users’ credit card details is central to Line’s strategy of building a wider content and commerce platform. Users can currently make payments for digital goods via mobile application stores (using credit cards or operator billing where supported). To expand its role in the value chain Line needs to be directly involved in payments – and so providing support for P2P transactions and wider retail services is necessary. Persuading users to provide credit card details will remain a challenge and Line may need to incentivise users with offers to do so.

Given the amount of competing payment and commerce services on offer, Line may also struggle to find a compelling use case to drive adoption of its payment services – particularly in countries outside Japan where it could lack scale. 


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