Japan's Struggling Rakuten to Combine Credit Card and Mobile Payments Business

Japan's Rakuten Group will fold its payments and points businesses into its credit card unit, it said on last week, a move that could set up the struggling e-commerce company to eventually list the card business.

Despite strong revenue from its core e-commerce offerings, Rakuten has lost money for 12 straight quarter.

It has turned to listing some of its units - including its popular internet banking business, Rakuten Bank, to generate cash.

The company said it plans to consolidate its payments and points businesses and fold them into Rakuten Card, its credit card and loans unit.

Rakuten Card will become the "driving force" behind its integrated payments business and may form strategic partnerships with other companies as well as "raising its own capital as necessary", Rakuten said in a statement.

At its quarterly earnings briefing last week, Rakuten committed to taking on no additional gross debt, instead using equity-related financing to reduce its debt burden.

The group has a total 1.9 trillion yen ($13.22 billion) in debt, with 406 billion yen due in 2024 and a further 430 billion yen in 2025, according to Refinitiv data.

In the April-June period, Rakuten posted an operating loss of 48.9 billion yen ($340.13 million), narrowly better than expectations of a loss of 51.2 billion yen, based on the average of six analysts polled by Refinitiv.

Losses at the mobile segment narrowed to 82.4 billion yen on higher average revenue per user and increasing subscriptions. Last Monday, Rakuten announced the departure of mobile chief executive Tareq Amin, who had headed the unit since March 2022.

(Source: Reuters)