Back in October, Line Corporation, which operates the messaging app, announced plans for a mobile payments service. Now Line, which has 170 million monthly users, says that the feature, called Line Pay, will be released soon around the world.
The launch of Line Pay is significant because how well the service performs will be a key indicator of whether or not Line’s efforts to turn its messaging app into a “lifestyle platform” are successful.
Line Pay will allow users to make payments through the app at affiliated online and brick-and-mortar stores by registering their credit cards. Future plans include allowing Line users to send money to one another.
Line Corp is a Tokyo-based subsidiary of Naver Corp., one of South Korea’s biggest Internet companies. The new mobile payment service is a key part of its plan to expand Line beyond its core revenue streams. These include a connected games platform, which Line derives most of its revenue from, as well as official accounts run by brands to reach customers, and the sale of stickers through its messaging app.
The company reported revenue of $192 million in the last quarter, which is 104.2 percent higher than a year ago and represented a 17.7 percent increase from the previous quarter. Though it is currently enjoying strong revenue growth, Line continues to compete with other popular messaging apps, including WeChat, KakaoTalk, and WhatsApp, and is seeking to diversify its services.
Line Corp’s latest features, including Line Pay, Line Wow, a food delivery service in Japan, Line Maps, Line Taxi, and an upcoming streaming music service, are part of an effort to turn its messaging app from a communication tool into a platform that encompasses almost every facet of its users’ digital lives. In September, Line postponed its IPO in order to focus on growing its revenue and profit.
Its rivals are also pursuing similar strategies. For example, Daum Kakao, the South Korean Internet giant that operates KakaoTalk, recently KakaoPay, which is available for South Korean users of the messaging app. Tencent’s WeChat also added payment features, including one that lets users pay their utility bills through the app.
Line’s entrance into the mobile payments space also comes at a time when messaging apps are dealing with slowing growth in mobile gaming revenue. Tencent, for example, recently issued a disappointing third-quarter earnings report due largely to slowing revenue from mobile gaming, which generates more than half of its sales. The company had previously warned investors that its expects the growth of its mobile gaming revenue to plateau temporarily as it adds more titles and integrates e-commerce services. Last week, Line made its second purge of titles on its gaming platform in six months, likely an effort to remove games that were either not getting enough user engagement or becoming dated. Line and Tencent recently made a joint $110 million investment in Korean developer 4:33 Creative Lab Games Studio, as the two seek to refresh their roster of games and keep users engaged.
As the two companies increasing focus on mobile payments and other services show, however, messaging apps are eager to seek out other sources of revenue beyond gaming and stickers.