Line Buys Stripe-Like Japanese Startup WebPay To Boost Its Payments Service

Messaging app company Line is beefing up its payments service after it scooped up Japanese startup WebPay in an undisclosed acquisition deal.

Line Pay began rolling out to its 500 million registered users in December. Initially the service, which is integrated into Line’s core chat app, is limited to buying digital goods from Line’s platform — such as stickers (or taxis in Tokyo) — but the company has plans to extend that to cover other online sites and services, and that’s where WebPay comes into the picture. The Tokyo-based startup — which raised $1.5 million a year ago — offers a Stripe-like service that facilitates payment on e-commerce sites, mobile apps and other web-based services.

Line didn’t say how it plans to use WebPay beyond that it will “further solidify the pace of growth of the Line Pay business.”

Line, which is owned by Korean internet giant Naver but operates as a Japanese company, is one of a number of messaging services to embrace payments as it seeks to move beyond merely providing a platform for chat.

The Line Pay service can be used for peer-to-peer cash transfers — just like Snapchat’s payments service — but Line appears to see its true potential as a facilitator of online-to-offline commerce and a method to overcoming online/mobile payment hurdles.

With an Uber-rivaling taxi service in Tokyo, a fledgling grocery delivery service in Southeast Asia, and plans for a global music streaming service, Line is focused on building out its suite of services and Line Pay is an important component of that. Just yesterday, Line unveiled a $42 million fund for Japan that is aimed at growing that network of services via third parties. Based on its most recent financials, that looks like being a move to reduce dependency on its lucrative mobile gaming service for revenue, as well as a strategy to increase user engagement (and monetization) on its platform.

Titles on Line’s connected games platform account for more than half of the firm’s revenue, while that has helped it grow fast it also presents a problem. Slowing revenue from its flagship Line Rangers game was blamed for Naver missing its revenue target for Q4 2014. That’s despite the company recording a 62 percent year-on-year increase.