Alphabet Makes 'Full-Scale Entry' Into Japanese Fintech

The Nikkei reported on Thursday that Google parent Alphabet, Inc. GOOG GOOGL is making a push into fintech in Japan.

What Happened? The report said Google is buying Japanese smartphone payment company Pring for $181.9 million. It also noted Google is planning to offer payment, transfer and other fintech services in Japan starting in 2022. Pring reportedly has “hundreds of thousands” of customers.

Why It’s Important: On Friday, Bank of America analyst Futoshi Sasak said the news of "full-scale entry" into Japanese finance appears to be in-line with Google’s strategy of beefing up its financial services business.

“Google has been adding financial functions such as banking services and international remittances through smartphones to payment functions of Google Pay,” Sasaki wrote in a note.

Related Link: Here's How Much New G7 Tax Proposals Could Hurt FANG Stocks

Pring reportedly focuses on low-cost remittance services, and Sasaki said deregulation could open the door for significant growth in digital salary payments in Japan.

While expansion into Japanese finance is an important trend for Alphabet investors to keep an eye on in coming years, Sasaki said Google’s finance business in Japan will likely be limited to remittances for the time being.

“We believe that the impact on existing payment-related businesses will be limited,” he said.

Bank of America has a Buy rating and $2,755 price target for Alphabet.

Benzinga’s Take: Japan may not be a top priority for Alphabet or its investors given it’s nowhere near the size of the economies of the U.S., China or the largest European countries. However, JPMorgan recently estimated Japan’s mobile commerce market is worth about $36.6 billion annually, which is more than enough to move the needle for the country’s digital payment market leaders.