In its most extreme form, a psychological condition known as chrometophobia — fear of money — can take over the lives of people who suffer from it. They recoil from the sight of cash, flinch when touching or coming into contact with paper bills and coins.
SoftBank Group, Japan’s most aggressive venture capital investor, thinks they might be onto something. Its latest multibillion-dollar technology bet is being marketed on a simple proposition: In the age of the coronavirus, cash is immensely dangerous.
“Many people don’t want to touch paper bills and coins that may have been touched by someone else,” said Ichiro Nakayama, CEO of the new SoftBank-created digital payment app PayPay, in a livestreamed news conference in July. “Cashless is the way to enable touchless and contactless.”
Cash phobia could not have come at a better time for SoftBank’s massive bet on digital payments in Japan. Cashiers across the country have begun asking customers to take extreme sanitary measures when paying, such as placing bank notes on a tray, wiping the tray with a sanitizer after each transaction, often while wearing plastic gloves. In South Korea, people have been cooking bank notes in microwaves to disinfect them.
That is all very encouraging, according to Nakayama. “Sixty-nine percent of respondents said that they felt resistance for bank notes and coins from the viewpoint of public health,” Nakayama told the news conference devoted to PayPay’s progress in conquering cash.
SoftBank has invested over $1 billion in PayPay and taken nearly $800 million in losses in the year ending in March. It is wagering that it can succeed in popularizing mobile payments in a country where nearly a dozen other competitors have failed. Japan has been famously resistant to mobile payments technology: Consumers prefer withdrawing money daily from convenient ATMs to scanning a QR code on their phone. Unlike in China and India, where mobile payments quickly entered the mainstream, in Japan, they remain 1% of a $5 trillion economy.
Curing Japan of its cash addiction would be incredibly lucrative; bringing the mobile payment penetration rate on par with China’s would create a $1.3 trillion industry.
SoftBank, meanwhile, desperately needs a win. It is struggling after a series of technology bets gone badly, including troubled office-sharing company WeWork and Uber Technologies’ underperformed initial public offering. Despite vowing to pivot toward a cautious and defensive strategy, it hit headlines this week with reports identifying the company as the “Nasdaq whale,” a massive buyer of tech stock options whose market-distorting activity caused share prices to skyrocket. Undaunted, it is quietly putting its chits on the roulette wheel once again — this time, wagering hundreds of millions of dollars that it can transform Japan from a hinterland of cash hoarding to a digital payments powerhouse. And the coronavirus has become a major talking point for PayPay executives.