Rakuten Group will merge its payments and points businesses with its credit card unit, according to an announcement on Thursday. This move has the potential to pave the way for the struggling e-commerce company to eventually list the card business.
Despite generating strong revenue from its core e-commerce offerings, Rakuten has been experiencing losses for approximately 12 consecutive quarters. These losses can be attributed to the costly expansion of its mobile phone business, which has failed to gain traction in Japan.
In an attempt to generate cash, Rakuten has opted to list some of its units, including its popular internet banking business, Rakuten Bank.
The company stated its intention to consolidate its payments and points businesses and integrate them into its credit card and loans unit, Rakuten Card. Rakuten Card will become the driving force behind its integrated payments business and may form strategic partnerships with other companies. Rakuten also indicated its willingness to raise capital as needed.
Points and payments play a crucial role in Rakuten’s ecosystem, which aims to attract customers to its diverse range of offerings. Users can accumulate points by using Rakuten credit cards, shopping, and availing insurance services. These points can then be utilized for purchasing groceries, paying bills, or booking travel.
The plan to combine the businesses was initially reported by public broadcaster NHK.
In its second-quarter results announced on Thursday, Rakuten reported an operating loss of ¥48.9 billion ($339.61 million), slightly better than the ¥51.2 billion operating loss expected by analysts polled by Refinitiv.
On Monday, Rakuten also revealed the departure of Tareq Amin, the chief executive of its mobile business, who had been leading the unit since March 2022.