“It’s a big step to move into a megabank’s customer base – it’s huge,” Ryu Muramatsu, a founding partner at GMO Venture Partners, tells Tech in Asia. “We’ll use most of this funding to help startups – our merchants – grow.”

GMO Internet is a behemoth in Japan, offering an array of internet services (domain listing, web hosting, cloud storage, advertising, security, online FX and securities trading) in addition to its popular payment solution. GMO Payment Gateway connects ecommerce businesses – including startups – and credit card companies to merchants.

The partnership with such a well-known financial institution will make the service even more attractive to current and future users. Mitsui Sumitomo is one of the leading banks in Japan, with 27 million domestic retail accounts. In a country of roughly 127 million, that’s a lot of customers to bring on to the GMO payment platform.

“GMO Payment Gateway believes that it is important to diversify payment business opportunities by bringing together finance technology and internet technology, and to broaden relationships with large-scale businesses in order to drive ecommerce penetration […] in Japan, a rate that is expected to reach 10 percent in the not-so-distant future,” GMO said in a statement.

Foreign and domestic rivalries

The firm also cites North American and European financial and payment firms’ encroachment on the Asian ecommerce ecosystem, adding that it’s “necessary to partner with a financial institution and build a firm relationship ahead of its competitors.” Domestic ecommerce giant Rakuten offers a competing payment solution, but GMO will also have to battle with PayPay and, most recently, Stripe.

Several other tech companies are also in the mix with their own young payment services. GMO’s move is sure to raise eyebrows at Metaps (Spike), Base (Pay.jp), and Line (Line Pay).

With the so-called third arrow of Prime Minister Shinzo Abe’s “Abenomics” monetary policy calling for deregulation, Japan will likely see more megabanks follow Mitsui Sumitomo’s lead when it comes to collaborations with internet service companies and fintech startups.