PayPay

PayPay is probably the biggest barcode / QR code payment rail in Japan. The core functionality of PayPay can be summarized as the following:

• You can accept payments from friends and family using PayPay, if they also use PayPay.
• You can pay for goods in stores and around Japan using PayPay.
• You can pay for Apple Account balance items using PayPay.
• You can pay for goods on Yahoo! Japan Auctions and other online shopping services using PayPay.
• You can pay for Coke ON Pay goods using PayPay.
• Most people use PayPay because it has a relatively good point reward program for shopping using PayPay. PayPay points, coupons, and shop-specific stamp cards are relatively lucrative a lot of the time.

PayPay has no relation to PayPal, despite having a similar name. PayPay is a product of LY Corporation, the modern incarnation of Yahoo! Japan and LINE Corporation.

All you need to sign up for PayPay is a Japanese phone number and an App Store region set to Japan.

PayPay accounts start out in a non-identity-verified state. This is what PayPay calls “Money Lite”. Money Lite cannot be withdrawn from a bank account, though it can be used to pay for goods and services. You can also send Money Lite to friends, but they also cannot withdraw Money Lite to a bank account. In other words, it's basically “unverified funds”. To prevent money laundering, money that starts its life in PayPay as Money Lite will remain that way forever¹⁾

If you're a resident or you become a resident, you may be tempted to verify your identity with PayPay. This has benefits and drawbacks.

Benefits:

• You no longer send PayPay Money Lite to people, or receive it.
• You can top-up from a bank account, provided that your PayPay phone number and name are identical to what's on your bank account. If these are not the case, however, it will not work.
• You can apply for PayPay Card (credit card).
• The app no longer whines about identity verification.
• You can create a PayPay Bank account.

The main drawbacks are what happens around resident card renewal. Unlike most banks, PayPay views your residence card expiration date as the end date for most PayPay services unless you get an extension before the end date. In other words, most banks give you a 2 month grace period while immigration processes your residence card renewal. PayPay does not do this.

When your residence card expires due to pending renewal, PayPay restricts your account beyond what an unverified account has as restrictions:

• Payments to third-party connected services, including Coke ON, Apple, etc. will fail.
• Top-up from an ATM will fail.
• Top-up from a bank account will fail.
• Sending money will fail.
• Withdrawing money will fail.

In essence, the main drawback about PayPay identity verification is that you will be completely locked out if your residence card lapses, despite your legal immigration status allowing you to remain in the country.

In my experience, PayPay will take the maximum amount of time to verify your identity if you apply for it, and you will be forced to redo the procedure if anything doesn't match your bank account.

PayPay is cross-compatible with other QR code payment systems like AliPay outside of Japan. If you're a resident, a good reason to verify your identity is to use it in lieu of WeChat Pay or AliPay in China, for example.