PayPay Payment App Files more Patents than Japan’s Big 3 Banks Combined

Japanese mobile payment service PayPay is taking steps to guard its financial technology, filing 90 patents in 2021, more than double as many as the country’s top three banks combined.

PayPay filed 88 patents in 2022, with a similar figure expected this year and beyond, according to research by Nikkei and Tokyo-based patent analysis company Patent Result.

Among Japanese fintech companies, Money Forward filed 23 patents in 2021 and at least 15 in 2022. Telecommunications provider KDDI filed 51 financial-related patents in 2021.

Patents take about 18 months to be published, which can cause deviations in the figures.

PayPay is a QR-code based payment method that is widely used in Japan, including at convenience stores and supermarkets, as well as in e-commerce. Users download a smartphone app, and then link a bank account or a credit card to pay for purchases.

Most of PayPay’s patents are related to the app, including technology that automatically rotates a smartphone’s display so a store clerk can easily check payment amounts.

As a rule, the company acquires patents when it develops new functions. In July, it announced a patent filing for a function that allows payments when not connected to the internet.

“There is a growing recognition among startups, including non-bank fintech companies, that patents can be a potent weapon,” said Keita Sekiguchi, a lawyer at Imai Sekiguchi Law Office who is well-versed in intellectual property.

The existence of patent trolls, who acquire patents for the purpose of suing companies for infringement, is also a concern.

“In the digital field, it is important to proactively acquire patents as a precaution,” Sekiguchi said.

Meanwhile, Japan’s three megabanks — MUFG Bank, Sumitomo Mitsui Banking Corporation and Mizuho Bank — filed 36 total patent applications in 2021. The number has been on an upward trend in recent years as web-based financial services have become popular.

The banks have a policy of filing patents for only key technologies. MUFG Bank has filed one for same-day trading when opening an investment trust account, and SMBC and Mizuho Bank have each filed a patent for fraud detection on ATM withdrawals using artificial intelligence.

Financial institutions in other countries are actively acquiring patents, especially in the US where lawsuits are common. Bank of America filed 168 patents in the US in 2021, and JPMorgan Chase 86. More than half the patents filed by both since 2021 are related to AI and blockchain technology.