Learning from the Mercari Example: The Snares of the Payment Services Act in C2C Services

Mercari Terms of Service
Article 13, Paragraph 2. Withdrawal Application
In the case where a purchase agreement for the listed goods is formed, the payment and shipping of the goods related to such purchase agreement have occurred, and the seller and the purchaser have mutually appraised the other party’s performance, thereby concluding the transaction, the seller shall submit a withdrawal application for the purchase price payment of such goods within 90 days of the conclusion of such transaction. Further, when a withdrawal application for the purchase price payment of goods is submitted, our company may require the prescribed verification of the seller’s identity and withhold the withdrawal until the verification has been completed. If the seller has not submitted a withdrawal application for the purchase price payment of such goods after the expiration of the 90 day period following the seller’s completion of such transaction, even though our company requested the seller’s submission of a withdrawal application for the purchase price payment of goods, our company will promptly pay the entire amount of purchase price payment of such goods by deposit into the seller’s registered bank account at a financial institution. Further, if the transfer of funds is not successfully concluded for a reason not attributable to our company, even though our company undertook transfer procedures based on this provision, our company may deem such seller to have waived its right to make a claim for the payment of an amount equivalent to the purchase price payment of such goods.(Unofficial translation)

For business managers, understanding the lawfulness of your company’s service model is essential.

Under the new rules, the revision of Mercari’s strongest merit of allowing the direct purchase of other goods with retained sales proceeds became unavoidable. The strength of the successful services is in many cases the innovation not found in existing services. However, the reason why similar services were not available until now is probably because they were not possible under legal regulations.

For example, although the social tipping service Osushi, launched at the beginning of 2018, was a groundbreaking service where [users] could make donations to bloggers they liked and others, following suspension of its services, it had no choice but to start all over again since it had not registered as a funds transfer service provider.

The social tipping service Osushi starts again, the “monetization”of sushi is not possible

The structure of the service model consists of the following steps:
(1)First, check to see if there any rules in your field, such as laws or regulations;
(2)If there are rules, consider whether to obtain consents and registrations up front or to revise the service model so it does not fall under the rules
(3)If you respond by revising the service model, consider whether those revisions can completely avoid the rules (or) or whether it is unclear (gray); if you develop a gray service, it is import to plan simulation questions and answers if the service is pointed as being “gray”, making additional revisions to make the service white in the future, and obtaining consents and registrations.
Accurately grasping how much legal risk your company’s service model has is an important issue for managers since it has direct bearing on the company’s business judgment.
Kenji Sugiura, attorney-at-law

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Learning from SHOWROOM: How to Create a Social Tipping Service that does not Conflict with the Payment Services Act

2018/11/3 Additional note:
After the posting of this blog on September 20, 2018, Mercari issued a press release indicating it would extend the fixed 90-day limitation period for applications to withdraw sales proceeds in effect since December 4, 2017 to 180 days.
Important:The 90-day limitation for transfer applications for sales proceeds haas been changed from 90 days to 180 days.
There has been no change in the system where sales proceeds are confiscated if an application for transfer of sales proceeds or point sales are not done within the time period above.