Using Rakuten Wallet to Pay With Bitcoin Cash in Japan

There's been some news floating around that it's now possible to use Rakuten services in order to pay with cryptocurrency at stores in Japan. I've just successfully made my first purchase using this Rakuten system, so I thought I'd just provide a short synopsis of how this system really works and if it's worth it.

First, I'm not sure how well known Rakuten is outside of Japan. If you're not familiar, it's like the Amazon of Japan, not only in that it's an online market for selling stuff, but also in that it's a huge conglomerate business that does all sorts of different things. For example, they're currently building an entirely new cellular phone network infrastructure across Japan, from scratch.

The first thing I had to contend with in order to figure out how to use Rakuten to spend BCH at a store was to understand all the different related services that seemed to possibly be relevant. There's a Rakuten Account, Rakuten Bank, Rakuten Wallet, Rakuten Pay, Rakuten Cash, Rakuten Points, and different apps connected to each. Where does one even start?

It took me about two months to sort them out and sign up for everything. That time includes all the failings of Rakuten services. Every foreigner living in Japan will be familiar with dealing with complexities like having to deal with confusion between how one's name is written in Japanese versus English. But Rakuten adds even more layers of hassle. But this article isn't about that, so I won't go into further details. I'll just say that it was not easy to get this set up and I had to get customer support to straighten things out multiple times.

So, anyway, I eventually chopped my way through the weeds and figured out what's what. And here's how it all breaks down, for the purpose of spending with BCH.

A Rakuten Account is just the account you set up if you make purchases on their online store. I don't think this is strictly necessary in order to set up BCH payments, but, it does help in that you can link accounts so that you don't have to enter the same address information over and over.

Rakuten Bank is just a normal online bank account. In retrospect, I think this is also not a requirement for the rest of the process, but, similar to having the Rakuten Account, having it means you can link accounts and skip having to do extensive KYC for each other service. By the way, the level of KYC to open a Rakuten Bank account was more than I've had to do for any other bank in Japan, and would probably make most crypto enthusiasts' heads explode.

Rakuten Wallet is basically a custodial wallet linked to an exchange. It's where you do your crypto trading. It only deals in BTC, ETH, and BCH.

Rakuten Cash is basically money you hold inside the Rakuten walled garden. You can use it to purchase things directly on the Rakuten Store, I think, and you can also exchange it for Rakuten Points or use it for Rakuten Pay.

Rakuten Pay is the system that's used in stores for QR code purchases. When you scan something using Rakuten pay, it debits your Rakuten Cash.

Rakuten Points are bonus points you earn for making purchases or whatever, and they're not really relevant to the crypto flow. I only mention them so if you see them mentioned elsewhere you know that they can be ignored. Hopefully save you from some of the confusion I had at first.

So, the flow goes like this. You transfer some amount of BCH from your preferred wallet to the Rakuten Wallet. Then you sell it for Japanese Yen, just like any exchange. Then you have the option of withdrawing that Yen to your Rakuten Bank account, or you can buy Rakuten Cash with it. If you withdraw it to your Rakuten Bank account, there's a 300 yen service charge.

If you buy Rakuten Cash with it, then, assuming you have your Rakuten Pay app correctly configured to use Rakuten Cash, you can pay for things at stores that accept Rakuten Pay with a QR code.

When I first heard of this system, I thought maybe it would be a way to buy things with Rakuten and have it automatically debit a BCH wallet. That would be cool. Sadly, this is not that. You have to sell your BCH for Rakuten Cash first, and then you can spend it.

But, there is a reason to use it, which is that there is no service fee for converting Yen to Rakuten Cash in the Rakuten Wallet. That lack of friction makes a worthwhile difference.

When you convert your BCH to Yen in the Rakuten Wallet, there is a spread between buying and selling prices, and so far as I can tell it's no worse than any other exchange I've dealt with.

Since there's no service fee, it does mean that if you sell some small amount of BCH and do the purchase right then, you're pretty close to buying goods and services with BCH at current rates. My experience with the whole speed of transfers and sales with Rakuten was very smooth and quick, so it's feasible you could make a decision right there in a store or restaurant to use BCH for the purchase, move some to the Rakuten Wallet, convert it, charge your Rakuten Cash, and make a payment.

It would take a few minutes, so it's not something you'd do impulsively at the register. But it does bring BCH that much closer to the marketplace.

Sometimes when BCH has an increase in value, I'll feel like using that bump to buy something. Before I had this system, I could think of maybe buying something on Purse.io. Maybe I'd consider cashing some out. But, for the most part, options for using my BCH when I felt like it were limited by the fact that it's often not worth exchanging small amounts.

Now, the process is easy and cheap enough I could move more trivial amounts of BCH, get some Rakuten Cash with it, and then buy something minor. Since there's no service fees, I could do more frequently with trivial amouts for more frivolous purchases. Spend and replace.

All in all, it's definitely not as good as being able to use BCH directly. Obviously. But, as a route to get at least some liquidity in the system, it's a step in the right direction. I'm glad I have it set up now because it does mean I have more options with my BCH than I did before, and more options are always better.