Rakuten Card, a wholly owned subsidiary of Rakuten, has announced that it plans to establish a company to commence banking operations in the US, pending approvals.
Rakuten Card says it will follow necessary procedures to provide banking services in the US. The planned entity, Rakuten Bank America, will provide business loans and deposits, credit card issuing and acquiring, and personal loans. The current plans show it will be capitalised to the tune of US$400m and be wholly owned by Rakuten Card, and plans to be formally founded on 31 July.
The announcement from the Japanese e-commerce giant has been met with dismay in some quarters, however, with the American Bankers Association (ABA) proving to be particularly displeased by the news.
“As Japan’s largest e-commerce site, Rakuten is a major technology firm engaged primarily in non-financial activities,” said ABA's President and CEO Rob Nichols. “Allowing Rakuten to participate in banking activities would raise important questions about the free flow of credit, consumer privacy and possible conflicts of interest - questions not raised by current ILC charter holders.”
Nichols called on the FDIC “to rigorously review every aspect of the application to see if it meets the relevant requirements for this charter, including community need, keeping in mind the broad commercial rather than financial nature of Rakuten’s business and the significant questions that raises.”
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