Japanese mobile payments app Kyash is making a play for consumer wallets with a Venmo-style digital and physical debit card that handles merchant payments and peer-to-peer money transfers. Though it faces competition from companies such as Rakuten Pay, Line Pay and PayPay, the company is backed by Japan’s largest bank and other well-heeled funders.

Kyash claims its advantage over other Japanese payment companies is the fact that it doesn’t require a QR code. Chihiro Hara, a spokesperson for the company, told Bank Innovation that companies like Line Pay, Rakuten Pay and PayPay rely on member stores adopting their payment technology. Since Kyash offers both a digital and physical Visa card, customers can use Kyash with any merchant that accepts Visa. The app shows real-time spending information and allows customers to lock the card if they lose it.

Kyash is using a 2% cashback program as a customer acquisition vehicle. According to Hara, the company plans to continue the cashback program for the foreseeable future. The company also intends to apply for a license to offer checking accounts. Hara wouldn’t disclose Kyash’s number of users.

Kyash is coming into the Japanese digital payments marketplace with some powerful backers. The Series B funding round, which raised $14 million earlier this month, was led by Goodwater Capital and Mitsubishi UFJ.  Mitsubishi UFJ is the investment arm of MUFG, the largest bank in Japan, while Goodwater is a California-based venture firm that has invested in large fintech companies such as Monzo and Stash. Toppan Printing, JAFCO, Shinsei Corporate Investment and SMBC Venture Capital also participated in the funding, which Hara said Kyash primarily will use to hire more employees, including engineers, business developers, marketing specialists, project managers, data scientists and HR personnel.

Japan is early in its transition to cashless payments, with only 20% of payments in Japan being cashless compared to about 50% in the U.S.  The Japanese government aims to increase the share of cashless payments to 40% by 2025, according to the Nikkei Asian Review. To the end, the country will offer a 5% reward point rebate to consumers at small and medium-sized businesses starting in October, and Kyash will be a payment provider for the program. 

Meng Liu, an analyst who covers the Asia-Pacific region for Forrester Research, said Kyash is still too small to determine whether it can meaningfully challenge Rakuten and Line in the mobile payments arena. In addition, Rakuten and Line have a social element to them, something Kyash lacks and will need to make up for with incentives, he explained.

That said, cards may have a better chance of winning Japanese customers away from cash. “The QR code payment may not be able to compete with the card payment method in the short term,” Liu said.