February 2023 marked the tenth anniversary of Mercari, Inc. We now have a new Group mission of “Circulate all forms of value to unleash the potential in all people.”

Here at Mercan, we have kicked off a new series feature called “Eight Keywords for Delving Into Mercari: Our First 10 Years and the Potential and Future We Seek to Unleash,” where we shine the spotlight on the thoughts and dreams put into this new Group mission and what we intend to achieve in the future. We will hear from key people who will lead Mercari into its next era, and try to paint a picture of the present and future of the organization that is Mercari to help us imagine how we can contribute to the company in the coming ten years.

For the sixth article of this series, the keyword is “value and circulation.” For this installment, we asked three of Mercari Group’s executives in charge of the fintech area to demystify “value and circulation” and to describe in their own words the role of Merpay and Mercoin in the fintech area as well as their vision of a world that “circulates all forms of value.” Sharing their thoughts in this edition of Mercan are Masato Yamamoto (@mark; Vice President, Chief Executive Officer (Fintech)/Representative Director, Chief Executive Officer of Merpay, Inc. / Director of Mercoin, Inc), Keisuke Sogawa (@sowawa; CISO of Merpay and Mercoin/CINO of Mercoin), and Dr. Yoshihiro Kawahara (@yoshy; Mercari R4D Head of Research).

Due to the colossal size of the topic “value and circulation,” this article contains a wealth of abstract information; however, we’ve made a point of retaining as much of the nuances of our conversation as possible in their unfiltered form. By bringing you this article, which poses hard questions instead of providing easy answers, we hope to give our readers an opportunity to think about what our future world could look like.

Fintech has made it possible to use trust and digital assets as forms of exchange

——Mercari Group has formulated a new Group mission. What is your take on the differences between this new mission and the ones we’ve had thus far?

@mark：A significant difference is that the potential of the value that the Mercari marketplace can circulate has expanded. Since our company was founded, Mercari has basically made possible the circulation of items. However, in just the past decade, technology has gradually enabled our users to exchange even more diverse, potential value. It’s now possible to use the Mercari marketplace to quantify the value of items, but I think that one future challenge will be how to go about making other forms of value quantifiable and exchangeable.

Merpay is a pioneering service in this regard. When we established the business, our idea was to handle three types of assets for our users. Items, money, and trust.

Masato Yamamoto（@mark）

@sowawa：I think of trust as something that is generated when money travels over time, so to speak. The processes of borrowing money and paying in installments are exactly what this describes. Applying time as a factor allows people to purchase goods and services with money that they currently do not have on hand. When this happens, trust replaces money.

Over the course of repeated transactions for the exchange of money and items, this idea of “trust =money x time” had already taken root at Mercari when I joined the company six years ago. This is where Merpay put forward the mission of “Building trust for a seamless society,” and by introducing a credit system, it made it possible for users to use trust as a form of exchange.

@mark： In addition, Mercoin is now working on using blockchain and other such technologies to make it possible to exchange digital assets, which at present are difficult to convert into money. In that sense, I think that one notable aspect of our new Group mission is what the fintech field has accomplished.

Merpay has been on a journey for five years. It is a fertile ground for the current issues we face and makes possible the birth of entirely new forms of trust.

——I understand it’s been five years since Merpay and our fintech business started. Looking back, what are some of the responses and issues you’ve encountered?

@mark：The last five years have been a time of careful preparation. In terms of the basic features that we offer, we’ve managed to create mechanisms for things like credit, credit cards, and QR code payments, and we’ve managed to make our business profitable. However, I think that as far as the size of our business is concerned, we’ve still got a long way to go. I’d like us to take on the challenge of expanding the reach of the value that we provide to users while deepening our collaboration with Mercari and having even more people use the Mercari marketplace app.

@sowawa：Recently, Mark and I had a chance to look back on the last five years. I don’t think anyone would argue the fact that Merpay has expanded the concept of trust and time as a new form of currency. However, there were also things that we could not cover with that process.

One example is that we weren’t able to make QR code payments into a payment method that personified Mercari. We ended up creating our QR code payments in the same ecosystem as conventional credit card and QR code payment systems. The mechanism for authorizing payments was the same as the one used with credit cards, and it never became anything more than a simple system for communicating payment accounts and personal credit information.

Normally, we would go one step further and look at what our users are buying and selling and learn about who they are, and we would have to come up with a mechanism for collecting the metadata pertaining to such things as the details and images of what was bought and sold. The fact that various information regarding purchasing does not get past the realm of primary distribution is not what you could call a “sustainable world.” I believe that we should ideally have a payment system that allows these data to be collected automatically and diverted to secondary distribution as well.

Keisuke Sogawa（@sowawa）

——One challenge that Merpay has had to face was that we did not include a Mercari-like concept or additional value in the mechanisms for payments. Are there any others?

@sowawa：Another thing would be that credit can only be used where the individual user can be identified. Right now, we gather credit information and use a KYC (Know Your Customer) mechanism to determine roughly how much money our customers can use on credit. But really, if we adopt privacy tech, we should be able to provide people with credit without identifying them as individuals.

If we could make that happen, our users would become able to find what they want and receive purchase suggestions just by opening the Mercari marketplace app and without a company having to manage their personal information. If we could do that, I think it would bring us one step closer to achieving our Group mission of “Circulate all forms of value to unleash the potential in all people.”

@yoshy：We have all of the technology needed to create that kind of system. Recently, even a lot of university graduation thesis projects have featured presentations about “Transformer,” a new deep learning model. What makes Transformer incredible is that it uses even fewer computer resources than previous models, and it incorporates mechanisms that allow a machine to determine noteworthy points the way a person would. With technology like this, I think we’re approaching a time when we’ll be able to find any notable purchasing data within data regarding purchasing and automatically determine a user’s credit limit without linking them to their personal information.

@sowawa：This will be the birth of a completely new and unprecedented form of credit.

Total value grows when we let go of what we need

——Based on the idea of addressing any remaining issues, I would like to ask you about how we will facilitate the “circulate all forms of value” part of our mission. To begin with, what do you think the word “circulate” means?

@yoshy：If you take the meaning of the word “circulate” literally, it means taking something from a starting point to travel in a loop and bringing it back to where it started. If the value of items was absolute, they would not circulate just by moving in one direction, much like a ball that falls from a high place to a low place. Behind the word “circulate” is the prerequisite that relative value rises and falls.

川原圭博（@yoshy）

@sowawa：Sort of like the “Penrose Stairs,” which never end, no matter how much you climb them. If that paradox is true of value exchange, it’s likely because people’s assessment metrics are imprecise. Perhaps it is due to this lack of precision that at some point over the course of things being evaluated highly by one person and less so by another, true circulation manifests.

——So you’re saying that perhaps what makes circulation possible is that the assessment metrics of people are imprecise and value is relative?

@sowawa：Sure. However, if you don’t stick too strictly to the meaning of the word circulate, if you just think of it as “items being distributed to various different places,” I think that Mercari has already accomplished this. How you interpret circulation will change what we need to do as a company. This is not really in response to that idea but, another problem I see with the word circulate is that it implies a closed system. The start and the end of the system are linked, and the system is itself independent, so no new information or concepts are introduced.

——I suppose that does make it a closed system. It begs the questions: “How should we circulate items in order for them to return to circulation?” and, “Is circulation within a closed system prosperity?”

@mark：It’s possible the circulation Mercari is aiming for is not one where the same items go around and around in the same system. I think that the abstract concept of value travels to and fro various systems, and as a result, the amount of value that enters and leaves our users’ lives is climbing, indicating that the speed of this process is accelerating.

The main point of this is accelerating the inflow and outflow of value. For example, the value of a smartphone depreciates from the moment someone buys it, so long as the smartphone never changes hands. However, if the owner of the smartphone passes it on to someone who wants to use it even if it’s secondhand, the relative value of the smartphone as it relates to the next potential user can actually increase the value of the smartphone as a commodity. Moving value around results in an increase in the number of people who experience the value of the item. The total value of the systems that make this possible should also grow.

This is why, recently, I’ve been making a point of listing things that I actually need. Selling something that I actually need myself forces me to replace it, and so I have to buy a different item. Doing this increases the opportunities I have to experience new value, and I get the sense that the idea I have about the value that I need expands. Even when it comes to the items that I use for my hobbies, I keep buying and selling items to compare them against each other. In some cases, I’ll buy something to check whether it provides me with value and then I’ll get rid of (i.e., sell) it right away. By speeding up this circulation, the value that passes through my hands increases, and as a result, the value I gain in experience increases dramatically.

@yoshy：Borrowing and lending items could also be a way of circulating value. Right now, at the University of Tokyo, there’s an intramural project similar to the Mercari marketplace for matching borrowers and lenders. When people at the university loan something out, they also pass on the knowledge of how to use it. For example, if someone loans out a hard-to-use measuring device, they also have to teach the borrower how to use it, otherwise, what’s the point? At first, it seems like the lender will be burdened by a system like this, but if the borrower and the lender are measuring the same subjects or objects, there is merit in them working together on research. I think that exchanges like this will generate value that is even greater than the value of the items that people exchange. If it becomes possible to use lending and borrowing to trade value in the forms of know-how and manuals, two items that have been difficult to trade up until now, this could become another way of realizing various forms of value.

Changing the concept of possession aiming for a sustainable and prosperous world.

——I’ve never explored “circulation” to this extent before, but thanks to this conversation, we’ve managed to shed a lot of light on the meaning of the Group mission. In closing, do you have any hints for achieving the ideal world that Mercari is aiming to create going forward?

@mark：Sure, but let me start by saying that I can’t guarantee what I say will be well organized. (laughs) Before I joined Mercari, I had the chance to speak with @sowawa and others. We’d talked about wanting to change the very concept of possession itself. People value their possessions very highly and tend to take their loss extremely hard. Even if a possession depreciates with time, they think that the value they will lose by letting it go will be much greater than it actually is. There are a surprising number of people who hold on to items that they’re not using at all. If you place this value into the hands of another person, it allows the true value of that object to manifest. If we freed ourselves from the concept of “possession,” and all items could be shared on the Mercari platform, it would allow us to always have whatever it was we felt had the most value to us at any given time. This would allow even more people to discover even more value.

This form of sharing is even different from possession by multiple people like what we see in the sharing economy. I think that what the Mercari marketplace offers is a mechanism that is close to a subscription model. For example, a user could purchase everything they buy in installments and sell their items on Mercari once they no longer need them. If they pay for an item using their account balance, they only have to pay for it for the period that they actually have the item in their possession, which would allow the user to enjoy the value of their item before passing it on. With a mechanism like that in place, we could seek out more opportunities and experiences without getting hung up on who owns what, which would bring us even closer to a world where all forms of value circulate.

@sowawa： In other words, an ideal world that is sustainable and where people live more prosperous lives. I also think that it’s important to take care of your things. However, we already live in a world overflowing with things, information, and opportunities, so it might be wasteful to adhere too closely to this.

——I have a hunch that by using Mercari, people will be able to have more “frequent opportunities with new forms of value.”

@mark：That’s it exactly. Through the camera I use for my photography hobby, I get to experience that kind of outlook. There are all different kinds of camera lenses, but each one is for a different photography scene or application. That said, there are only so many lenses you can carry at once, so I usually lean toward holding three lenses. And this is why I periodically try to sell all of my lenses and then buy a completely different set of lenses. This allows me to experience a new form of value by having the opportunity to use a lens that I wasn’t able to buy because I’ve told myself, “Well I’ve already got this one.” Doing this allows me to enjoy shooting photos of new kinds of scenes that I haven’t been able to shoot with the lenses I’ve had to date. Letting go of one thing opens you up to the joys of new experiences and new discoveries.

@yoshy： I also like to shoot photos, so I know what you mean. I have to say, that’s a really refreshing way of thinking. Normally, I use Mercari to buy items that make my life easier. But Mark uses Mercari as a means to trade items in order to discover new value.

@sowawa： I think that changing your interests at a steady pace leading to opportunities to experience new value the way that Mark does is a very human approach. The structure of the human brain limits its capacity to recognize and take an interest in things. Therefore, we have to let go of something in order to make space to introduce something new.

Computers and people are actually very compatible with each other: people are of limited capacity while computers can accumulate information without limit. People with ever-changing interests work well with computers, which are capable of repeatedly making suggestions and matching things limitlessly. By combining these two things, you might even make possible the fantasy of the Penrose Stairs. Since Mercari was built entirely on computers, you could say that it’s one of the places where people and computers come together.

——Our vision for the world is one where it’s easy to let go of value and obtain new value. You could say that such a world would be one of tangible prosperity while at the same time sustainable.

@mark： I do think that a lot of the topics we covered today may be difficult to understand for people who are not already familiar with them. But when creating a service I think that aspects like these are a part of it. Merpay’s service is the same. To keep things simple, we tell our users about things like QR code payments, but the aims that we are thinking about in the background are more complicated.

Even if our aims are a little difficult to understand, when users use our services our aims manifest organically; making products that improve people’s lives is our mission. I would like to continue improving our service in order to realize our Group mission.