Japan's Mercari buys payments app provider Origami

TOKYO (Reuters) - Japanese fleamarket app operator Mercari Inc 4385.T is buying rival cashless payments business Origami for an undisclosed sum, continuing consolidation in the fast-growing sector.

Loss-making Mercari has almost 15 million users of its eponymous fleamarket app, which allows people to trade used items via their smartphones, and plans to merge Origami Pay with its intergrated Merpay service.

Merpay has 5 million users but is encountering stiff competition from the aggressive expansion of SoftBank's 9984.T PayPay, which has run campaigns offering big rebates on purchases through its app.

The Origami acquisition announced on Thursday comes as money losing Mercari looks to make headway in the United States, where it competes with the likes of eBay EBAY.O and Craigslist.

Origami, which is unlisted and has investors including credit card company Credit Saison 8253.T, has not disclosed user numbers for its service, which allows users to make payments by scanning QR codes that have become common in countries such as China and India.

SoftBank's domestic wireless business last year said it would merge Line Pay operator Line Corp 3938.T with its internet subsidiary, leaving Mercari and other smaller players, such as Origami, looking increasingly underweight as the Japanese government encourages consumers to shift away from their reliance on cash.

While users have long used digital payments services such as East Japan Railway's 9020.T Suica service for train tickets and other purchases, no method has yet achieved broader dominance, with retailers slow to move beyond cash and credit cards.

Armed with ample cashflow, SoftBank has signed up 23 million users since its first 10 billion yen ($90 million) rebate campaign led to queues at discount electronics retailers.

One unsuccessful attempt to attract users to digital payments was by convenience store operator Seven & i Holdings 3382.T, which abandoned its 7pay service last year after some users were hacked.

Reporting by Sam Nussey; Editing by Sam Holmes and David Goodman