7-Eleven To End Mobile Payment Service In September
1st August 2019 – The operator of 7-Eleven convenience stores in Japan said Thursday it will end its mobile payment service “7pay” in late September, only three months after its launch, after hundreds of customers suffered as a result of unauthorized access to their accounts.
Seven & i Holdings Co. admitted at a press conference it had failed to adequately strengthen its security system and promised to fully compensate for losses through purchases made by unlawful access using stolen IDs and passwords. Three Chinese nationals have been arrested in connection with the case.
The company launched the cashless payment service on July 1 at over 20,000 stores across Japan but has suspended acceptance of new users and the addition of credit to its smartphone application as the breach was confirmed soon after launch.
As of late July, there were 808 victims who suffered total losses of 38.61 million yen ($353,600), Vice President Katsuhiro Goto said at a news conference.
“We will compensate 100 percent. We deeply apologize to all of the affected parties,” he said. The company will also pay back unused credit to customers, Goto added.
The company said its countermeasures against logging in from multiple devices and additional verification steps were insufficient and there were also problems with risk management.
Seven & i said it has set up a team consisting of lawyers and others to look further into the cause of the problem and work out measures to prevent a recurrence.
On July 4, police arrested two Chinese men on suspicion of attempted fraud as they allegedly used stolen IDs to settle payment for electronic cigarettes at a 7-Eleven outlet in Tokyo’s Shinjuku Ward.
One of them paid 730,000 yen to buy 146 cartons of e-cigarette cartridges at the convenience store using 7pay, according to the police.
The third Chinese suspect was arrested on July 12 for allegedly using stolen IDs for unauthorized 7pay access to purchase around 32,000 yen worth of 15 items including e-cigarette cartridges and cosmetics at a Seven-Eleven store in Tokyo’s Chiyoda Ward she worked for.
The police suspect the involvement of a China-based international crime organization that includes a hacker, a person who gives instructions and others who engage in the purchase and collection of merchandise.
The Economy, Trade and Industry Ministry has said that Seven & i failed to strictly follow guidelines to prevent unauthorized access, warning providers of similar services that they must confirm the identity of users.
In Japan’s convenience store industry, FamilyMart Co. has also launched its FamiPay smartphone payment service to attract more customers amid intensifying competition.
Seven & i said today despite the termination of 7pay services on Sept. 30, it will promote cashless payments at its outlets through various settlement services offered by other companies.