In a report by Bloomberg, the news agency noted the price war between Twitter Inc. co-founder Jack Dorsey and SoftBank Corp's Masayoshi Son over credit card transactions in Japan.

Barclays Plc Tokyo-based analyst Azuma Ohno said, "Japan's credit-card market still has significant potential to grow. "Large merchants have already built settlement systems and it's not easy to grow sales to a significant volume by targeting small retailers."

Sumitomo Mitsui Card Co general manager Kazuhiro Noizumi added that card fees are based on sales, with bigger merchants paying less than 3.25% while smaller retailers are levied between 5% to 8%.

Tokyo-based card company Credit Saison Co. estimated that Japanese consumers pay in cash for about 56% of their JPY279 trillion worth of purchases just last fiscal year. Only 12% opted to pay in plastic. This paled in comparison to 26% credit card payments and 20% cash payments of USD8.3 trillion worth of purchases US consumers paid in 2011.

Dorsey introduced payment processing firm Square Inc via a smartphone-based option, and small retailers switched from Son's Paypal Inc venture in order to save JPY200,000 or USD2,000 for setting up a conventional service. However, Japan's second-richest man introduced a 35% off in charges to regain its market share in the number three economy in the world, wherein a growth opportunity is seen in low-cost, easy-to-use credit card payment services. According to Bloomberg, consumers in Japan shelled out USD1.5 trillion in cash to pay for their services in the year through March last year and only used plastic at around half of the American shoppers' rate.

Gartner Inc consumer services trends research director Sandy Shen said, "Smaller merchants in aggregate will drive substantial payment volume once they see the benefit of accepting card payments."

Square's free, coin-size card reader which is a plugin to iPad and smartphones, charges 3.25% to process transactions.Dorsey's Square had partnered up with Sumitomo Mitsui Card in order to scale its business in Japan. SoftBank's response to Square's threat in the market the former is dominating is a reduction of fees from 5% to 3.24% per transaction in its PayPal Here's payment service.