Payment Cards in Japan

Date: July 1, 2010
Pages: 124
Price:
US$ 4,495.00
Publisher: Datamonitor
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: PB85921FC68EN
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Payment Cards in Japan
Introduction

Payment Cards in Japan is an invaluable guide to one of the world's most complex card markets. The report provides statistics on market size, competitor market shares and forecasts. It also provides an overview of regulation, competitor activities, issuer strategy and product innovation including developments in contactless, mobile payments, online and prepaid cards.

Scope

- Data and analysis provided on debit cards, credit cards and deferred debit and charge cards.

- Historic market data and competitor market shares are presented for 2004-2008, H1 2009, with forecasts presented to 2014.

- New for 2010 includes data covering transactions by merchant category, premium card branding, benefits per card, card primacy and repayment behaviour.

- Includes a detailed analysis of developments in the areas of e-money, contactless, mobile, online and prepaid cards.

Highlights

The Japanese payment market remains dominated by cash, with consumers using that payment form even for high value transactions. Despite this, credit cards are continuing to show positive levels of growth with a CAGR of 2.5% between 2004 and 2008. Pay now cards however remain almost exclusively used at ATMs, with use at the POS in active decline.

The competitive situation in Japan is in a state of flux as a result of new regulations restricting APRs and issuer margins. Acquisitions and mergers are currently running high as the industry restructures itself. Despite this, the market remains dominated by JCB, who hold a 34% share of the market, a full 20% more than its nearest competitor.

Contactless, mobile, and prepaid payments are at an advanced state of development in Japan in the form of e-payments, typically on a contactless card or on a mobile phone handset. A large proportion of the market also holds transport ticketing functionality. E-money has gone truly mainstream with over 100 million cards in issue.

Reasons to Purchase

- Learn how payment cards in Japan work, and how they have developed over the past five years.

- Understand recent developments in Japanese payments in terms of consolidation, new entrants and product/technology innovations.

- Plan your future strategy effectively with Datamonitor's five year forecasts across all product categories.
OVERVIEW

Catalyst
Summary
Executive Summary
Sizing and Forecasting the Payment Card Market in Japan
Competitor and product developments in Japan
Contactless Mobile Online and Prepaid Payments
Table of Contents
Table of Figures
Table of Tables
Sizing and Forecasting the Payment Card Market in Japan
Overview
Structure of the Japanese payment cards market
Demand for debit is weak, partly due to the structure of credit repayments
Key macroeconomic and consumer data
Macro-economic trends and performance
GDP
Unemployment
Real GDP growth
Inflation
Demographic and consumer trends
Regulatory environment
The payments market is regulated by the Japanese Financial Services Authority
Credit card issuers have always faced heavy restrictions on lending and borrowing rates
The revised Money Lending Business Law became fully enacted in June 2010
The consumer credit market is experiencing dramatic shifts as a result of the new law
Prepaid cards are also affected by tight regulations
Sizing the payment card market in Japan
Size and performance of the payment card market
Penetration of payment cards
Number of payment cards in issue by type
Number of payment card transactions
Value of payment card transactions
Trends in payment card use compared to other countries
Credit card balances outstanding, revolve rates, usage and repayment behavior
ATM and POS terminal numbers
Competitor and Product Developments in Japan
Overview
Profiles of key Japanese players
JCB
Sumitomo Mitsui Financial Group
Mitsubishi UFJ Financial Group
Credit Saison
Aeon Credit Service
Rakuten
Western players
Card issuer market shares and performance
Credit card market shares
Number of credit cards in issue by brand
Number of transactions by brand
Value of transactions by brand
Balances outstanding and card repayment rates by brand
Charge and deferred-debit card market shares
Product design and issuer strategy in Japan
Credit card product strategy
Card product features by brand
Usage trends by brand
Leading revolving credit products and price points
Leading loyalty programmes
Card scheme market shares and developments
Major card scheme developments
Pay now card scheme shares
Number of cards in issue
Value of transactions
Revolving credit card scheme shares
Number of cards in issue
Value of transactions
Charge and deferred-debit card scheme shares
Number of cards in issue
Value of transactions
Forecasting the payment card market in Japan
Forecasting the pay now card market
Forecasting the revolving credit card market
Forecasting the charge and deferred-debit card market
Contactless, Mobile, Online and Prepaid Payments
Overview
Alternative payments are now mainstream
Japan has the most advanced e-money market in the world
e-money can be used on cards or phones
The majority of consumers now use e-money
There were 105 million e-money cards in issue by March 2009
Transaction values and volumes are also rising as consumers spend more using e-money
The majority of e-money transactions are for less than JPY1,000
Most e-money re-loads are for a value between JPY1,000 to JPY5,000
Although characterized by a variety of players, e-money is dominated by a select few firms
Branding remains a critical feature of the e-money market
Transport related cards hold a regional presence
Suica leads the market for e-money, with a 30.3% share of the market in H1 2009
Convenience is the primary driver of e-money use in Japan
Mobile payments remain niche in Japan
NTT DoCoMo's success in mobile has been driven by its effective domestic monopoly
Mobile players are focusing on incentivising use
FeliCa's dominant position may be a drawback
Online spending remains relatively low in relation to Japan's online presence
30.2% of all online shopping in Japan is for airline tickets and hotels
Credit and debit use online in Japan are at the extremes when compared to other markets
Japan holds several lessons for other regions
A sense of convenience is critical
Technology is not enough
Partnerships are essential to gaining mass acceptance
Appendix
Supplementary data
Definitions
AAGR
Affinity card
CAGR
Co-branded card
Credit card
Deferred-debit and charge card
EMV
EPC
ePurse
Merchant service charge
Pay now cards
POS terminal
Private-label cards
Methodology
Cards and payments database
Financial Services Consumer Insight is new to our offering, providing new and valuable insight
Forecasting methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

LIST OF TABLES

Table 1: Japan - macro-economic indicators
Table 2: Japan - demographics and consumer trends
Table 3: A selection of key credit card fees, APR's and product features
Table 4: Datamonitor's forecast for the pay now card market, 2008-14f
Table 5: Datamonitor's forecast for the credit card market, 2008-14f
Table 6: Datamonitor's forecast for the deferred-debit and charge card market, 2008-14f
Table 7: GDP for 2008 by country
Table 8: Unemployment and unemployment rates in Asia-pacific
Table 9: Japan: GDP growth 2005-09
Table 10: Card penetration in Asia-pacific
Table 11: Japan: inflation (% change)
Table 12: Transaction split by merchant category in Japan
Table 13: Average transaction value and frequency of use for pay now cards in Asia-pacific
Table 14: Average transaction value and frequency of use for pay later cards in Asia-pacific
Table 15: Number of ATMs: Asia-pacific
Table 16: Population per ATM in Asia-pacific countries
Table 17: Number of POS terminals: Asia-pacific
Table 18: Population per POS terminal in Asia-pacific countries
Table 19: Balances outstanding and revolve rates, 2008
Table 20: Number of e-money cards, mobiles and terminals
Table 21: Volume and value of e-money transactions
Table 22: E-money amount outstanding
Table 23: E-money market shares, H1 2009
Table 24: Current relevant publications
Table 25: Future relevant publications

LIST OF FIGURES

Figure 1: The value of banknotes and coins in Japan accounted for 17% of GDP in 2008
Figure 2: Cheques account for 1.5% of non-cash transactions by volume
Figure 3: The Japan Debit Card Promotion Council has an active online marketing presence
Figure 4: Japan had the highest GDP in Asia-pacific in 2009
Figure 5: The unemployment rate stood at 5.1% in Japan in 2009
Figure 6: Japan's economy shrank by 5.2% in 2009
Figure 7: Japan's economy hit by deflation in 2009
Figure 8: Japan had the highest card penetration among Asia-pacific countries, 2008
Figure 9: Penetration of pay now cards is higher than pay later cards in Japan, 2008
Figure 10: Japan had the highest penetration of pay now cards in Asia-pacific in 2008
Figure 11: Japan had the second highest penetration of pay later cards in Asia-pacific, 2008
Figure 12: Credit cards grew the fastest in Japan over 2004-08
Figure 13: Credit cards accounted for the largest share of cards transactions, 2004-09e*
Figure 14: Payments cards were used more at the POS than at ATMs in Japan
Figure 15: Pay later cards are majorly used to buy food & drink in Japan
Figure 16: Pay now cards usage constantly declined in Japan during 2004-08
Figure 17: Transactions made at ATM showed a downward trend from 2005 to 2009e
Figure 18: The transaction value of pay now cards is constantly declining in Japan, 2004-09e*
Figure 19: The value of ATM transactions has declined substantially in Japan over the last five years
Figure 20: Flight and hotels account for the greatest transaction value in Japan
Figure 21: Average transaction values were highest for pay now cards, 2004-09e*
Figure 22: Average transaction value at ATMs was higher than at the POS in Japan, 2004-09e
Figure 23: Asia-pacific countries vary significantly in terms of frequency of use and transaction value of pay now cards, 2008
Figure 24: ATM transactions accounted for the greatest turnover per pay now card in Japan, 2008
Figure 25: The average value and frequency of use of pay later at the POS is in line with the asia-pac average
Figure 26: Turnover per pay later card was highest at the ATMs in APAC region, 2008
Figure 27: In most Asia-pacific countries, the transaction value of pay later cards is highest for booking flights & hotels
Figure 28: 51% of Japanese credit cards are seen as primary by consumers
Figure 29: Japan stood out in terms of cards usage in Asia-pacific region
Figure 30: The revolve rates per outstanding balance range between 3%-13% across APAC countries
Figure 31: 83.5% of consumers in Japan pay off their balance in full each month
Figure 32: The ATM terminals grew at a CAGR of just 0.5% in Japan during 2004-2008
Figure 33: The POS terminals grew at a CAGR of just 8.2% in Japan during 2004-2008
Figure 34: JCB was the leading credit card issuer in Japan
Figure 35: JCB has the highest volume of transactions, but a low level of use per card
Figure 36: JCB held the highest value of transactions with €94.3 billion
Figure 37: Revolve rates ranged between 0% - 7% in Japan, H1 2009
Figure 38: Most of the consumers pay off their credit cards in full in Japan
Figure 39: JCB was the largest charge and deferred-debit card issuer in Japan
Figure 40: Rewards/loyalty points was the most prevalent card feature in Asia-pacific
Figure 41: Reward/ loyalty points was the most dominant card feature in Japanese market
Figure 42: Japan had the highest number of standard-branded cards among APAC countries
Figure 43: Half of the Citibank' and MUFG card' were banded as gold cards in Japan
Figure 44: Card primacy levels vary strongly by brand
Figure 45: J Debit was the only pay now scheme in Japan
Figure 46: The value of transaction for pay now cards declined by a negative CAGR of 7.9% over 2004-2008
Figure 47: Visa was the dominant credit card scheme in Japan
Figure 48: JCB accounted for the maximum value of transactions in Japan
Figure 49: Visa was the most dominant scheme in the Japanese deferred-debit and charge card market
Figure 50: Visa was the dominant scheme in terms of value of transaction in Japan
Figure 51: Pay now cards in issue are expected to increase by 0.3% during 2009-2014
Figure 52: The credit card market in Japan is expected to grow by a CAGR of 2.3% during 2009-2014
Figure 53: Charge and deferred-debit will continue to grow through to 2014
Figure 54: e-money can be used on a variety of terminals and devices
Figure 55: 57% of Japanese consumers now use electronic cash
Figure 56: 55% of e-money users have been using it for more than two years
Figure 57: There were over 103 million e-money contactless cards in issue as of March 2009
Figure 58: There were 1.18 billion e-money transactions between April 2008 and March 2009
Figure 59: 53% of consumers spend an average of JPY1,000 or less per e-money transaction
Figure 60: 60.3% of consumers load an average of JPY1,001-5,000 on their e-money wallets
Figure 61: Outstanding e-money totaled JPY92.2 billion in March 2009
Figure 62: e-money cards often have a strong brand identity
Figure 63: Transport orientated cards are often partnered with other cards, including for e-money acceptance
Figure 64: The market is dominated by Suica and Edy, both of which have around 31 million cards in issue
Figure 65: Convenience remains the key draw for Japanese consumers in using e-money
Figure 66: 19.2% of e-money users feel it does not need any improvements
Figure 67: 60.5% of non-users of e-money claim they simply do not need it
Figure 68: DoCoMo has leveraged its market power to develop a multi-functional mobile payment service
Figure 69: Two-thirds of consumers do not make use of the contactless functions on their phones
Figure 70: Consumers spent €54.9 billion on airline tickets and hotels in 2009
Figure 71: The value of spending per online shopper is higher than the global average
Figure 72: 66.1% of online purchases are made with credit cards
Figure 73: Debit cards account for only 2.8% of online spending in Japan
Figure 74: Bank transfers and cash on delivery accounted for 22.8% of online spending
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