Retail Payments in Japan: A Land of Contrasts and Opportunity

by Zilvinas Bareisis, January 7, 2014
Industry Trends
Asia-Pacific

Abstract

The Japanese retail payments market is full of contrasts and unique traits which can be difficult for outsiders to grasp. Contrasts notwithstanding, it also presents opportunities for players both inside and outside of Japan.

In the report, Retail Payments in Japan: A Land of Contrasts and Opportunity, Celent aims to shed light on the retail payments market in Japan. The report is an overview aimed primarily at those seeking to get an introduction to payments in Japan. The market overview is organised into three main sections:

  1. Cash, credit and debit cards
  2. E-money, contactless and prepaid instruments
  3. E-commerce market and key payment instruments

Japan, with its rich and distinctive culture, has always posed a challenge to foreigners seeking to understand its ways. Despite Japan’s deserved reputation as an advanced payments market, it remains a cash-heavy society. Credit cards are popular, although the numbers have remained flat in recent years. On the other hand, transactions on debit cards are virtually non-existent. Credit cards are issued by a broad range of companies, not just banks, and most serve as both issuers and acquirers. The e-commerce market is large and fast growing, and it has a number of unique payment methods, such as konbini.

“Domestic and international players interested in the Japanese payments market have a number of opportunities with different risk and investment profiles,” says Zilvinas Bareisis, Senior Analyst with Celent’s Banking Group and author of the report. “For example, in Celent’s view, all issuers should be considering a mobile app with sophisticated capabilities for cardholders to manage their cards and engage with their finances. However, some opportunities around mobile payments are likely to be suitable for selected players only.”

This report provides an overview of the market, discusses some of the latest trends and developments, and suggests potential opportunities for card issuers and their technology partners. The report also suggests potential market opportunities for card issuers and their technology partners.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

3

Cash, Credit, and Debit Cards

4

 

Cash Rules

4

 

Cards: Yes to Credit, But No to Debit

5

 

Selected Innovations in Card Acceptance

8

E-Money. Contactless, and Prepaid Instruments

10

 

Overview

10

 

Contactless Payments

11

 

Other Prepaid Services

17

E-Commerce Market and Payments

22

 

E-Commerce Market Overview

22

 

Online Payments Methods

23

 

Other Developments

26

Market Opportunities: Recommendations to Card issuers and Vendors

28

 

Invest Without Regret

28

 

Explore a Business Case

29

 

Proceed with Caution

30

Leveraging Celent’s Expertise

31

 

Support for Financial Institutions

31

 

Support for Vendors

31

Related Celent Research

32

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