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Taking Another Look At Japan

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22 December 2009
Over the past few years, much media and industry attention has been placed on the use of mobile NFC payments in Japan. Typically, Japan is portrayed as a mobile NFC "nirvana", a shining example of how the rest of the world will eventually adopt NFC. This portrayal is backed by some big numbers: 33 million NTT DoCoMo subscribers with the osaifu keitai (mobile wallet) service, the majority holding a Suica (public transport-based) payment card, and to a lesser degree, the DCMX e-credit card. Other mobile carriers also offer osaifu keitai, mostly for Suica use. Over the past few years, I too have watched Japan with great interest regarding mobile NFC. I travel to Japan quite often (4 to 5 times a year), and while I'm there, I make it a point to notice how many people are using mobile NFC at train/subway turnstiles, or at convenience stores. Through these amateurish visual surveys, I've come to a conclusion: very few Japanese are using mobile NFC payments. Mind you, my personal survey findings are that the overwhelming majority of Japanese commuters are using plastic card-based NFC. However, I'm just don't see Japanese commuters and shoppers using mobile NFC. And although my survey methods are anything but scientific, I can tell you that my findings are consistent every time I make a trip to Tokyo. During my latest trip (last week), conversations with industry insiders provided anecdotal info which seem to confirm my findings -- mobile NFC isn't taking off, and some players may actually be losing money from it. DoCoMo may have 33 million osaifu keitai subscribers, but the number of actual active users is a mere fraction of the total. So mobile NFC players outside Japan have reason to take heart -- they're not alone in waiting for the market to take off. As in Japan, the challenge will continue to be to find ways to encourage consumers' use of mobile NFC, as a way to generate sales "lift". Simply replacing an existing payment form factor (e.g., mag-stripe or NFC plastic cards) with a mobile form factor for the same payment types and amounts will place a damper on mobile NFC growth. Japan, the supposed mobile NFC nirvana state, deserves our attention more than ever.

Comments

  • I think that the functionality which first will need to take hold here in N. America is for people to use their phones for mobile banking and bill payment. Once the comfort level is there, then the migration to NFC will be a more comfortable one.