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Payment Cards in Japan

  • Publication Date:July 2010
  • Publisher:Datamonitor
  • Product Type: Report
  • Pages:124

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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