Retailer Payments, Banking, Insurance and Assistance in Japan

Retailer Payments, Banking, Insurance and Assistance in Japan

Retailer Payments, Banking, Insurance and Assistance in Japan investigates the market for financial services organised by over 200 major retail brands in Japan. As well as examining their initiatives in payment cards, banking products, insurance and assistance, the study also examines their involvement in proprietary and coalition loyalty programs, and details the online payment mechanisms accepted by those with an online sales capability. Among other data points, the report and PartnerBASE™ dataset that accompanies it embrace the following information about the retailers covered:

- whether they offer their own credit, debit or prepaid cards and, if so, the card issuers that they work with in this context if they do not issue the cards themselves;

- whether they are linked to one or more loyalty programs and, if so, whether these are proprietary or coalition schemes;

- whether they make non-card point-of-sale finance available to their customers and, if so, the finance providers that they employ for this purpose;

- whether they promote mainstream banking products such as general-purpose personal loans, mortgages and savings accounts and, if so, the partners that they co-operate with;

- whether they distribute accident, dental, health, household, life, motor, pet or travel insurance, or any kind of assistance services and, if so, the insurance or assistance providers used;

- for retail brands with an online sales capability, the payment means and providers that they accept for online purchases with consideration of payment cards, online accounts, mobile payments, bank transfers and other online payment options.

The report and PartnerBASE™ dataset can be used in the following ways:

- to gain access to a comprehensive source of information that provides detailed insights into the involvement of major retail brands in Japan in payments, banking, insurance and assistance;

- to monitor the activity of key competitors in retailer financial services including AEON Financial Services, Credit Saison, JCB, Rakuten Bank and Seven Bank;

- to understand the potential in Japan for converting proprietary retailer loyalty cards and coalition loyalty schemes into fully-fledged payment cards;

- to evaluate the extent to which consolidation among conventional banks is opening up opportunities for new retailer banks to emerge as ‘consumer champions';

- to appreciate the range of online payment choices open to consumers in Japan who buy products and services through the websites of major retail groups.
Table of Contents

Executive Summary

Introduction

Market Analysis

List of Graphics / Tables



0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?

Rationale

In many countries, consumers are tending to gravitate to larger retailers and to buy more online...

... which throws up new opportunities in payments, banking, insurance and assistance

Methodology

Survey of retailers

The survey's scope covers over 200 important retail brands grouped across ten categories…

…with a clear majority of retailers operating a mixed distribution model

Definitions

Payment, banking, insurance and assistance products and services

Operating models

Weighted shares

PartnerBASE

Finaccord

2.0 MARKET ANALYSIS

Introduction

Retailer payment cards

Credit, debit and prepaid cards

Over a half of major retail brands in Japan offer a co-branded or private-label payment card…

… with captive card issuers constituting the dominant operating model in this context

The largest of these are likely to be AEON Credit Service, Rakuten Bank and Seven Card

Idemitsu Credit and Saison Card are the two joint venture card issuers active in this field...

... in which well over 30 entities are present in total

Card issuers owned by Sumitomo Mitsui Financial Group would lead if considered together

AEON Credit Service has a portfolio of over 30 million credit cards issued in Japan

Mizuho Financial Group's Credit Saison is party to multiple joint ventures

Seven Card is one component in Seven & I's broader financial services division

Rakuten Bank has experienced very rapid growth in both revenues and profitability

By both unweighted and weighted share of partnerships, JCB overtakes MasterCard

All major retail brands surveyed in two categories in Japan have introduced their own payment cards

Gift cards

Well over a half of major retail brands in Japan offer a stored-value gift card...

... with the provision rate highest among retailers selling both offline and online

Retailer loyalty programs

Participation in loyalty programs runs at over three quarters of the major retail brands investigated...

... with provision rates exceeding 50% in all retailer categories

Proprietary loyalty programs

Proprietary loyalty programs are most popular among major Japanese retailers...

Coalition loyalty programs

... although as many as seven coalition loyalty programs attract some retailer involvement

JAL Mileage Bank has the most retail sector partners out of the schemes surveyed…

…although by number of members, ANA Mileage Club is not far behind

T Point was launched originally as a proprietary loyalty scheme for Tsutaya…

…just as Top Club Q mainly serves department store Tokyu, its parent company

Consumer finance

Japanese retailers are much less likely to offer point-of-sale consumer finance than payment cards

JACCS is the dominant partner used in this domain...

... in which only four other competitors are apparent...

... namely AEON Credit Service, Cedyna, Credit Saison and Orico

Seven categories host retail brands with arrangements for non-card consumer finance

Banking products

Overview

As many as 11 major retail brands in Japan make savings accounts available to their customers…

Personal loans, mortgages and savings accounts

… with some of the same captive providers involved as for payment cards and consumer finance

Both Rakuten Bank and Seven Bank are substantial captive banking businesses

Provision of mainstream banking products is concentrated mainly in two retailer categories

International payments / remittances

Seven Bank International Money Transfer is a joint venture of Seven & I with Western Union

Rakuten Bank launched its own international remittance service in 2013

Insurance and assistance

Accident, health, life and motor insurance are the policy types most commonly marketed by major retailers

Almost all insurance distribution partnerships among retailers are organised via captive intermediaries

Rakuten acquired AIRIO Life in 2013, re-branding it to Rakuten Life in the same year

Seven Financial Services takes advantage of in-store electronic terminals to market insurance

Japanese retailers selling insurance products are drawn from four retailer categories

Online payments

Acceptance rates

Payment cards and 'COD' ('cash on delivery') are the most widespread online payment means

Payment cards

Ten different payment card brands enjoy online acceptance among major retailers in Japan...

... with availability rates for online card payments dipping below 100% in only two retailer categories

Online accounts

Five online account providers are in evidence but none has yet amassed a large number of partnerships

Two providers require secure readers (which plug into the user's computer) to confirm the transaction...

... and two began life as solutions for online auction payments

Retailers in the consumer electronics sector record the highest acceptance rate for online accounts

Mobile payments

Three of the four mobile payment initiatives found online are owned by mobile network operators...

... but the penetration of these among major online retailers in Japan is also quite limited

Bank transfers

Direct bank transfers are accepted by close to a quarter of major online retailers in Japan

Other methods of online payment

Payments on delivery (COD) constitute the most common alternative to payment cards

3.0 APPENDIX

Major captives and joint ventures




LIST OF GRAPHICS / TABLES


0.0 EXECUTIVE SUMMARY

Provision rates for key payment, banking, insurance and assistance products, adherence rates for loyalty schemes and online payment product acceptance rates among retailers in Japan, 2014

1.0 INTRODUCTION

Retailers researched in Japan, segmented by category, 2014

Retailers researched in Japan segmented by distribution model, 2014

2.0 MARKET ANALYSIS

Provision of retailer payment cards by type of card in Japan, 2014

Retailer payment cards in Japan: provision rate and operating models, 2014

Retailer payment cards in Japan: unweighted and weighted issuer share of partnerships, 2014

Retailer payment cards in Japan: unweighted and weighted network share of partnerships, 2014

Provision of retailer payment cards by retailer category and distribution model in Japan, 2014

Provision of retailer gift cards by retailer category and distribution model in Japan, 2014

Retailer loyalty programs in Japan: provision rates, program types and links to payment and other cards, 2014

Provision of or involvement in loyalty programs by retailer category and distribution model in Japan, 2014

Coalition loyalty programs in Japan: unweighted share of retailer brand members, 2014

Retailer consumer finance in Japan: provision rate and operating models, 2014

Retailer consumer finance in Japan: unweighted and weighted provider share of partnerships, 2014

Provision of retailer consumer finance by retailer category and distribution model in Japan, 2014

Retailer provision of other banking products and services in Japan, 2014

Retailer personal loans, mortgages and savings accounts in Japan: provision and operating models, 2014

Retailer personal loans, mortgages and savings accounts in Japan: unweighted and weighted provider share of partnerships, 2014

Provision of personal loans, mortgages and savings accounts by retailer category and distribution model in Japan, 2014

Retailer international payments / remittances in Japan: provision rate and operating models, 2014

Retailer international payments / remittances in Japan: unweighted and weighted provider share of partnerships, 2014

Provision of international payments / remittances by retailer category and distribution model in Japan, 2014

Retailer insurance and assistance in Japan: provision by policy type, 2014

Retailer insurance and assistance in Japan: provision and operating models, 2014

Retailer insurance and assistance in Japan: unweighted and weighted provider share of partnerships, 2014

Retailer online payment acceptance in Japan: acceptance rates by payment type, 2014

Payment cards accepted as an online payment mechanism by retailers in Japan: unweighted and weighted network share of acceptance, 2014

Acceptance of payment cards as an online payment mechanism by retailer category in Japan, 2014

Online accounts accepted as an online payment mechanism by retailers in Japan: unweighted and weighted provider share of acceptance, 2014

Acceptance of online accounts as an online payment mechanism by retailer category in Japan, 2014

Mobile payment services accepted as an online payment mechanism by retailers in Japan: unweighted and weighted provider share of acceptance, 2014

Acceptance of mobile payments as an online payment mechanism by retailer category in Japan, 2014

Acceptance of direct bank transfers as an online payment mechanism by retailer category in Japan, 2014

Acceptance of other types of online payment mechanisms by retailer category in Japan, 2014

3.0 APPENDIX

Retailer captives and joint ventures in payments, banking, insurance and assistance in Japan: operating models, partners and ownership, 2014