Electronic Money: Contactless Payment in Japan

December 11, 2007


Tokyo, Japan December 11, 2007

Contactless payments in Japan are steadily increasing, with over 98.4 million payment devices currently in distribution. Although usage remains limited when compared with the overall size of the cash payment market, Celent expects device growth to reach nearly 180 million in 2010.

Japan is undergoing a transformation in its employment of alternative payment methods. In 2000, electronic money (also referred to as contactless payments) emerged. When it first appeared, there was little impact on both the market and regulators. Despite low expectations for this niche channel, electronic payments have increased dramatically. The impact of contactless payments on small cash transactions, particularly in large cities, is growing. However, overall usage remains small, despite major efforts to expand their presence.

In a new report, , Celent explores the complicated Japanese electronic money market. There are currently over 98.4 million devices in the country, including both smart card and mobile phone products. Usage is expected to grow steadily during the next five years. Contactless payments consist of three different payment methods: prepaid (stored value), auto-charge, and post-pay. The latter two are linked with credit cards, which has helped them enter the small payments market. Key success factors include an increase in the number of merchants that accept contactless payments and promotion by both issuers and distributors.

"While credit cards are both convenient and heavily distributed, consumers perceive that this channel should not be used for smaller payments. This is a common misunderstanding in the Japanese market," says Yumiko Manchu, an analyst at Celent. "In contrast, usage of debit cards is limited to less than 10% of credit card transactions and continues to decline. There remains a vast segment of the consumer population that prefers cash payments. This is the segment that electronic money has targeted in order to achieve wider acceptance."

Major electronic money vendors covered in this report include PASMO, Suica, Edy, Quicpay, iD, waon, and nanaco. Profiles provide a description of vendors' issued numbers, the number of usable places, and the types of devices and payment methods they provide. The report also evaluates the market structure for contactless payments.

The 35-page report contains 14 figures and three tables. A table of contents is available online.

Members of Celent's Retail Banking and Wholesale Banking research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.  

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 operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Tokyo, Japan< december 11, 2007


Executive Summary 03
Introduction 06
The Old World 09
Definition and Basic Characteristics 13
  Definition 13
  Basic Types of Electronic Money 14
Drivers 16
A Guide to Electronic Money in Japan 21
Technology 29
Changing Business Models 32
Contactless Payment Adoption Trends 35
Conclusions 38



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