Innovation in the Japanese Financial Services Industry: Retail Payments

by Eiichiro Yanagawa, March 3, 2015
Industry Trends


This report examines efforts in the financial services industry to spur innovation, with a focus on the retail payments market. In particular, the report addresses the following points:

  • Japan is a market where cash payments long have been king.
  • Credit cards are offered by many firms apart from banks and are the most common noncash method of payment.
  • Debit cards have languished, but brand-specific debit cards are creating expectations of new growth.
  • Japan’s many e-money schemes make the market unique. Many telecommunications firms and card companies are working to come up with mobile wallet solutions.
  • The advent of the Payment Services Act in 2010 expanded regulations on server-based prepaid services, opening the door to a new market for payment and money transfer services.
  • Japan’s electronic marketplace has been growing rapidly as business increasingly shifts to the mobile channel.
  • Omnichannel initiatives are gaining momentum. The lines between channels are beginning to blur as bank, mobile, ATM, and branch channels are transformed, fused, and run in two directions.
  • In the retail and the communications industries, there are many innovative initiatives afoot. For instance, the financial industry is implementing new approaches, including using a diverse variety of store formats in an organically coordinated way; observers expect to see the leveraging of online services to heighten value-added at brick-and-mortar stores, such as by unifying customer information and offering premium services.

Against the backdrop of the Japan Revitalization Strategy, a crucial component of recently reelected Prime Minister Shinzo Abe’s raft of economic policies called Abenomics, this report examines efforts in the financial services industry to spur innovation, with a focus on the retail payments market. The report is based on a 2014 survey tailored to accommodate the factors peculiar to the Japanese market.

“Innovative disruption is akin to the search for undiscovered continents: monumental discoveries that can provide new value to win over non-consuming consumers.” says Eiichiro Yanagawa, a senior analyst with Celent’s Asian Financial Services practice and author of the report. “Celent believes that technology, the market, regulations, and government are putting in place an environment to encourage innovation.”

The report contains 27 figures and 4 tables.

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

Table of Contents

Executive Summary



Key Research Questions


Abenomics and Innovation



Japan Back on the World’s Radar



Abenomics: Fourth Arrow of Innovation and Globalization


Retail Payments Market



The Spread of Online-to-Offline Commerce



Primary Payment Methods in Japan


Traditional Payment Methods



Cash Circulation and the Cash Payment Ratio



Major Japanese Credit Card Companies



J-Mups: Multipayment Processing System



M-POS Initiatives


Second-Generation Payment Methods



Contactless Payments



Payment Services Act and Related Services



Leading E-Commerce Payment Methods


Digital Banking and Omnichannel Initiatives



The Backdrop of Digital Banking



Digital Banking Trends at Banks and Financial Institutions



Leading Omnichannel Initiatives at Major Retailers



Omnichannel Initiatives Involving Interindustry Partnerships


Final Thoughts



Key Market Trends



The Future of Innovation


Appendix: Celent’s Forum on Innovation and Digital Strategies in Tokyo


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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