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A comprehensive overview of the cards, payments and consumer banking market in Japan, with clearsighted commentary backed by detailed market data.
The pandemic is expected to cause a sharp recession, wiping out recent economic progress but also presenting an opportunity to accelerate the uptake of cashless methods.
In addition, MSC caps and cashback schemes may incentivise merchants and consumers to make the switch. QR codes, once a footnote in Japanese tech history, are coming to the fore in payments having revolutionised payments in China.
New regulations require non-card issuing acquirers to apply for a licence to operate. Network-branded debit cards are slowly gaining ground.
How the government has been improving payments infrastructure.
Which online bank has proved the most attractive and why.
What the implications are of homegrown standard FeliCa.
Why QR codes' appeal has seen a resurgence for providers.
How long-cherished payments rituals reassure consumers.
TABLE OF CONTENTS
Demographics and the economy
Japanese cards market
Key retail banks and issuers
Acquiring and processing
Regulatory and other cards market information
Appendices: Card Payments Data
Appendix I: Demographics and the economy
Appendix II: Payments environment
Appendix III: Cards market data
Appendix IV: Mobile payments data
Appendix V: Profit pool
Appendix VI: Card networks
Appendix VII: Key retail banks and issuers
Appendix VIII: Acquirers and processing
Appendix IX: Online acquiring data
Demographics and Economy
The total labour force of Japan came to an estimated 62% of the total population at the end of 2019, with a median income of $35,500 and an unemployment rate of just 2.4%.
Consumers have been slow to adopt card usage due to a hard-to-break preference for cash. However, debit cards are now held by approximately 88% of adults, while 70% of adults hold a credit card.
Cash continues to be a preferred payment mode in Japan, in particular for lower-value purchases. The low crime rate also impacts the preference for cash over cards as consumers feel safe carrying cash, whereas they remain fearful of the counterfeiting of cards and potential data breaches.
Japan has been at the forefront of payment technologies, inventing QR codes in 1994 and also pioneering mobile wallets technology and integrated circuit (ie, chip) cards. That may come as a surprise as, when it comes to payments, Japan is now notable as a cash-heavy country despite its digital prowess.
The Japanese payment cards market is mature. Around 284 million credit cards are in circulation as of the end of 2019, producing a credit card penetration rate of 258 credit cards per 100 adults.
The market for credit cards remains primarily split between Visa, Mastercard and JCB, which together had a combined market share of 98% in terms of card numbers in 2019. The development of debit cards in Japan lags behind that of credit cards.
Key Retail Banks and Issuers
Despite the weak yen, operating costs in Japan are among the highest in the world and it is difficult to compete against the country's traditional domestic banks, which have deeper roots and higher capital bases.
Acquiring and Processing
The merchant-acquiring market in Japan is highly competitive, with all the major issuers involved. With retailers operating multiple terminals to facilitate on-us transactions, the majority of domestic transactions are on-us: hence interchange rarely applies.
The size of the B2C e-commerce market has been expanding steadily, growing from $102 billion in 2013 to $178 billion in 2019, the majority of which is retail-based, followed by services and lastly digital content.
Regulatory and Markets Information
Local and foreign firms carrying out banking business are required to obtain a banking licence. In addition, banks are required to obtain a separate licence from the FSA for providing securities-related services in Japan.
All Nippon Airways
Bank of America
Bank of China
Bank of Nova Scotia
Bank of Tokyo-Mitsubishi UFJ
Cedyna Financial Corporation
Central Finance Company
Citi Cards Japan
Dai Nippon Printing
Daiwa Securities Group
East Japan Railway Company
Credit and Finance Information System
Financial Services Agency
Fukuoka SoftBank Hawks
General Electric Group
GMO Payment Gateway
Japan Card Network
Japan Credit Bureau
Japan Debit Card Promotion Association
Japan Electronic Payment Promotion Organisation
Japan Net Bank
Japan Post Bank
Japanese Credit Bureau
Life Card Co.
Mitsubishi UFJ Financial Group
Mitsubishi UFJ NICOS
NTT Data Corporation
Osaka Credit Bureau
PGA Tour Champions
Rugby World Cup
Sakura Card Company
Seven & I Holdings
SMBC Trust Bank
Sony Payment Services
Starwood Preferred Guest
Sumishin SBI Net Ban
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Card Company
Sumitomo Mitsui Finance & Leasing
Sumitomo Mitsui Financial Group
Sumitomo Mitsui Trust Bank
Tap on Mobile
Tohoku Rakuten Golden Eagles
Tokyo Star Bank
Universal Studios Japan
Wako Tea Salon
Yosakoi Soran Festival
Reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in the Asia Pacific region. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and finance experts.
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