Aug-05
Payment cards slow to
catch on in Japan
Japanese consumers are the most sophisticated in Asia-Pacific, demanding
high-quality products and good after-sales service regardless of price.
However, this advanced behaviour is not reflected in the use of credit
and charge cards, especially when compared with Australia, the next
most developed economy in the region.
With a population six times larger than Australia's, Japan saw only
twice as many card transactions in 2004, 208 million transactions
vs. 105 million in Australia. And billings per card are five times
lower. This disparity is not expected to differ much in the short-
to medium-term future.
Some of the key barriers to payment card adoption in Japan:
| • |
Lack of credit card culture: It was not until 1992
that bank-affiliated issuers were permitted to issue cards that
allowed revolving credit. Most of today's consumers therefore
did not grow up with the notion of using credit cards. |
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| • |
Fragmented merchant base: Japan lacks a substantial base of
relatively large retailers to make the network financially efficient.
The cost of recruiting the small 'mom and pop' shops that make
up their bulk of the merchant base is high. |
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| • |
Cost of fraud prevention: Credit card fraud came to more than
US$140 million in 2002, and high telecommunications costs hinder
the development of an effective anti-fraud system. |
Despite the anticipated growth in the next five years, Japan's payment
card market will take much longer than that to reach its full potential.
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About Fusion Consulting
Fusion Consulting is a business intelligence consultancy providing
strategic advice on Asia-Pacific markets. With offices in Shanghai,
Singapore and Hong Kong, and a network of 400 freelance industry consultants in 16 countries, the company conducts custom research and consulting
to help clients understand their markets, compete more effectively
and grow into new areas of opportunity. www.fusionc.com
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