Consumers Consumers Consumers
There is an interesting article over at businessweek.com talking about NTT Docomos plans to include credit card capability in a new line of mobile phones.
This will be possible following NTT Docomo taking a a 34% stake in Sumitomo Mitsui Financial Group Inc.’s credit-card business. In Japan one can already purchase things like movie tickets or pay for groceries in some convenience stores with cell phones, but this move to enable consumers to more conveniently pay for things without needing to use cash or to fumble through their wallets is certainly going to change how business is done here.
Japan is still very much a cash based society. Cheques were never very common here - outside of business to business transactions, and debit card services like the endemic EFTPOS we have in New Zealand, while available in a few stores, are rarely used. Credit cards too are not commonly used - for two main reasons. Firstly, Japanese people traditionally have avoided using credit like a good kiwi farmer avoids wine cooler; as to use credit was seen as signifying a lack of social worth or ability and thus a loss of face. Secondly, on the merchant side, fees for credit card transactions are twice what they are in the west meaning that few business offer such facilities.
As well as mobile phones, there are a couple of other ‘electronic purse’ options. East Japan Railway Company (JR East) offer the ‘Suica Card’ which passed the 10 million cards issued mark in October of 2004.
Primarily used to ride the railway system (not the subway system - it is quite separate from the railway system here) your suica card can also be used to make small purchases from stores in the railway stations. Purchases are made merely by waving your card over a sensor, and if you have your suica card in your rear pocket you can go through the turnstiles just by sliding your arse over the sensor!
There is also the Edy card (pronounced e-d- ka-do) which can be used to make small purchases at AM/PM convenience stores. I haven’t tried one so I don’t know much about it, but from what I know it is similar to the suica card.
The suica card has a maximum charge limit of 20,000 yen (about $200US) and I imagine that the Edy card is similar. These cards are good for the environment as they are reusable (with over 2 million people going through just Shinjuku station everyday imagine how much garbage 2 million tickets would make!). But its not just for environmental reasons that these cards are popular. The main reason would have to be convenience, with security a close second.
With a low maximum charge limit most people don’t worry too much about their cards, its a pain if you lose one, but hey it ain’t that much cash. Most people equate these cards with their change purses, but something like a credit card is seen as being much more of important thing. Losing a phone with swipe and pay credit card facilities would be a much higher risk.
It remains to be seen if NTT Docomo can overcome this hurdle.
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