Statistics from Nomura Research Institute show that the amount of electronic money transactions in fiscal 2007 reached 844.4 billion yen, about five times the previous year’s figure. In fiscal 2012, that amount is expected to balloon to 3.3 trillion yen. Most of the transactions are handled by railways, supermarkets and convenience stores, but e-money functionality is also starting to be added to student and company ID cards. As a result, the number of users looks likely to increase.
But in spite of the major growth of electronic money, the service is predominantly used for small transactions, with the total transaction amount reaching only about 2 percent of the figure for credit-card transactions.[From E-money use growing rapidly in Japan – Mainichi Daily News]
Small, but growing. And not driven by, or under the control of, retail banks.
The Japanese market has many special characteristics that mean that it simply cannot be seen as a template for Western e-payment marketplaces, but nevertheless I think this presents clear evidence that there is something about the combination of contactless interfaces (for speed and convenience) and mobile phones (for functionality) that provides energy for a number of dynamic changes at the retail POS. One dynamic is the steady move toward interoperability and acceptance. A significant issue in the early days of Japanese e-money was consumer confusion in the face of proliferating schemes, brands and terminals. Over time, this problem has been addressed and retailers have begun to accept each other’s e-money.
Aeon and FamilyMart, Japan’s third-biggest convenience store chain, said on Wednesday that shoppers would be able to use Aeon’s smart money cards at FamilyMart stores in Japan from autumn of this year… Still a fraction of overall transactions, Japan’s smart money market has been expanding rapidly, as a growing number of stores and restaurants have been accepting cards of issuers such as East Japan Railway… [Nomura Research] said the market is likely to triple over the next five years.[From Japan’s Aeon teams with FamilyMart in smart money | Industries | Consumer Goods & Retail | Reuters]
While this kind of deal may seem slightly odd in the UK, is it really so far fetched that retailers may begin to issue their own e-money and then begin to strike deals to cross-accept? I happened to be in a meeting recently discussing the decision by a retail group (not in Europe) to begin issuing their own contactless cards (combining prepaid and loyalty) because they didn’t want to use bank products — which, I am sorry to report, they considered expensive and inflexible for their purposes — and I did begin to think again about the potential for major chains to not only issue their own payments card or device, but their own currency.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]