Is Mobile Payments Market in Japan Growing Or Not?
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15 February 2013KyongSun Kong
People think that Japan is one of the countries that is an early adopter of contactless mobile payments. We can certainly agree this is true. However, whether contactless mobile payments are common in Japan is another question. The answer is in fact “No”. In other words, mobile payment-enabled phones are widespread because many mobile phones are preloaded with the mobile payment function, but the active users are far less than the penetration of mobile payment enabled phones. As of August 2012, there are approximately 126 million mobile phone contracts in Japan. Among those, 58% or roughly 73 million mobile phones are embedded with a mobile payment chip. This is equivalent to 20% of all e-money cards / devices, which total about 180 million cards. How is the transaction volume? Monthly transaction volume of e-money, including not only mobile payments but plastic e-money, recorded 260 million in July 2012. That is, monthly transaction volume per card is only 1.5 transactions. Recently, smartphone subscriptions have been rapidly increasing and mobile payment embedded smartphones have also gradually penetrated. Approximately 34% or 10 million of smartphones have mobile payment chips, and of these 3 million subscribers use the mobile payment function. Does this seem like a high number? Smartphone users usually tend to prefer new things compared to feature phones users but merely 30% of mobile payment embedded mobile phone subscribers use mobile payments. Given the low transaction volume of all e-money cards, mobile payment registered users don’t seem to use mobile payment actively at this moment. It could be because of the lack of recognition of mobile payment or simply the lack of allure and advantage of mobile payment. That is why Celent estimates that the active users of mobile payment are 10% or less of mobile payments holders. A number of overseas media believe that mobile payments are very popular in Japan. However, it is not true. Yes, the infrastructure of mobile payments has been established well but the active users are not so many yet. To increase the number of active users, mobile payments players in Japan should not only preload mobile payment functions in mobile phones but also develop a strategy for promoting mobile payment effectively.