E-money in Japan and South Korea
1 May 2014
Japan and South Korea are among the leading countries which have tried to spread the use of e-money from an early stage. Due to the different backgrounds they have, they have been going the separate paths for e-money growth. In recent years, the Japanese e-money market has emerged as one of the important payment methods. Especially with the consumption tax rise from April 2014, the e-money market has received more attention because the usage of loose coins would increase due to the consumption tax rise from 5% to 8%. On the other hand, in South Korea, the e-money market growth has been sluggish because of the heavy usage of credit cards and check cards. Although there are two major e-money providers, T-money and Cashbee, South Korean credit cards and check cards are available for not only big purchases but also for small purchases so consumers do not recognize the need for e-money. In Japan, Suica, e-money from East Japan Railway Company and nanaco, e-money from Seven & I Holdings, exceeded 100 million transactions for a month in March 2014. It is the first time for nanaco to exceed 100 million transactions. All e-money providers have said that transaction volume has been growing. Celent believes that this trend will continue in the future by improving customer experience although one of the obstacles in the way of the e-money market growth has been considered the lack of the customer experience. In South Korea, Kakao Talk, one of the most popular social networking services in South Korea announced that they will launch a mobile wallet service called “Bank Wallet Kakao” in the first half of this year. At the very beginning, this will be used for customer to customer (C2C) payment and will expand to business to customer (B2C) payment. For both countries, the e-money market has entered a new phase although the reasons for growth are different. From the case studies of both countries, we can learn that e-money has diverse potential. I believe that e-money will create a new value and become a more accepted payment method.