In my last column (the third installment), I discussed whether the move toward the consumption tax hike and the Tokyo Olympics would trigger an increase in the cashless ratio. With less than 100 days to go until the consumption tax hike and the implementation of the tax hike is imminent*, this time I would like to focus on recent developments other than the consumption tax hike that will affect the future of payments.
One of the topics that have been attracting a lot of attention recently is a campaign titled “30 billion yen festival to give to everyone Reiwa celebration” in the form of sending 1,000 yen bonuses between LINE users via LINE Pay in May. It was announced that it was implemented from the 20th and ended on June 10 without waiting for the passage of one month, reaching the planned 30 billion yen. Since then, LINE Pay has continued to provide coupons and other items at the time of use, acquiring a large number of users through campaigns, and immediately after that, LINE Pay has invested not a small amount of funds in directing people to actually use LINE Pay.
First of all, PayPay implemented a campaign claiming “total 10 billion yen return” at the end of last year and this spring, and LINE took action to counter it, but besides that, Rakuten Pay 300 points at the first use, Since then, we have been running campaigns such as 5% point rewards until July 1, and competition to acquire users is heating up. In the second column, I wrote, “SoftBank, Yahoo Japan (the two companies on the left are shareholders of PayPay), LINE, Rakuten and other IT companies Players who have already achieved success in their fields, who are well-funded and distancing themselves from the existing industry order, have the potential to make a big difference,” he wrote, adding that the four companies + Mercari (Merpay) are really trying to lead the competition with a large amount of cash on hand.
Competition for franchisees is also intensifying, and each company is simultaneously developing campaigns for franchisees. It is clear that each company is taking the offense at this time with the aim of attracting as many users and merchants as possible by the implementation of the government’s cashless consumer return business (October 1), which I mentioned earlier.
On the other hand, major distribution companies have also made moves to acquire users, and for example, Yodobashi Camera held a cashless payment campaign titled “20% Point Redemption Festival” in which 20% points were rewarded for a limited time. JR companies, which are leading the way in cashless payment using transportation cards, have been trying to acquire users through measures to grant points and improve convenience (mobile Suica, etc.), but as a collaboration to promote cashlessness, in the spring of 2020, “Rakuten Pay”. It was announced on June 5 that it will be possible to issue and charge “Suica” within the app. In August last year, we collaborated with Mizuho Bank to create “Mizuho Wallet. It is a movement following the start of providing “Mizuho Suica” that can issue Suica cards from the app.
Witnessing this situation, various competitors and collaborations among major companies in the payment field, such as new entrants and existing businesses and distributors, have become active, and it seems that a major trend is about to be born with the support of the government.
On the other hand, there is also a view that preparations for the government’s above-mentioned return program have not progressed sufficiently on the part of franchisees. According to a survey conducted by the Chamber of Commerce and Industry in April on small and medium-sized enterprises (SMEs) that are the core targets of the system for the return business, only 34% of companies plan to apply for the system, and 31% of companies do not know whether their company is eligible. There seem to be voices that the contents of the system and the merits of introducing terminals are not understood, and it has been pointed out that it is necessary for the government to thoroughly disseminate information.
In addition, this is just the impression that we members of the Payment Study Group have, but for Japanese people who are accustomed to credit card payment and transportation card payment, the hurdle of barcode payment provided by new entrants seems to be unexpectedly high. Even if we enliven it with campaigns, it seems that it is difficult to encourage consumers to actually use it, and even among people who have a certain understanding of information technology and payment trends around us and are not relatively conservative in their consumption behavior, I have the impression that there are surprisingly few people who have actually used barcode payment. A similar situation can be seen in Hong Kong, where the use of credit cards and transportation IC cards (Octopus) is progressing and cash payments are common, QR such as Alipay and WeChat Pay. The current situation is that the spread of code payment has not progressed much.
External pressure (visitors to Japan) is considered to be a factor that could be a breakthrough in the above. According to this year’s White Paper on Tourism, the amount of consumption by foreign tourists in Japan is 4.5189 trillion yen, which exceeds the export value of electronic components such as semiconductors and contributes considerably to consumption in Japan as a whole. The government aims to increase the consumption amount to 8 trillion yen next year, and the white paper says that it is necessary to increase the number of places where cashless payments can be made to that end. 8.38 million, or 27% of the 31.19 million visitors to Japan, are from China and are familiar with QR code payments. PayPay is appealing to merchants that they can also handle Alipay. In addition, support for QR/barcode payment at convenience stores is also becoming more serious. If such a movement progresses along with the increase in the number of visitors to Japan, QR/barcode payment is expected to spread.
While various trends have been observed this time, as a result of our attempt to think about their impact while taking them up one by one, it may have become a somewhat rambling story, but it seems that we can expect more and more interesting developments in the future.
