- Briefing Room
- Consumer Engagement
- Commerce 3.0
Welcome back! Day 2 of The [Payments] Innovation Institute opened with a panel on three hot button issues for the payments sector: mobile, POS, and social networking.
Andrei Hagiu (Senior Expert, Market Platform Dynamics) took Institute Fellows around the world to explore Japan’s complex eMoney ecosystem.
“Like Ignacio said yesterday, if he’s the feel good story, I’m the sci-fi story,” Hagiu joked.
Hagiu explained that there are eight major eMoney systems, plus many smaller ones, which all operate on a single contactless technology platform, FeliCa, which was developed by Sony.
The eMoney systems range from prepaid (Suica, Edy, PASMO) to credit/post-paid (QUICPay). All offer mobile as well as electronic, plastic card payments. In Japan, the major eMoney players are mobile operators, retailers, railway companies, etc., as opposed to financial service companies, credit card networks, or startups.
“You have these eMoney systems… it’s a bunch of chicken-and-egg problems happening on top of this one platform,” said Hagiu.
So why is Japan so far ahead of the United States with regards to mobile payments? Hagiu explained that when mobile payments arrived in Japan, the only other predominant payment method in the country was cash. Only 7% used credit cards compared to 20% in the United States. Not to mention a FeliCa reader apparently costs $2,000…
Hagiu also noted that there are only three mobile operators in Japan, and Docomo has at least 50% of the market share. Also, mobile operators dictate the terms for handset production.
Many solved the mobile chicken-and-egg problem by creating mobile membership networks for merchants. Edy partnered with coffee shops and pre-installed on i-mode phones.
How easy is it to replicate Japan's model, particularly in the U.S.? It appears AT&T and Verizon, partnering with Discover and Barclay’s, may try. Here's how...
PYMNTS.com Blog Entries from the Innovation Institute
Wednesday, December 11, 2013
Today's Top Stories