Japan, the leader in m-payment system

Driven by the innovations on new mobile technologies and the rapid growth of the e-commerce, mobile payment is becoming more attracting throughout the world. According to Gartner , worldwide mobile payment transaction values will reach $235.4 billion in 2013, a 44 percent increase from 2012 values of $163.1 billion. The number of mobile payment users worldwide will reach 245.2 million in 2013, up from 200.8 million in 2012.

This rapid growth in mobile payment is attributed to the fact that it can bring added values to all its participants. For the mobile phone users, it improves the easiness and efficiency of traditional credit card payment process. The mobile phone, as an electronic wallet, can integrate multiple cards, tickets, certificates, and coupons all together, and reducing the trouble of carrying all of them. For the operators, mobile payment can bring new revenue sources by entering e-commerce and other financial services. And for merchants, mobile payment can digitalized customer’s behavior, and make it easier to keep records of customer’s information.   

Japan is definitely the country that has the largest mobile phones usage rate. Mobile phone is considered as a living necessity in Japan. Japanese network operators makes huge investments on new technologies and innovations every year, which leads Japan one of the world’s most lively and profitable mobile e-commerce market. Due to its pervasive mobile culture, the country has been the leader of mobile phone commerce for some years. Its first mobile network went live in 1979 and it was one of the first countries to launch 3G services. Mobile internet access is the norm, with the majority of Japanese citizens using phones and other portable devices to connect to the web. A study shows the mobile transactions amount is more than USD 42bn in Japan, and has a 71% increasing rate every year.

NTT DoCoMo, a mobile network operator in Japan, has a dominant position in Japanese mobile payment market. It launched the Osaifu Keitai (Wallet Mobile), which is  based on Sony’s FeliCa card,  in July 2004.  It supports 2 type of payments. One is WAP payment, which means paying online with the phone. The other is NFC payment, which means make a payment by waving the phone to a FeliCa chip reader.

The reason why NTT DoCoMo is so successful in mobile payment market is that it has support from the bank and merchants. The operator invest huge money into banks and merchants to enhance the control over the mobile payment value chain. In 2005, it invest 100 billion yen and required 34% stake in Sumitomo Mitsui Card Company, and 10 billion yen and required 18% stake in UC card company in 2006. And for the merchants, NTT DoCoMo gives them a quite fancy return if they implement its mobile payment receiver (NFC Times).