Kyodo News : Using cell phones with credit card functions to make purchases is expected to be a big thing this year as major credit card firms scramble to get shops and stores to accept such payments. The reward could be lucrative -- the new market is estimated to be worth 60 trillion yen. NTT DoCoMo Inc. executive Takeshi Natsuno said a service allowing consumers to hold mobile phones over contactless credit card readers to pay for goods is likely to become more commonplace this year.
"(2006) will be the year when cell phones and credit cards will join together," Matsuno predicted. Credit card companies started entering this emerging market last year.
JCB Co. began issuing Quickpay cards in April, followed by UFJ Nicos Co. with Smartplus in August and Sumitomo Mitsui Card Co.'s iD in December.
Meanwhile, NTT DoCoMo and other cell phone carriers are upgrading their "osaifu keitai" mobile phones, which are equipped with contactless IC cards that can be used to purchase items at convenience stores, buy tickets and for other purposes.
Out of 300 trillion yen per year in domestic consumption by individuals, 60 trillion yen is generated by purchases of less than 3,000 yen.
Thus, people in the credit card industry say the service is especially aimed at consumers who want to charge goods worth less than 3,000 yen, including many daily necessities. Japanese tend to use credit cards for expensive purchases and must sign the sales slip.
Because transactions using a cell phone equipped with credit card functions do not require this process and can be completed in seconds, credit card firms see them as a great advantage to expand their market.
However, there are drawbacks. Only big electronics retailers and restaurants are currently equipped with contactless readers. Convenience stores and supermarkets do not have them yet. In addition, businesses need different readers for each credit card company.
In those areas, efforts are also being made. Currently, talks are under way between JCB, UFJ Nicos, KDDI and others to create a standardized system, though Sumitomo Mitsui Card declined to take part in the talks, according to industry officials.
UFJ Nicos President Kazuhiro Omori said the key to success is to gain as many member shops and stores as possible to adopt the new system.
"The credit card company that succeeds in gaining the most member shops will be able to become the standard of the industry," Omori said.
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"(2006) will be the year when cell phones and credit cards will join together," Matsuno predicted. Credit card companies started entering this emerging market last year.
JCB Co. began issuing Quickpay cards in April, followed by UFJ Nicos Co. with Smartplus in August and Sumitomo Mitsui Card Co.'s iD in December.
Meanwhile, NTT DoCoMo and other cell phone carriers are upgrading their "osaifu keitai" mobile phones, which are equipped with contactless IC cards that can be used to purchase items at convenience stores, buy tickets and for other purposes.
Out of 300 trillion yen per year in domestic consumption by individuals, 60 trillion yen is generated by purchases of less than 3,000 yen.
Thus, people in the credit card industry say the service is especially aimed at consumers who want to charge goods worth less than 3,000 yen, including many daily necessities. Japanese tend to use credit cards for expensive purchases and must sign the sales slip.
Because transactions using a cell phone equipped with credit card functions do not require this process and can be completed in seconds, credit card firms see them as a great advantage to expand their market.
However, there are drawbacks. Only big electronics retailers and restaurants are currently equipped with contactless readers. Convenience stores and supermarkets do not have them yet. In addition, businesses need different readers for each credit card company.
In those areas, efforts are also being made. Currently, talks are under way between JCB, UFJ Nicos, KDDI and others to create a standardized system, though Sumitomo Mitsui Card declined to take part in the talks, according to industry officials.
UFJ Nicos President Kazuhiro Omori said the key to success is to gain as many member shops and stores as possible to adopt the new system.
"The credit card company that succeeds in gaining the most member shops will be able to become the standard of the industry," Omori said.
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