Japan Lagging Behind in the Adoption of Mobile Payments Technology

December 8, 2014         By: Michael Cheng

Despite being one of the most technologically advanced countries in the world, Japan has a lot of catching up to do when it comes to digital payments and services.

At the moment, the populous Asian hub is in the process of transitioning from the use of smart cards to mobile smartphones.

David Gibson, Macquarie Tokyo analyst, pointed out that one of the main reasons Japan is slow to adopt mobile payments technology is due to fierce competition among providers and telecommunication companies.

Because of this, the majority of Japanese consumers still pay their monthly bills using cash. Top-performing service industries are also directly affected by the lack of digital payment options, forcing some businesses to only accept hard currency.

So far, the only payments service provider that has managed to tap into the Japanese market is FeliCa Networks, a joint venture started nearly a decade ago by NTT DoCoMo and FeliCa (Sony). According to Sony, FeliCa offers over 100 mobile-related services, including payments, to roughly 60 million users.

Due to the network’s dominating presence, analysts are wondering how users will respond to Apple Pay. With over 8.1 percent of Apple users based in Japan- coming in third next to U.S. and China, the offering of the tech giant’s payments services is highly anticipated and noteworthy.

Apple faces several underlying obstacles in the rollout of its new services, because of the well-established reputation of current mobile service providers in Japan.

Gibson mentioned during an interview, “If you’re going through Shinjuku, one of the busiest train stations in the world and you have to wait for a second, it’s not going to work at all.”

This means that in order for Apple Pay to successfully rival FeliCa, it has to match its speed, convenience, and reliability.