The use of contactless payment cards is growing in Japan, driven in part by transit systems, according to a report issued Wednesday by the Boston market research firm Celent LLC.
In Japan, "the contactless payment market is a chaotic one, where a number of players compete in a small space," wrote Celent analyst Yumiko Manchu.
Using contactless payment cards is rising alongside the use of standard credit cards, she wrote, and she expects the number of contactless cards in Japan to grow about 80%, to 180 million by 2010. However, it remains unclear whether consumers there will prefer contactless cards to cash for small purchases.
Most contactless payments in Japan today are made by commuters, she wrote. Transportation has been a catalyst, in part because many commuters were not given another choice. Japan Railway, the first to offer contactless cards as train passes, stopped accepting and issuing its older passes when it did so.
Another fact affecting the rate of adoption is that, though consumers would like to have multiple payment accounts on a shared device, such as a card or a mobile phone, issuers did not. Thus, any new contactless payment provider must also build a payment network to support it.
Though Ms. Manchu wrote that "critical mass is expected to be achieved," she also noted that acceptance has moved slowly even in large cities. Contactless payment methods were introduced in Japan 10 years ago, she wrote.
