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JCB Co., facing growing competition for its credit card business at home, is continuing its push into overseas markets, hoping for major expansion in Asia and the United States.
JCB's president and CEO, Tamio Takakura, who took over Japan's top credit card brand last June, has brashly predicted the JCB logo would be as a ubiquitous as those from Visa Inc. and MasterCard Worldwide at the point of sale throughout the U.S. within four years.
Takakura is seeking to use JCB's reciprocal agreements and partnerships in the U.S. with such major card companies as Discover Financial Services to put JCB's acceptance on par with Visa and MasterCard. It also is trying to open up China, among other prime targets in the Persian Gulf and Southeast Asia, to JCB cards.
JCB is counting on spreading its brand throughout the United States on the back of the roughly 4 million merchant locations Discover has stateside, Kunimasa Kawase, JCB executive vice president of international strategy planning, tells Cards&Payments. In return, Discover gets access to JCB's large merchant network in Japan. He declined to say how much JCB might benefit from Discover's acquisition of Diners Club International.
JCB has billed itself as the only international payment card brand hailing from Asia. It made the decision to go global in the early 1980s, while other Japanese credit card issuers were aligning with U.S.-based Visa or MasterCard.
And JCB has made progress in building its acceptance network outside of Japan, with a little more than 8.5 million merchant locations as of September 2007, according to the latest figures it has released. That is up by nearly 3 million outlets in five years. It has Japan well-covered, with 5 million locations.
But JCB and its licensees have managed to recruit only 4 million cardholders, and that is down from a high point of 4.6 million at the end of March 2005. The figure fluctuates, say JCB officials, who add JCB has changed the way it calculates cardholder numbers. But by contrast, JCB had 54 million cardholders in Japan as of last September. Kawase says JCB will look to partnerships with banks to increase international card numbers.
In Japan, JCB is facing an increasingly competitive market. It dropped to No. 2 in credit card sales volume for the first time in the fiscal year ended in March 2007, edged out by Sumitomo Mitsui Card Co., according to the Nikkei Inc. news service. Both had an 11.7% share of the 38.8 trillion yen (US$374.7 billion) Japanese consumers spent with credit cards that year, though Sumitomo's share was slightly larger. JCB remains the largest acquirer in Japan.
Nikkei suggested spending by Sumitomo customers with contactless mobile-wallet phones helped push the issuer past JCB in sales volume. Sumitomo joined Japan's largest mobile operator, NTT DoCoMo, in launching the contactless "iD" credit brand in late 2005.
JCB responded by pushing its QUICPay contactless credit application more aggressively, but it trails DoCoMo in merchant acceptance for the new form of payment.
Motoharu Hirowatari, a senior vice president in JCB's planning department, agrees Sumitomo poses perhaps the most potent threat to JCB in Japan, but rejected the idea iD had anything to do with Sumitomo's surge.
JCB and other major card issuers in Japan face other threats, including from the recently privatized Japan Post Bank, which plans to issue its own credit cards. Regulators in late 2006 also slapped restrictions on the top interest rates consumer-finance lenders could charge.
Nonetheless, JCB sees the promise of more growth domestically: Japanese shoppers still use cash to conduct 90% of transactions. Perhaps its best prospects for growth are overseas. Yet until it further bulks up card membership and acceptance outside of Japan, it will not play in the same league as its larger American rivals. CP
