JCB Has Global Hopes for Growth

  Anyone curious about Japanese travel habits should track where JCB International targets its merchant-acceptance efforts. Outside its home turf of Japan, the issuer has expanded acceptance to 190 countries throughout the Asia Pacific and in parts of the United States, Europe and the Middle East-destinations long popular or becoming popular with Japanese travelers.
  JCB also hopes to expand issuance of its cards to consumers from countries throughout the world, even those who have no ties to Asia. It is attempting to do so both with acceptance deals and through negotiations with U.S. issuers.
  JCB increased worldwide merchant locations that accept its cards to 14.1 million in 2006, up 14% from 12.4 million locations in 2005. It increased cardholders to 59.1 million in 2006, up 7% from 55.1 million in 2005.
  Hawaii, the West Coast, New York City and Florida are the top U.S. destinations for Japanese travelers, according to JCB. So it is in those areas that JCB is focusing the most attention by its own agents and those of independent sales organizations, according to Tom Wright, JCB USA general manager and executive vice president.
  Wright says Japanese travelers in California are venturing farther from large cities. "If you look at the San Francisco Bay area, previously they would stay in San Francisco," Wright says. "Now they're venturing to Napa Valley, Yosemite and Monterrey, and not necessarily [just] on package tours."
  In March 2006, JCB launched its Discover Aloha Hawaii campaign to boost Japanese tourism to Hawaii in partnership with Hawaii's Tourism Japan bureau and Hawaiian businesses and organizations.
  The campaign's chance to win such prizes as Kona coffee and return trips to the islands, however, did not lure more Japanese tourists. Their numbers declined 10% from the beginning of the promotion through January, Wright says.
  But JCB reports a 6% increase in sales charged in Hawaii between April and January on its cards held by Japanese travelers and a 13% increase in transaction volume, Wright says.
  He declined to disclose actual sales charges and transaction volumes related to a specific region, but JCB reported worldwide charge volume of $62.7 billion in 2006, up 11% from $56.6 in 2005.
  JCB announced in August a reciprocal acceptance agreement with Discover Financial Services that will allow each issuer's cardholders to use their cards at merchants affiliated with the other's networks. Besides training cashiers to accept JCB cards wherever Discover is accepted, and vice versa, the integration presents technical challenges and will take a couple of years to implement, Wright says.
  "We're hoping to complete connectivity by June then begin a phased approach to merchants and processors adding the JCB [bank identification number] ranges," he says. "The benefit for JCB is moving from approximately 800,000 [U.S.] merchants today to the 4.5 million that are on the Discover Network."
  JCB also began negotiations in 2006 with some unnamed U.S. issuers that contacted JCB about issuing the brand here, Wright says. JCB currently issues in the U.S. some 25,000 consumer cards cobranded with Japanese specialty supermarkets in California and Hawaii, about the same number issued as last year.
  JCB 2006 2005
  Charge Volume $62.7 $56.6
  Merchant Locations 14.1 12.4
  Cardholders 59.1 55.1
  Source: JCB International Card Co. Worldwide data.
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