Increased adoption of contactless payments in Japan, South Korea

According to online media outlet letstalkpayments.com, Japan has the largest number of NFC enabled POS (>1 Million) in the world. There are more than 70 million NFC-enabled devices in Japan, according to Wireless Watch, compared with around 3 million in the US. In Japan, FeliCa (developed by Sony) is the most popular contactless payment system in Japan. FeliCa based terminals have been placed at over 1 million while MasterCard has announced deployment of 400,000 PayPass based terminals over the years.

ComScore research indicates that in December 2010 alone, 9.8 million Japanese consumers used their mobile wallet to make a purchase; 7.6 million made a purchase in a retail/convenience store; 3.2 million purchased from a vending machine; 2.7 million paid for public transport; 2.6 million purchased in a grocery stores; and 1.5 million paid a restaurant bill all using their mobile phone. 47 million Japanese have adopted tap-and-go phones in three years. In Japan, mobile Web shopping exceeded USD 10 billion in 2009 as per ABI Research. In March 2010, the m-coupon service of McDonald’s Japan reached 4.5 million users, according to Infinita.

Suica is a popular electronic and mobile ticketing and e-cash system in Japan. As per estimates in a report by Eurotechnology Japan, over 30 million suica cards have been issued used for around USD 10 billion worth of annual transactions. Suica cards are used for transportation fare as well as for general purchases. These cards are supported across vending machines, kiosks and retail chain stores.

In January 2011, research company Celent had deduced that South Korea’s mobile contactless payments market will grow at CAGR of around 50%. Growth of the mobile contactless market in South Korea can be attributed to the spread of mobile contactless payment processing terminals and through interoperability initiatives. In May 2012, there were as many as 200,000 terminals in the country capable of accepting MasterCard PayPass and Visa payWave. In June 2013, Korea Times reported that SK Telekom’s Smart Wallet reached 10 million users.

In a quarter of 2011, the three main MNOs took delivery of 5 million NFC-enabled SIMs. The Grand Korea Alliance runs an NFC shopping mall in one of the commercial districts of Seoul. It enables shoppers to make NFC-based payments at 200 merchants, order drinks, and download coupons and transit information from smart posters.

South Korea’s contactless payment market has at its centre the T-money services. It was first implemented back in 2004 as a card to ease traffic flow at ticketing gates. It later transformed into a rechargeable smart card used in all public transit fares in major cities of the nation. The prepaid RF smartcard embedded with a CPU can also be used to make purchases.

T-Money ‘cards’ come in different shapes and sizes as well which has also been a key aspect behind its wide adoption by the public. It comes in forms like standard credit card, key chains, cell phone charms, watches, rings, stuffed animals, and embedded into cell phones as well.