Survey on E-Money Reveals Rapid Expansion of Retail E-Money Cards, Showing Signs of Growing Competition for Becoming the Primary E-Money Card

Nomura Research Institute, Ltd. (NRI: Tokyo, Japan; Akihisa Fujinuma, Chairman and President, CEO & COO) conducted a “Survey on Electronic Money” in June of this year targeting 2,000 people living in the metropolitan area, Tokai, Kinki and Fukuoka. The survey was the second one following one conducted in May 2007, and revealed the latest trends and changes from last year concerning the share and use of e-money cards, and the respondents’ intentions on using e-money cards in the future. (E-money cards here refer to Edy, Suica, PASMO, ICOCA, PiTaPa, TOICA, nimoca, nanaco, WAON, iD/DCMX, QUICPay, Smartplus/Visa Touch, PayPass, JAL IC Coupon and taspo/Pidel. For some questions, SUGOCA and Kitaca, which are now being prepared for introduction, were also included.)

Rapid growth of retail e-money cards and a two-digit increase in the amount spent

The survey revealed that 56.2 percent of respondents have Suica and 31.7 percent have PASMO in the metropolitan area, indicating that an overwhelming number of respondents have e-money cards issued by railway companies as compared to those ranked third and below. At the same time, the survey also found rapid expansion of e-money cards issued by retailers. For example, nanaco (held by 11.3 % of respondents in Fukuoka) and WAON (held by 9.2% of respondents in Tokai) ranked second next to Edy in their respective areas (Figure 1).

The sites where people often use e-money cards for shopping differ depending on the type of their “primary e-money card” (the one that is most frequently used for everyday shopping). Among people who use Suica as their primary e-money card, “retail stores within the premises of a train station and/or in a station building” ranked first (selected by 78.1% of respondents). However, these sites were selected by only 16.7 percent among people who use Edy as their primary e-money card. While 16.7 percent of Edy users use their cards in supermarkets and 15.8 percent in pharmacies and drugstores, the percentage of Suica users who use their cards in these sites is only less than one-third that of Edy users. Because the percentage of respondents who frequently use their cards in convenience stores is high for both Edy users (72.9%) and Suica users (41.0%), these findings suggest that convenience stores have become the main arena for these two e-money cards.

The question of how much users spent by using their primary e-money card revealed that the average monthly amount spent increased from \4,340 in 2007 to about \5,565 in 2008, up 28 percent. The survey also revealed an increase in the average monthly frequency of use from about 5 times to about 7 times, and an increase in the average amount spent per purchase from about \690 to about \750. As such, the increase in the frequency of use has been considered to contribute to the increase in the amount spent (Figure 3).

Signs of competition for the position of primary e-money card

The average number of e-money cards held per person has already exceeded 2 cards and is currently 2.1 cards. In this survey, the e-money card that is most frequently used for daily shopping was defined as the primary e-money card. About 10 percent of respondents in all survey areas – from the largest percentage of respondents (14.7%) in Kinki to the smallest percentage of respondents (8.0%) in Fukuoka – have changed their primary e-money card within the past year. Among them, nearly half of the respondents who changed their primary e-money card (6.2% in Kinki and 6.7% in Fukuoka) have not used their former primary card at all (Figure 4). These results suggest that competition for the position of primary e-money card has already begun.

Railway companies in the metropolitan area and Kinki have started “IC card compatibility services” services. To the question of which e-money card do you want to use if a single e-money card could be used not only for train and bus tickets but also for daily shopping, almost no respondents in any of the survey areas prefer to use several different cards. These results suggest that consumers desire a situation where a single e-money card can be used anywhere in a manner similar to credit cards that have many member stores and use common payment terminals (Figure 5).

In contrast with Edy, which is used by a large number of male respondents (62.7%) as their primary e-money card, WAON is used by a large number of female respondents (79.9%) as their primary card, indicating a clear distinction between the two cards.

With the spread of railway e-money cards for which new services are to be offered, competition for wining the position of primary e-money card is likely to intensify. Nevertheless, 46.7 percent of respondents in Fukuoka and 23.5 percent of those in the metropolitan area started using an e-money card for the first time within the past year. As to which e-money card can attain the position of the “single card selected by consumers,” we need to see future developments, such as service specifications, the number of member stores, availability of mutual use, etc.

Consumers take a prudent attitude towards the regulation of e-money cards

Less than half (43.0%) of the respondents consider that regulations on e-money should quickly be strengthened, while 21.6 percent consider that only moderate regulations are needed (Figure 7).

While studies have begun on the laws and regulations to be applied to e-money at related ministries and agencies, careful and thorough discussions are necessary by fully considering the opinions of consumers who actually use such cards.

In the future, NRI will continue our research on the trends in the use of e-money cards, and looks forward to making effective suggestions to card users and issuing companies.