Regarded as one of the most
technologically innovative card players in the world, Japanese
giant JCB has stepped outside its domestic market in order to
expand abroad, but it faces renewed competition at home.
Titien Ahmad reports.

JCB, Japan’s home-grown international credit card brand, is
facing strong competition in its domestic market as Japanese
mega-banks shift their focus to retail banking and credit cards
after trying to shake off their legacy of problematic corporate

Japanese bank Mitsubishi UFJ Financial Group is in discussion to
acquire a 20 percent stake in consumer credit company Jaccs,
largely to expand its retail banking business. Jaccs is primarily a
credit card issuer with 9 million credit cards issued. Sumitomo
Mitsui, Mitsubishi’s banking rival, acquired a stake in credit card
issuer OMC Card (which has 9 million cardholders) a few months

Although there have been no signs of interest in domestic
acquisitions from the JCB management, the company has been actively
investing in international expansion through issuing deals with
local banks in major markets. JCB was established in 1961 as the
Japan Credit Bureau and started its internationalisation programme
in 1981. Since its launch outside Japan in 1985, in Hong Kong, JCB
now has over 59 million cardholders and is accepted in 190
countries and territories.

Growing numbers

JCB increased its merchant acceptance network to 14.1 million
merchant locations  in 2006 from 12.4 million locations in
2005. It also increased its cardholder base to 59.1 million in 2006
from 55.1 million in 2005.

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Initially, JCB focused on top US destinations for Japanese
travellers such as Hawaii, the West Coast, New York City and
Florida. In 2006, JCB launched a Discover Aloha Hawaii campaign to
boost Japanese tourism to the island. Although the number of
tourists declined during the promotion period, there was a 6
percent increase in sales and a 13 percent increase in transaction
volume for JCB cards charged in Hawaii during the promotion period
from April 2006 to January 2007.

The company is expanding beyond these traditional markets into
emerging geographies such as the Middle East and China. The
internationalisation strategy has also moved beyond servicing
Japanese cardholders venturing abroad to target local cardholders
with local partners.

The company will start issuing credit cards in the United Arab
Emirates through a joint venture with financial services group Orix
and Majid Al Futtaim (MAF) Group, a Dubai-based developer of
shopping and entertainment outlets. JCB has a 10 percent stake in
the venture and is aiming to issue 150,000 cards in five years.
Based in Dubai, the venture will target cardholders from MAF
Group’s 100 million customers at its shopping centres, hotels and
movie theatres.

Since the beginning of this year, JCB has also stepped up its
expansion in China. It has already launched cards together with
Bank of China, Bank of Shanghai, Shanghai Pudong Development Bank,
China Merchants Bank and China Everbright Bank.

According to JCB: “While in the past, the purpose of expanding
the JCB brand network in China was mainly to enhance acceptance for
JCB cardmembers travelling from Japan and other Asian countries,
the rapid growth in the Chinese economy has driven demand for
international credit card issuing, making the country one of the
most important markets for JCB issuing. In recent years, JCB has
been forming a number of new issuing partnerships to meet the needs
of Chinese consumers.”

In December 2006, Bank of China launched a co-branded JCB card
with a major household appliance retail chain in China. In February
2007, China Everbright Bank began offering co-branded JCB cards
tied to a major fashion magazine publisher in the region.

The organisation has already expressed its intention to partner
with an additional three to four local Chinese companies by the end
of 2007 and is aiming for a 15 percent share of the market by

Contactless technology goes abroad

With Japan leading the world in technology innovations, JCB has
also been able to leverage domestic cards and payments technology
innovations in its expansion overseas.

In February, Visa and JCB announced a deal to share contactless
terminals in the Asia-Pacific region: the first location to be
announced was Taiwan. This will be JCB’s first overseas launch for
contactless payment and the company believes that there is interest
from card issuers in its J/Speedy payment application.

According to Tac Watanabe, senior vice-president of global
infrastructure and technologies at JCB: “The agreement will provide
new opportunities for the two payment systems to expand contactless
merchant acceptance further and to increase the number of outlets
where cardholders can use both Visa and JCB contactless cards.”

Cost and terminal interoperability have been touted as the key
advantages of this agreement. Rahul Khosla, general manager
products for Visa Asia-Pacific, said: “Merchants accepting Visa and
JCB contactless cards will soon be able to minimise their
investment in terminals. Vendors will be able to lower their
production costs, speed up time to market and thus accelerate the
pace at which the industry can implement interoperable contactless
payment programmes.”

Visa’s Wave and JCB’s J/Speedy contactless payment solutions
will be accepted by the same POS terminals in merchants such as
Watsons, Blockbuster, RT-Mart, Taipei 101 and Breeze. Watanabe has
made it clear that contactless will be the key factor to staying
competitive and JCB does not want to compete with Visa on
acceptance points.

Not so contactless at home

The co-operative stance might be due to the lesson that JCB has
learned from its home market – there are eight competing
contactless schemes in Japan and each safeguards its acceptance
points. Even though one out of 2.2 people is estimated to be using
a contactless payment application, none of the contactless cards or
mobile wallets in Japan is run outside the country and a merchant
would need to have different acceptance terminals to cater for the
competing schemes.

NTT Docomo, the largest mobile telecommunications company, has
55,000 acceptance points and has been the most aggressive in
signing up merchants such as McDonald’s. Not to be outdone, JCB
signed a deal with 7-Eleven Japan, which has 12,000 outlets – the
largest convenience store network in Japan.

This will boost its merchant network as JCB has not been as
proactive in signing up merchants. NTT’s rival is also preloading
JCB’s Quick  Pay contactless application on its wallet phones,
which will help create a larger user base.

The multiple schemes and differing standards for each scheme has
affected the adoption rate of smart cards among consumers who are
wary of carrying a thick wallet of cards, or are confused as to
whether they should be paying with their mobile phone or their
contactless cards.

Not just serious technology

Beyond contactless, the company is also currently developing a
number of new payment methods such as watches and mobile phones.
Innovations have not been limited to serious technology.

JCB teamed up with Asian lingerie retailer Wacoal and Taiwan’s
E.Sun Bank in 2004 to launch a card equipped with an ultraviolet
sensor that measures the strength of ultraviolet exposure. They are
targeting young Asian women who are particular about sun
protection. In 2005, it launched the JCB Linda Sweet scented credit
card which allows the creation of different fragrances for its

The track record of success of these card innovations has been
patchy, but one JCB marketing initiative has had enormous success
due to the popularity of a pair of cartoon cats. Hello Kitty and
Dear Daniel, two mouthless cartoon cats first popularised in Japan,
have also been marketed by JCB in its overseas deals.

Hello Kitty merchandise launches in Asia typically whip up a
collecting frenzy. In Taiwan’s Makoto Bank, three in four of its
Hello Kitty cardholders are women – acknowledged as more loyal bank
customers than men. When it splashed the kitty on its credit cards
and account books, more than 150,000 customers willingly forked out
around $25 in annual fees in a market in which bank fees are
non-existent in the market, and contributed to an increase of 5
percent in overall deposits. Queues outside the bank on the day of
the launch prompted fears of a bank run.

Recently, JCB teamed up with China Merchants Bank (CMB) the
mainland’s largest credit card issuer, to launch the JCB CMB Hello
Kitty Fan credit card. The card is available in two designs – one
appealing to traditional Chinese tastes and one featuring a more
European look.

According to Kunio Yoshizawa, president and chief operating
officer at JCB International: “We have been actively focusing on
forming alliances to expand JCB card issuing in China, and are
pleased and honoured to be launching business with China Merchants
Bank, holder of the largest share of the credit card numbers issued
in China in this vast potential market. We anticipate the launch of
JCB CMB Hello Kitty Fan’s credit card will significantly increase
the awareness of the JCB brand by Chinese consumers.”

Global rebranding

To support its global expansion, JCB announced its new brand
slogan, ‘Good times start here’, in June 2007. The logo had been
previously redesigned with redefined S shapes to promote a new
brand personality focusing on softer values of ‘support, strength
and sharing’ as opposed to the ‘sign, smart and safety’ used

“Our new brand slogan and emblem are an important initiative for
JCB as a global payment brand,” said Yo Imanishi, senior
vice-president of marketing planning department and head of the new
branding project at JCB. “With ongoing efforts to stay ahead of
diversifying consumer needs and a rapidly changing market, JCB is
committed to providing new products, services and solutions that
will become the standards of the future, enhancing the value of the
JCB brand even further.”

Focus on international expansion

JCB has earlier stated that it aims to expand its market share
in Asia to at least 10 percent by 2010. Its recent senior
appointments highlight those recruits with international banking
experience, albeit with local Japanese banks, such as Sumitomo
Mitsui Banking and Sanwa Bank.

As these institutions are not well known for their overseas
expansion strategy, it will be interesting to see how the new
management plans to bring JCB to the world beyond Japan.