Payment Related

[Credit card] What are companies aiming to evolve their services?

The level of credit card services is increasing day by day.

With the advent of various types of cashless payment services, traditional cashless credit cards are dressed as a counterattack to acquire customers.

As a matter of course, when you shop with a credit card, part of the money you paid in the form of points will be returned, and a service that increases the interest rate of your bank’s savings deposit by 100 times has also been created.

We will introduce how credit card companies enhance their services and what their goals are.

Overwhelming with cashless, but not at all comparable to cash

The current position of credit cards will be “overwhelming other cashless payments such as e-commerce and QR codes, but not at all comparable to cash.”

According to the Ministry of Economy, Trade and Industry, cash and other payments accounted for 73.2{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} of all payment methods (private final consumption expenditure) in 2019, and cashless payments accounted for 26.8{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} (* 1). You can see that Japan is still a cash society.

However, cashless society has increased from 16.9{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} in 2014 for the fifth consecutive year, and increased by 9.9 points (= 26.8 ({5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}) -16.9 ({5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7})) from 2014 to 2019.

The breakdown of cashless in 2019 is as follows.

  • Credit: 24.0{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
  • Debit: 0.6{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
  • Electronic money: 1.9{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}
  • QR code: 0.3{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}

In this way, credit cards boast an overwhelming share of cashless payments.

However, the QR code has increased sharply from 0.05{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} in 2018 to 0.31{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} in 2019, and if the population parameter is the same, it will be 6.2 times in one year. From this situation, it can be inferred that credit card companies have the following motivations.

  • We have to take more share of cash settlement
  • We must not lose to the catch-up of the new cashless

From this motivation, credit card companies are enhancing their services.


“Rakuten Card”, which collects points no matter what you do, aims to build an economic zone

Rakuten Card Co., Ltd. is so enthusiastic about PR that there are no days when we don’t watch Rakuten Card TV commercials.

And what we are putting more effort into than advertising is activities to increase the benefits of Rakuten Card. Rakuten Card users can take advantage of various services provided by companies under the umbrella of Rakuten Group, Inc. (* 2).


Advantageous content

As of May 2021, Rakuten Card has so many points as a gift.

  • Rakuten points (5,000 points) worth 5,000 yen for new enrollment and new use
  • 7,000 points for new enrollment and new use of Rakuten Gold Card
  • 5,000 points for new enrollment and new use of Rakuten Premium Card
  • Students only, up to 5,555 points for new members of Rakuten Card Academy and achievement of conditions
  • Up to 2,000 points for applying for and using Edy Auto Charge
  • Up to 7,000 points by lottery using cashing

In addition to presenting points, we also offer many ways to increase points. Here are some of them.

  • If you shop at Rakuten Ichiba online, you will get triple points.
  • If you create an account at Rakuten Bank and withdraw the Rakuten Card usage fee from that account, you will receive 200 points when you first withdraw.
  • If you open an account with Rakuten Securities and invest with Rakuten Card, you will earn 1 point for every 100 yen settled.
  • Free cancer insurance will be given to those who have Gold rank or higher among those who have Rakuten insurance (Rakuten Group Co., Ltd. will bear the insurance premium)
  • When you pay the Rakuten Pay charge from Rakuten Card, you will receive 1.5{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} of your shopping payment.
  • If you purchase electricity (Rakuten Denki) from Rakuten Energy Co., Ltd. and pay with a Rakuten card, you will receive 1 point for every 200 yen of electricity charges.
  • Apply for Rakuten Mobile smartphone use and purchase an iPhone to receive 20,000 points

From here, you can see Rakuten’s strategy.

A tool for shoppers to lock in consumers

Rakuten is now developing its Rakuten Economic Zone strategy. This is a strategy in which Rakuten, an all-purpose store, wants consumers to buy anything via Rakuten. And Rakuten Card has become an important tool for expanding the Rakuten economic zone.

As long as consumers have a Rakuten card, they can shop online, withdraw at a bank, invest in stocks, take out insurance, make payments on their smartphones, or electricity. You can get points by using or purchasing a smartphone.

Consumers will find that the more they shop at Rakuten, the more profitable they will be. The power of that thought was tremendous, and Rakuten points issued to users by Rakuten exceeded 2 trillion points in 2020, and the amount of shopping handled using Rakuten cards reached 9.5 trillion yen (* 3).

Rakuten Card attracts consumers to the Rakuten Economic Zone, and Rakuten Card keeps consumers in the Rakuten Economic Zone.


“AEON Gold Card Select”, which raises interest rates on bank deposits, is a pillar of financial business strategy

Aeon Co., Ltd., a retail giant, is also focusing on creating an economic zone. And credit cards are still the key.

Interest rate is 100 times that of Mega Bank

AEON Credit Services Co., Ltd. is responsible for the credit card business of the AEON Group. What I would like to pay attention to here is the “AEON Gold Card Select” issued by the company (* 4).

You can’t easily hold it because you just call yourself “gold”.

Aeon Gold Card Select can be held by those who already have Aeon Card Select, which is a general credit card, and who have spent more than 1 million yen on card shopping for the last year.

Aeon Gold Card Select’s free services include insurance for up to 3 million yen per year when the purchased product is damaged in an accident, and overseas travel insurance, which pays up to 50 million yen.

And if you open an account at AEON Bank, have AEON Gold Card Select, shop a lot, invest a lot, and borrow a lot of loans, the “AEON Bank score” will be higher.

The AEON Bank score starts from the bronze stage and progresses to the silver stage, the gold stage, and the highest platinum stage.

For those who have reached the platinum stage, the interest rate on AEON Bank’s savings deposit will be 0.1{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}. Since the interest rate of Mega Bank’s savings deposit is 0.001{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}, the interest rate is 100 times that.

Even though the service is so complete, the annual membership fee of AEON Gold Card Select is free. Aeon’s large-scale behavior stands out because many credit card companies charge a gold card while freeing the annual membership fee for general cards.


Aeon and financial business

Aeon is focusing on the credit card business because it is serious about the financial business.

The Bank of Japan started current deposit transactions with AEON Bank, Ltd. in October 2007 (* 5). As a result, AEON Bank has secured a means of payment with the Bank of Japan and the Government of Japan. For Aeon, the financial business is not just a side business.

However, Aeon’s operating revenue for the fiscal year ended February 2021 was 8,603.9 billion yen, of which the financial business accounted for 5.7{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7}, or 487.5 billion yen, less than 10{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} (* 6). However, Aeon’s “main business”, the general merchandise store business, is struggling due to being pushed by emerging retailers such as Amazon, so the financial business is in the position of a “special side business” that supports the main business (* 7).

Motoya Okada, Chairman of Aeon, told new employees at the 2015 entrance ceremony when he was president about the financial business (* 8).

“Aeon is not limited to retailing through physical stores. There are various businesses such as services, finance, developers, etc., but they are organically linked to each other. And you will start each business and business from today. But please don’t forget to be a merchant. “

It is important for Aeon to be a merchant, and as such, it is natural to start a financial business.


Summary-Let’s use it wisely

It costs money to enhance the credit card service, so the more benefits you add, the less profit the credit card company will make. However, the reduced profits of the credit card company will definitely be returned to the users, so they will want to use it again.

Credit card companies enhance their services because they want more shopping. This move is also supported by the government, promoting deregulation in the financial industry and supporting retailers to enter the financial industry (* 9).

You have to be careful not to overuse your credit card, but if you can make a good deal, using your credit card should be a “household defense”. Examining credit card services is one of the smartest consumer behaviors.