Security concerns stifling mCommerce growth
Japan has one of the most developed eCommerce economies in the world, and addressing security concerns will help drive further growth in this market, according to new data from Worldpay Inc. (https://www.worldpay.com/uk) (NYSE: WP; LSE: WPY), a global leader in the payments technology industry.
In its 2018 Global Payments Report, Worldpay found that the eCommerce market in Japan is set to increase by 29 per cent between now and 2022 to become worth US$203.9bn. Mobile is the fastest-growing channel, increasing at a rate of nine per cent annually, suggesting that consumers are becoming increasingly comfortable with shopping on their smartphones. By 2022, mobile will account for nearly a quarter of all online sales in Japan, according to Worldpay’s projections. Desktop sales, on the other hand, are growing at a rate of just six per cent annually.
Japan is one of the largest eCommerce markets in the world, thanks to internet penetration of 100 per cent. The most popular online payment method is credit cards at 56.5 per cent of the market, followed by Post Pay (20.4 per cent) and Bank Transfer (13.1 per cent). Japan in fact has the highest percentage of people who use Post Pay in the world (when a consumer selects a product online and pays for it later at an affiliated store).
Many consumers however remain sceptical about the security of shopping on their smartphone, which may be holding back mCommerce growth in Japan. Data from the payments leader found that only 32 per cent of Japanese consumers support the use of biometric data, such as fingerprint scanning or facial recognition to accelerate payment.[1] Furthermore, just 37 per cent of consumers would be happy for apps to store their payment details. [2] If these concerns are addressed, Japan has the potential to further accelerate its mCommerce growth.
Hideya Komori, VP commercial for Japan, Global Enterprise eCommerce at Worldpay, Inc., said, “Japan’s slow mCommerce growth reflects the public’s security concerns with mobile payments. With several high-profile security breaches over the last few years, Japan is cautious regarding the new technology — yet not to the point of halting growth.”
“Over time, we anticipate more and more Japanese to adopt eWallets for shopping. This may accelerate from 2020 as tourists from other countries expect to pay with their mobile, introducing and normalising the method. In any case, while mCommerce is king around the world, there is a long way to go before it fully takes off in Japan.”
Worldpay has published guidelines to help merchants capitalise on the global mCommerce opportunity:
1. Alleviate the security concerns of eWallets. Despite the widespread use of apps, significant issues remain around security perceptions for Japanese consumers. A re-education campaign on transaction security would accelerate future growth.
2. Embrace biometrics. Shoppers are becoming increasingly familiar with the concept of fingerprint scanning and facial recognition, so do not shy away from these methods of authentication. As well as helping with security concerns, biometrics contribute towards a frictionless customer experience.
3. Identify the most popular payment methods in each territory in which you operate. There is no one size fits all in any region so you will need to understand the best options for your company. Japanese businesses should be open to these new payment preferences, enabling foreign shoppers to purchase Japanese exports easily
About the 2018 Global Payments Report
The 2018 Global Payments Report offers a snapshot of the current payment landscape across 36 countries globally. Worldpay’s Market Intelligence team compiles the Global Payment Report using a combination of authoritative third-party vendors and other publicly available data. This compiled data was analyzed using Worldpay’s proprietary data model and categorization scheme, with support from McKinsey. The report also draws upon Worldpay’s decades of experience in providing global eCommerce solutions, informed by our processing of more than 40 billion transactions annually via more than 300 payment types, across 146 countries and 126 currencies.
The projected growth figures contained in this report were sourced from GlobalData and McKinsey and relate to the industry as a whole, not Worldpay’s business. The data was collected using consumer surveys, B2B surveys and input from local research teams. 45,000 consumers were surveyed globally in February and March 2018.
Any indicative predictions based on the data we have used should be treated as such. No representation or warranty, expressed or implied, is made by Worldpay, Inc. and/or any of its affiliates, directors, officers, employees, agents or advisers as to the reliability, accuracy, timeliness or completeness of any information, opinions or analysis contained in this document, which is not intended to be relied upon by you or any person for any purpose whatsoever.
