Plastic Charges Ahead

Back to Contents of Issue: May 2000
by Kyoko Fujimoto
Many Japanese still feel uncomfortable using credit cards; payment for merchandise ordered online is done largely by COD. It's no surprise, then, that the term debit card is still unfamiliar to most Japanese. About a year ago, though, a trial for a service called J-Debit started with 9 banks and 19 stores. On March 6, J-Debit went live, with more than 600 banks and 100,000 stores participating nationwide.

So far the card has been well received. According to the Japan Debit Card Promotion Association (the consortium of retailers, banks, and the MPT that's promoting the card; see http://www.debitcard.gr.jp), debit cards were used nearly 400,000 times during J-Debit's one-year trial, leading to ¥10 billion in sales. In the week after the launch, debit cards were used 50,000 times, leading to ¥2 billion in sales.

One problem many Japanese have with credit cards is they make it too easy to overspend. Debit cards fix this by drawing from one's bank account. And unlike with credit cards, there's no lengthy application form; in most cases, you just make sure the proper amount is in the bank, find a store with a J-Debit sign, and pay with your ATM card. On the other hand, many Japanese banks don't offer 24-hour service for their debit cards, just as they don't for their ATMs. And debit cards, unlike credit cards, can't be used overseas. There's also the PIN one must enter, usually in a crowded store full of potentially prying eyeballs.

Still, the debit card could lead to a greater acceptance of plastic in general. Many in Japan just aren't used to the idea of using plastic, and making the transition from a debit card to a credit card is considerably easier than going straight from cash to credit.

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