Mobile Wallets Spotlight: Japan

Over the past 2 years, Southeast Asia has added more than 70 million online shoppers. This growth has in large part been driven by consumers adopting mobile wallets. Mobile wallets give a bigger audience access to online payments than credit cards and bank-based payments.

Japan is one of the most developed markets in the region, in which mobile payments have existed in many forms throughout the years. This market is highly fragmented, as many mobile payment options exist with eCommerce marketplaces, messaging apps, and mobile operators all having their own wallet offering.

Despite strong credit card penetration, mobile wallets are playing a significant role in Japan, as they increasingly displace cash, moving Japan towards digital payment dominance:

• Mobile wallet users: 89M in 2020, forecast to grow to 123M by 2025
• Mobile wallet ownership: 71% of the population, 99% by 2025
• Mobile wallet transaction volume: 7.2B transactions, 14.6B transactions by 2025
• Mobile wallet transaction value: $189B, $337B by 2025

Japan’s competitive mobile wallet landscape: LINE Pay, Rakuten Pay, PayPay, MerPay, AuPay & others

Japan has a relatively mature, but rapidly evolving mobile payments landscape. The popular mobile messaging service, LINE, has nearly 40% market share. Mobile Operators have provided popular payment types for years, and KDDI’s mobile wallet, AuPay is now the #3 wallet in the market.

Two eCommerce marketplaces, Rakuten (Rakuten Pay) and Mercari (MerPay) have more than 30% market share combined.

This market has a healthy level of competition, and the next five years will likely be determined by which ecosystem(s) have the best stickiness (telco vs. messaging apps vs. eCommerce).

In terms of user growth by mobile wallet in Japan, here is our forecast for the next 4 years:

Want to launch mobile wallet payments in Japan? Conclusions

Japan is one of the few highly developed markets in which stored value mobile wallets are highly popular today; a history of mobile payment adoption as well as a desire to move towards cashless, non-card payment types are driving continued adoption

Mobile wallets in Japan are being predominantly used for payments, unlike emerging markets for which mobile wallets offer more diverse financial services.

There remains plenty of room for growth over the next five years, as mobile wallet transactions are set to double (from 7.2 to 14.6 billion transactions/year).

For merchants looking to grow their revenue in Japan, integrating mobile wallets to reach online consumers is crucial. If you are looking to launch mobile wallets in Japan and other Asian countries through one turnkey integration, get in touch.