Mobile payment in EU vs Japan: 10 years to reinvent the wheel?

Mobile payments for transport first introduced commercially in Tokyo January 28, 2006

Tokyo (mobile SUICA, FeliCa) vs. London (OYSTER, Mifare)

Mobile payments are big: Reuters estimates that the mobile payment market will be about US$ 1000 Billion by 2016, and in Japan just a single railway line achieves already now several US$ billion in mobile payments per year.

Mobile payment in London:

On July 17, 2012 The Wall Street Journal reports, that as far as Transport for London is concerned, there is no viable mobile payment solution at this time:

  • Transport for London sees no way to use mobile payments at ticket barriers at this time, because the technology is not advanced enough
  • London’s state-of the art mobile payment transactions take longer than 500 milli-seconds which is too slow for Transport for London requirements

Mobile payment in Tokyo:

While no viable solution has yet been found in London, in Tokyo millions of people use “mobile SUICA” mobile payments every day at Tokyo’s rail, subway, tram lines and buses:

  • mobile payments at ticket barriers were first demonstrated in Tokyo in 2003 (photo below shows a demonstration at a trade show in Tokyo in 2004)
  • “mobile SUICA” mobile payments were commercially introduced to the public since January 28, 2006
  • payment transactions take 100 milli-seconds or less, which would fulfill Transport for London’s speed requirements
  • in addition mobile SUICA also has a full e-money function, and can be used at 1000s of stores all over Japan for payments, and for 1000s km of high-speed trains all over the main island of Japan, between Hakata and Aomori.

Why does it take at least ten years to reinvent the mobile payment wheel in London?

Why is it that a problem the solution of which was demonstrated in Tokyo in 2003 and put to commercial use every day since January 28, 2006 without any problems, has not yet been solved in London even today?

The answer to this question is of course complex, and you will find elements of a discussion of this question on pages 185-188 of our mobile payment report (click here for free download which includes pages 185 – 188, pdf-file).

In our opinion the answer for this huge delay even today in the age of globalization and internet is a combination of:

  • human nature and
  • the huge communication gap and disconnect between European organizations and companies and Japanese organizations and companies and
  • the totally different way in which banking systems, payment systems, and also the commercial structure and way of thinking of transportation companies are organized regulated in EU vs Japan.

We have been working on mobile payment and e-money issues here in Tokyo for about 10 years or longer, and you may be interested in some of our reports:

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Dentsu acquires Aegis

Dentsu 電通

Aegis Group plc, a UK company with French roots

Dentsu’s challenge to grow global footprint while managing cultural differences

On Thursday, July 5th, 2012, Dentsu announced the acquisition of Aegis Group plc, a UK company with French roots, centered on media advertising media buying.

Dentsu’s need to globalize

Driving this acquisition was Dentsu’s need to globalize, to create the necessary global footprint to compete with Publicis, WPP, Omnicom, Interpublic, Havas on one hand, and with newcomers Google and Facebook.

Dentsu Aegis Network created to overcome cultural issues

To overcome the important cultural issues of Japan-focused Dentsu, the “Dentsu Aegis Network” was created which combines seven major global brands:

  • Carat
  • Dentsu
  • Dentsu Media
  • iProspect
  • Isobar
  • Posterscope
  • Vizeum

Dentsu acquires expertise in local markets

This acquisition enables Dentsu to acquire companies in local markets via this new European subsidiary. For European examples, see our listing of Japanese acquisitions in Europe.

Previously, Dentsu had acquired:

  • Steak Group, a UK based digital media group
  • Adjug, a UK based advertising exchange

Report on Japan’s media landscape (150 pages, pdf file):
[buy][more information][preview on slideshare]

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