Introducing The Mobile Wallet

No marketer in the world can ignore current developments in Japan.

JUNE 29, 2006 – The dream of combining the buying moment with the marketing moment is becoming a reality, and it is called osaifu keitai (“wallet phone”).

“The word ‘mobile’ can mean different things in different contexts. While Americans might have cars in mind when defining a mobile lifestyle, the Japanese might think of trains and mass transit. However, when it comes to handsets, both cultures agree: mobile = phones,” says James Belcher, eMarketer Senior Analyst and co-author of the new report, Mobile Payments in Japan. “And as far as mobile phones go, the Japanese are, once again, moving faster than almost everyone else in the world.”

The the wallet phone was an obvious next step, given Japan’s cash-focused consumer economy and once a critical mass of both devices and social habits favored yet more advanced use of mobile phones.

“More than 95% of urban Japanese consumers already have keitai [a mobile phone],” says John Gauntt, eMarketer Senior Analyst and co-author of the report. “Considering the Japanese mobile lifestyle, the o-saifu keitai makes a great deal of sense, promising to eliminate the several cash cards that many consumers carry, as mobile phones have already eliminated wristwatches for many Japanese consumers – and an increasing number of US mobile subscribers.”

Mobile wallet chips can also hold information other than a simple financial balance. Widespread building access via chip, for instance, could eliminate keys from pockets in the same way that mobile wallets could reduce or eliminate cash carrying. Besides cardkeys, mobile wallets could also insurance information and other electronic versions of the data found on cards in the average traditional wallet.

According to the NPD Group, 16% of Japanese mobile phone customers already use some kind of m-commerce.

In fact, although mobile wallets are a relatively new phenomenon, NTT DoCoMo found that a solid majority of Japanese consumers would like to use them.

The idea that mobile wallets could replace traditional wallets is not science fiction to Japanese consumers. Over a third of those surveyed by NTT DoCoMo said that mobile wallets would not just replace wallets, but coins as well, and some even thought that currency would disappear over time.

Japanese consumers think mobile wallet dominance as a payment method will come sooner rather than later, with almost three-fourths of those surveyed saying that wallets will become redundant within 50 years – and 35% saying that it would happen within ten years.

Payments made by mobile wallets can provide instant feedback and location-based targeting for marketers, promising value beyond the dollar (or yen) amount of the payments themselves. Online advertisers have often theorized about the targeting and feedback potential of the Internet. Mobile advertisers who aim promotions at mobile wallet users could take this potential even further.

“Marketers should pay close attention to Japanese mobile wallet developments,” suggests Mr. Belcher. “Savvy marketers learn as much as possible about how Japanese consumers use mobile wallets. Those that do will be ready when the technology is adopted elsewhere. “

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