Could Japanese Mobile CRM Pilot Serve As Mobile Payment Prototype?

A major Japanese mobile phone loyalty card trial slated to run from February through June of next year might prove to be a powerful prototype of how other countries might deploy mobile payment networks.

The trial features three retailers: a small technology café; a midsize, regional Tokyo-area chain; and one of Japan's largest retailers—Bic Camera, whose revenue last year was roughly equivalent to $6 billion. The trial's goal is to show that the consumer phones can hold the loyalty card data of more than 100 retailers, depending on how much data each retailer wants to store. Some want to have the photo of that consumer while others are limiting the retained data to text only.

In Japan, where cell phones tend to be more sophisticated than in the United States, there is little interest in converting phones to payment devices because Japanese consumers are much more fond of paying with cash, said James Corbett, a spokesperson with NTT Communications, one of the companies running the retail trial. "Credit cards are not that popular here," Corbett said, in a phone interview from Tokyo.

The technology being used in the trial is called Gyazapo (pronounced "gah-zah-poh") and it incorporates Triple DES encryption and restrictions that are supposed to prevent retailers from being able to "view or overwrite" the data from any other retailer.

One of the incentives in the United States to move to mobile payments could be as a way to avoid—or at least minimize—bank interchange fees for credit card use. But would such a plan merely swap out bank fees for mobile carrier and mobile hardware vendor fees?

Security would be another concern. Although the Gyazapo trial uses Triple DES encryption, the procedures to protect CRM data (customer personal information, demographic data, purchase history, consumer preferences, etc.) would have to be significantly upgraded to adequately protect payment data.

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.