Change is afoot in a country that has long favoured cash payments over electronic ones. While digital payments still account for just 20% of total spending, the Financial Services Agency is looking to double that figure over the next decade.
As the world’s leading digital payment platform, Visa obviously stands to benefit greatly from the increased infrastructure support that the government has promised. There are already encouraging signs. In Campaign’s 2017 Asia's Top 1000 Brands report, which monitors consumer perception of brands across Asia-Pacific, Visa leapt from 33rd to ninth in Japan, making its debut among the top 10 brands in the market. Its closest competitor, MasterCard, ranked 23rd.
At the same time, to fully capitalise on the period of optimism in Japan between now and the Tokyo 2020 Olympic and Paralympic Games (of which Visa is a Worldwide Partner), the brand needs to ensure it is seen to be as innovative as the fintech startups that continue to emerge, promising to shake up an outdated system of banking and financial services.
Presumably with this in mind, the company recently hired Takafumi Kashiwagi as head of Japan marketing. Kashiwagi was formerly at Google, where he was in charge of the FMCG sector. He has also worked at McCann Worldgroup, and began his career at Suntory, where he started out in PR but moved out of a desire to gain a deeper understanding of branding.
Why Visa? Kashiwagi says he was drawn to the company’s mission to “renovate their brand towards a new world”. He also likes the idea of working to innovate a master brand, rather than the sub-brands he was accustomed to in the packaged-goods sector.
Kashiwagi is not yet sure exactly what shape that innovation will take. But he understands the issues Visa needs to approach. He estimates that as much as 91% of daily payments are made in cash. But he reckons this is mostly force of habit and can change, in a similar way to the adoption of smartphones after pundits insisted people would be unlikely to part with their feature phones. “Japanese people are very good at accepting new technology after a tipping point” provided they see enough value in it, he says.
Proving that cashless payments make life easier will be key. Kashiwagi says there hasn’t been much discussion around modes of payment, and there is a misconception that using a card is time-consuming and inconvenient. Some people are also hesitant to use a card for small payments for fear of appearing poor.
For someone who used to work at a tech giant, Kashiwagi himself is a surprisingly late adopter: he only recently began using a debit card, which he says was “a very exciting moment”. What excited him most was the ability to monitor spending in conjunction with a mobile app, which he says can make money management a lot more sophisticated. “In general, people don’t think about the inconvenience of cash,” he says. “So we need to give them the hint that cash is inconvenient and you can replace it with debit”, keep track of spending online and hopefully become smarter with money.
From service provider to innovator
While Visa has high recognition, things could be better. For starters, it is still widely seen as a card company when it wants to be seen as a “payment technology company that connects people through a network”. Kashiwagi says he is working to determine Visa’s core value proposition for Japan in conjunction with its agency, BBDO, but thinks the service needs to be seen to be aligned with emerging technology.
At the moment, Visa is not seen as “super innovative”, he admits. But he sees a future for Visa in areas such as smart speakers and the connected car. Earlier this year, for example, Visa partnered with Honda to develop in-vehicle payments.
In the near future, Kashiwagi says, “the discussion shouldn’t be around cash or card, but about the role of these innovations in our lives. What is clear is that our lives will be innovated by these things and visa can definitely play a good role in that”.
The Olympics should provide the ideal platform to showcase whatever innovation Visa is able to develop. In doing so, Kashiwagi thinks it is very important that Visa is seen to support Japanese culture and contribute to national revitalization. Localizing communications is essential, he says. While payments are universal, each market has its unique characteristics around those payments. Presenting a marketing campaign based on universal values is unlikely to have much of an impact, he says.
“We are trying to find areas specific to Japan,” he explains. “In that respect, Tokyo 2020 will be a good opportunity for us to be more localized: innovations from Japan through Visa.”
Before that, Visa is likely to forge more partnerships, including with startups, as a means of building momentum towards the dream of a cashless society. At this stage, cash still represents bigger competition than any other financial services brand.