Mitsubishi UFJ Financial Group Inc.’s credit-card unit expects to double transactions by 2020 in anticipation that Japan will become a less cash-oriented society by the time Tokyo hosts the Olympic Games that year.
Mitsubishi UFJ Nicos Co. and its group companies are targeting combined card transactions of 20 trillion yen ($197 billion), up from 10.2 trillion yen in the year ended March, President Haruo Inoue, 56, said in an interview in Tokyo on July 4. “The key word is 2020,” he said.
Prime Minister Shinzo Abe aims to double the number of inbound tourists to 20 million by the Tokyo Olympics. The credit-card market has room to grow as Japan catches up with global trends to use less physical currency and builds infrastructure to meet demand from foreign visitors, Inoue said.
“Japan is still a cash-based economy but we’ll see a lot of visitors from cashless countries coming for the Olympics,” he said. “For Japanese people, we have to emphasize that cards are safe and convenient.”
Like in the U.S., Japan’s card transactions can grow to make up 25 percent of consumer spending from the current 13 percent, according to Inoue. The Tokyo-based company will increase users in rural areas through Mitsubishi UFJ’s client network, said Inoue, who became president last month after previously working at the financial group’s main lending unit.
Mitsubishi UFJ Nicos will consider expanding transaction methods, including electronic money and debit-card payments, while credit cards will remain the core product, Inoue added.
The card company posted a profit in each of the past three years, rebounding from losses stemming from a government crackdown that forced consumer lenders to cut loan rates and refund overcharged interest. Mitsubishi UFJ Nicos’s business includes providing loans without collateral.
Net income declined 21 percent to 25 billion yen in the year ended March, according to company data. That’s equivalent to 2.5 percent of the 984.8 billion yen in profit for the year at Mitsubishi UFJ, Japan’s largest banking group.
Shares of Mitsubishi UFJ fell 1.8 percent to 605 yen at the close of trading today, taking this year’s decline to 13 percent.
“The shift to a cashless world gives us a huge business opportunity,” Inoue said. “We no longer see any major obstacles, such as the repayment of overcharged interest. I believe we can make a big contribution to the Mitsubishi UFJ group’s earnings.”