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 ($197 billion), up from ¥10.2 trillion in the year that ended in March, the company’s President Haruo Inoue said July 4.
“The key word is 2020,” he said.
Prime Minister Shinzo Abe aims to double the number of inbound tourists to 20 million ahead of the Tokyo Olympics. The credit-card market has room to grow as Japan catches up with global trends to use less physical currency and build 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.”
Inoue believes that card transactions in Japan can grow to make up as much as 25 percent consumer spending from the current 13 percent, a level similar to the U.S. The Tokyo-based company will increase users in rural areas through Mitsubishi UFJ’s client network, said Inoue, who became president last month after 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, he added.
The card company has 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 in the year that ended in March, according to company data. That’s equivalent to 2.5 percent of the ¥984.8 billion in profit for the year at Mitsubishi UFJ, Japan’s largest banking group.
“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.”