JCB, Japan’s only international payment brand and credit-card issuer and acquirer, had been investing a lot of its innovation budget in contactless cards. But the rapid rise of real-time payments via mobile phones using QR codes necessitated a quick response.
One of the drivers of JCB’s partnering with financial services technology company FIS was speed to market, says Kenta Seya, JCB’s executive vice president for global network implementations, based in Tokyo.
“It was essential that we launch new services,” Seya said. “QR payments are a new solution that we did not have. FIS was able to help us roll this out the fastest.” (See here for a primer on QR codes and the battle for mobile money.)
From NCF to QR
JCB International, the firm’s ex-Japan operating company, has been exploring QR codes for two years. In late 2018, it launched a payment service using QRs following EMV standards (that is, standards pushed by EMVCo, a global consortium of payment processors, banks, merchants, and vendors to assure interoperability).
It led this early effort with Bank SinoPac in Taiwan and Sacombank in Vietnam, both JCB card issuers and merchant acquirers. This allowed local merchants – small businesses working in food markets, for example – to accept payments on JCB cards via their printed QR codes. JCB enabled a similar capability in Japan via the Origami Pay mobile app, in which the firm has an equity stake.
Now JCB is following up with a more aggressive rollout, starting in Thailand and Vietnam, targeting cross-border payments. If successful the firm would like to add Indonesia, Myanmar and the Philippines later this year.
Seya says about 20% of JCB’s cards-related payments in Southeast Asia are international, usually around travel for work or pleasure. Serving small businesses would then evolve to using QR codes to support e-commerce and other online activities.
“Merchants that already accept JCB’s plastic cards might also use QR codes,” Seya said. “We should be ready to provide our QR scheme if there’s a need among both consumers and merchants.”
In particular he says QR codes offer card companies like JCB an avenue to serving micro businesses that lie outside of the world of plastic.
The Worldpay from FIS 2020 Global Payments Report found that digital wallets now account for 58% of regional e-commerce purchases and are expected to reach almost 70% by 2023. Digital wallets also now surpass cash at the point-of-sale, accounting for 36% of in-store sales in 2019.
Governments and regulators across the region are eager to support initiatives to displace cash with mobile payments, particularly in the wake of COVID-19, which has made handling cash a health risk. For example, some governments such as Singapore’s now allow citizens to access public services via QR codes.
Up and running
Finally, JCB believes the timing is good because it is neither an American nor a Chinese company. It can steer clear of tensions around the Sino-U.S. rivalry or fears in local markets of being dominated by an overweening foreign payments rail. JCB is big enough, with cards issued in 24 markets and more than 140 million card members, but not too big.
Kanv Pandit, Singapore-based group managing director for banking solutions in Asia Pacific at FIS, says the vendor’s Payments One platform will allow JCB’s QR scheme to integrate easily with local banks and merchants. Payments One specializes in supporting switching and acquiring services.
“We can help JCB leverage an infrastructure that already exists,” Pandit said, noting QR codes require enabling real-time settlement. “Our platform already has cards-based payment processing capabilities. It’s standards-based and interoperates with partner banks. We’ve integrated QR codes in the past, so this is a proven service.”