How JCB is preparing for a plastic-free future
The ubiquity of plastic payment cards makes it hard to imagine a future without them, but Japan’s JCB card network already envisions it.
Through deals with new cobranding partners where the JCB name is very subdued or invisible — plus its own biometric security and an expanding global e-commerce acceptance footprint — the Tokyo-based card network is positioning itself for a future where brand recognition of its cards won’t matter as much as it does today.
“Cards aren’t dying out anytime soon, but we don’t have to be so intrinsically tied to cards, either, when we see people are increasingly paying via QR codes, biometrics and trusted networks,” said Andrew Mitchell, JCB’s vice president of development and infrastructure.
For JCB, the opportunity to open a new chapter is driven by its success in leveraging digital technology to move past its roots as a travel-and-entertainment card launched in 1961 for high-end Japanese consumers and world travelers, Mitchell said.
JCB gradually built broad acceptance outside of its home market through a series of partnerships, including a key deal with Discover in 2006. With 117 million cardholders and acceptance at 30 million merchants worldwide, JCB is now looking to fill a role for banks and domestic card networks interested in its proprietary technology and versatile branding policies.
Analysts say it’s no surprise that JCB, like other mature card networks including Visa, Mastercard, Discover and American Express, is exploring new strategies.
“The current card networks are under attack from a number of directions and adjacent markets,” said Tim Sloane, vice president of payment innovations at Mercator Advisory Group. He cited P2P solutions, Alipay, Amazon, faster-payments Request to Pay implementations, PSD2, fintech advances and technologies such as APIs and machine learning among forces changing the competitive landscape for incumbents.
Card networks that don’t experiment with their business models may get left behind, Sloane said.
JCB is trying out new roles in a number of areas.
Last year, Sri Lanka’s central bank selected JCB as the cobrand partner for LankaPay, its domestic debit card, which began rolling out in Sri Lanka this year. At the same time, the National Payment Corporation of India is developing cobranded credit and debit cards for customers traveling abroad, and Brazil’s Caixa Bank early this year announced plans for the first JCB cobranded card in Latin America.
In each case, JCB has promoted the versatility of its branding policies and low interchange fees to drive collaboration with cobrand partners.
“We’re very relaxed about how JCB is branded, providing fairly wide discretion to banks that want to use the JCB application in the background to enable international acceptance,” Mitchell said.
JCB also is taking a lead role in developing palm-vein biometric authentication licensed from National Robot. The process is differentiated from other methods that use fingerprints, eyes and faces, and it’s touted as simple to use and highly accurate. Project testing began early this year and JCB has limited user group pilots aimed at smoothing out the enrollment process of registering cardmembers' palm imprint.
“It’s a very promising technology and we have realistic goals of expanding it over the next couple of years,” Mitchell said.
Digital payment technology has also helped JCB to dramatically expand its reach in recent years. The network’s partnership with Adyen has been a major accelerator since 2014 to expand JCB's merchant acceptance in Europe. Last year the companies expanded their partnership so Adyen may support global acquiring for JCB.
“With Adyen and our own new technology, we’re opening up a lot of new access points,” Mitchell said. Adyen’s API-based integration has helped accelerate JCB’s growth, particularly in Europe, and now JCB is looking to develop its own similar approach to speed connections to merchants in fast-growing categories.
“We’ll soon be in a beta phase for our own API, because it would be great for us to be able to support that kind of integration directly,” he said.
JCB continues to work closely with companies like Adyen and iZettle to increase awareness of JCB with merchants across Europe, Mitchell said.
With each of its cobranding partners, JCB offers solutions to different problems, according to Mitchell.
“A lot of banks whose customers primarily use a card based on a domestic debit scheme don’t have a shop-abroad option, and we bring that plus access to ATMs,” he said.
The most high-profile example so far is JCB's partnership with LankaClear Limited, launched in 2002 and owned by the Central Bank of Sri Lanka. With JCB International Co. as the strategic partner for Sri Lanka's national card scheme, LankaPay-JCB cobranded cards are now available for local acceptance through Sri Lanka’s LankaClear network and globally via JCB’s network.
JCB expects that as Sri Lanka’s economy expands, more citizens will be traveling abroad, driving JCB’s card volume. JCB also plans to support development of contactless and mobile payments in Sri Lanka.
National Payment Corporation of India last year approved plans to accept JCB credit and debit cards at ATMs supported by 32 Indian banks and POS terminals with the support of two institutions, Axis Bank and ICICI Bank. The cobranded cards with operate on NPCI’s RuPay network in India, and JCB’s network outside the country.
For NPCI, the deal offers a low-cost approach to extend global acceptance for RuPay cards, with the goal of augmenting a series of regional acceptance agreements previously providing international acceptance of RuPay cards through various other card networks including Discover and American Express.
Brazil’s Caixa Bank this year launched the first JCB card issued in Latin America, the companies said in a May press release. The Caixa JCB Unico Card offers access to JCB customer lounges throughout the country and free food deliveries from Grubster. JCB already has broad acceptance throughout Brazil through partnerships it previously established with two large Brazilian acquirers, Cielo and Rede.
For JCB, driving broader acceptance outside Japan for e-commerce and in corridors with significant Japanese tourist and business traffic has long made sense, said Eric Grover, a principal with consulting firm Intrepid Ventures LLC. But Grover is skeptical whether there’s a big opportunity for JCB to find many cobranding partners in larger, developed markets.
“Today virtually every bank in the EU issues Mastercard and/or Visa payment cards, and in some cases they partner with large national networks like Carte Bancaires. There are only two genuinely global networks,” Grover said.
Mitchell noted that instead of competing head-on with larger networks, JCB is laying the groundwork for opportunities in the future and in emerging markets.
“Our objective is to provide the payment link between payers and payees, and whether it’s an interchange model now that may change later to a processing arrangement, or to more instant-payment or bank-to-bank models, we want to be the tried and trust partner,” Mitchell said.