What’s the point? Electronic Money and Point Systems in Japan

This blog post has been written in response to a request for tips on how to live frugally in Japan. Those of you who don’t live in Japan may wish to skip the “What you can do” sections.

When I was a wee boy, I was given a wallet as a present. It was my first wallet and I immediately wanted to fill it up so I could feel more grown up. I received about 10 pounds a week for delivering newspapers and that went inside. Any pocket money I was given also went in. There was one thing that bugged me though. Since I had no credit cards or cash cards, I had nothing to put in the slots dedicated to them. I remember that I was delighted when I was given a library card and put that in.

Oh, how times have changed. I now have the opposite problem. I have so many cards that my wallet is full to bursting and I have another card holder just for containing the overflow. I’m sure that many people experience this problem but in Japan, it’s even worse and I’ll explain why.

Those of you in Japan may not realise this but the price of goods that you see in shops isn’t the lowest price that you can pay for them. Just about everyone in Japan is participating in a game that allows you to pay less. Welcome to the Japanese world of loyalty cards.

In Japan, loyalty cards are often called point cards. If you’ve seriously looked into mileage cards for airlines, you won’t be surprised to hear that this is an insanely complicated subject. Japanese magazines frequently publish articles explaining which point cards offer the best value and how they work. Loyalty systems such as these also tie in with credit cards, mileage cards, electronic money* (see explanation below) and public transport commuter cards like Suica and Pasmo. The magazine Nikkei Trendy has a 47 page extravaganza in the edition that is out right now.

What you can do: the basics

The easiest thing you can do is get yourself something to hold a large number of credit cards and start filling it up with loyalty cards for every shop you go to. I was very concerned with spam when I started doing this because in order to get these cards, you often have to fill out a form giving your address and phone number. I’m happy to report that I’ve never been called by marketing teams. We get a lot of spam mail in the post, but I think that the vast majority of this is for local services and everyone in the building gets it. What I often do when filling out applications for point cards is to pretend I don’t have an email address and I miss out a crucial part of the postal address, like my apartment number.

Whenever you go shopping and make a purchase, hand over your loyalty card and get the points. Usually points are accepted in lieu of cash when making your next purchase. A few days ago at the supermarket, I didn’t want to mess around with small change, so I paid 4000 yen in cash and paid the rest using my points.

Point cards have alliances like airlines do with mileage cards. So you only need one card for many shops. One of the biggest, that you see all over the place, is the T-point system started by Tsutaya, the video rental store. There are a large number of shops in this alliance. Some of them only allow you to collect points (貯める) and some of them allow you to pay with points too (使う). You can use T-points to pay for things and you can also exchange them back and forth (交換できる) with other point systems like mileage at ANA.

What you can do: becoming a point ninja

If you really want to go to town with points, the best thing to do is pick up a magazine where the writers have done the research for you. Nikkei Trendy has published quite a few articles and probably contains the most detail.

The trick is to combine points with credit cards, electronic money and public transport cards. Credit card companies will often team up with point systems and offer deals to make their cards more attractive. Beware though. These deal sweeteners are usually combined with more punitive interest rates so don’t get one of these credit cards if you’re not planning on paying the bill in full every month. If you can pay in full, you have nothing to worry about and it won’t cost you anything.

There are three circumstances where you can collect points:

1. When you charge your electronic money card or public transport card using your credit card.
2. When you purchase items
3. When you ride the train or bus
   

Ideally, you want to cover all three bases. Here are some tips:

• When you charge your Suica/Pasmo, don’t use cash at the machine. Instead, set up auto-recharge, which will bill your credit card and refill the balance on your card when it drops below a certain level. You get points for every recharge. You can use these points to pay for subsequent charges of your Suica.
• Don’t buy stuff directly from Amazon or Rakuten or other online retailers. Instead, access these stores through a points mall, which will multiply the number of points you receive. In some cases by up to 17 times:
  Oki Doki ランド
  永久不滅.com
  オリコモール
  お財布.com
  yosoo.net
  SBIマネーワールドポイントモール
  ドル箱
  and many others..
  Only the first three can be used to access Amazon.co.jp and those three all let you exchange the points for JAL air miles. 
• Don’t pay for stuff with cash in convenience stores. You could use your credit card, but the quickest way is electronic money. Each chain of convenience stores supports a different player in the electronic money space:
  

Edy: the dominant player, supported at all convenience stores
Waon: the new kid on the block, supported at Family Mart and Ministop. Growing rapidly.
Nanaco: Seven Eleven
Suica/Pasmo: Most stores

• If you haven’t done so already, set up air miles accounts with an airline in each of the three global alliances. That way, whenever you fly, no matter which airline you use, you collect air miles using the relevant account. If you’re living in Japan, at least one of these air miles accounts should be JAL or ANA. JAL are part of the One World alliance and ANA are part of Star Alliance. There are credit cards connected to both JAL and ANA. Get one or both and get air miles each time you use it. You can also transfer points from other schemes to air miles.

Those are some general tips and avenues of investigation. Here’s what I’ve done:

• I already had an air miles account with BMI, who are part of Star Alliance. I therefore chose JAL instead of ANA. I got this credit card (the one on the left), which credits my JAL air miles account with air miles every time I use it. I also get miles when I use it to recharge my electronic money cards.
• The credit card I bought comes with a WAON card. Every time I use it at the convenience store, I get 15 miles. If I use other electronic money cards, like Edy, I get 10 miles.
• I have applied for the Tokyo Metro To Me Credit Card that offers an auto-recharge facility for PASMO. Every time it auto-recharges, every time I use it to ride public transport and every time I buy a new commuter pass, I get points. These points can be used to make subsequent purchases. You can also exchange these points for ANA air miles.
• I live on a subway line where I have to use PASMO to get my commuter pass, I can’t use SUICA. SUICA is generally far better than PASMO with wider acceptance and better deals on credit cards and points. This card gets good reviews, although it is JCB, which is useless abroad.
• I plan to also apply for an Edy card for the convenience stores that don’t accept WAON. I’m just trying to figure out the best one. A list of the different options is here.
  

Hopefully the above will give you some ideas if you’re a permanent resident of Japan. There are so many different options and I’m not sure if I have the best combination.

Why are loyalty systems so huge in Japan? Are they good for the economy?

I’m sure that the reaction of many readers will be, “What a hassle, I couldn’t be bothered with that”. It’s different here though - diligence is definitely a Japanese character trait. Of course, there are lazy Japanese people, but I’d say the majority always carefully do their duties and chores. Public facilities are always clean and efficient because of this quality.

It’s easy to see how point systems appeal in Japan. Effort and diligence are rewarded. It’s as simple as that. I try explaining to people that companies budget for these loyalty schemes by raising the basic price level to accommodate the discounts. If they didn’t bother, we could all pay less and save time too. Despite these attempts, the general attitude is that getting the best deal is a game and that point schemes make this interesting. It’s all very popular.

I’ve been wondering recently about the effect that the point systems have on the Japanese economy. As long as loyalty schemes are small scale and cover individual companies as they generally do in the west, I’m sure the effect is small. However, when you have enormous schemes like T-point, whose participating companies must account for an enormous amount of revenue in total, the effect may be much larger. How do you measure inflation when people are paying prices that are lower than those reported by the companies? Japan’s deflationary problem is well documented. Could it actually be worse than reports suggest due to points systems? Maybe I’m taking things too far but I really can’t emphasize how huge this is.

* Electronic money (電子マネー) is the Japanese term for IC chips inserted into cards and mobile phones, allowing you to tap contact areas and have the money taken from the chip wirelessly. In most other countries, this technology is restricted to public transport cards like Oyster in London and Octopus in Hong Kong. In Japan, the equivalents in Tokyo are called SUICA, for Japan Rail and PASMO, for the metro. These are now integrated so you can use either anywhere and you can use them on the bus too. There are lots of other equivalent cards in different areas of Japan like ICOCA and PiTaPa in the Kansai area and Kitaca and SAPICA in Hokkaido. Public transport isn’t the only area where you can use electronic money, you can take your SUICA card and use it in shops and with vending machines too. There are also other electronic money service vendors, like Edy, who offer the same service, but you can’t use these cards on public transport.


Photographs taken by (in order of appearance)

http://www.flickr.com/photos/ueblog/ / CC BY 2.0

http://www.flickr.com/photos/maynard/

http://www.flickr.com/photos/hazuijunpei/

http://www.flickr.com/photos/kankan/

http://www.flickr.com/photos/u-suke/

http://www.flickr.com/photos/brandonshigeta/

The Eternal Boy Band

Imagine, if you will, the boy bands that were popular in the early 90s. For those of you in the UK, that would probably be Take That. For those of you in the US, perhaps New Kids on the Block? Backstreet Boys? For those of you elsewhere, I have no idea.

Now imagine that these bands are still popular now, making music on a regular basis.

I know. The horror.

Don’t stop there though. Imagine further that members of the band star in dramas on TV every year. Imagine that they turn up as the lead actor in many movies too. Imagine that the band has its own variety show on TV every week that lasts for several hours, where they cook dinner for Hollywood celebrities, do comedy sketches and perform their music. Imagine that now, after almost 20 years, a double chinned and slightly portly Gary Barlow or New Kid is on countless billboards and television advertisements.

Nooooooooooooooooo! Pleeeeeaaase!

In Japan, this is a reality. Allow me to introduce, if you haven’t heard of them already, the band called SMAP.

Masahiro Nakai, Takuya Kimura, Shingo Katori, Tsuyoshi Kusanagi, Goro Inagaki

In typical Japanese English that makes little sense, SMAP stands for “Sports Music Assemble People”. The group consists of five members, each of whom Japanese people know very well. As I’ve discussed previously, social rank is very important in Japan and your age is a big part of determining this. Therefore, it is interesting that most Japanese people know the age ordering of the members and they definitely know which SMAP member is the oldest and which is the youngest. The eldest is Masahiro Nakai, who is the leader and is 36! (Incidentally, he is absolutely terrible at singing. Simon Cowell would destroy this man.) The youngest is Shingo Katori, 32, who is the clown of the group.

By far and away the most popular member is Takuya Kimura, or Kimutaku for short. When I studied Japanese in a language school in Tokyo, all of the female students from the Asia region (and some from outside Asia) loved this guy. He is Japan’s Brad Pitt. Disgustingly talented: he acts well, sings reasonably well, plays sports well and generally does everything pretty well.

SMAP are making waves again with a new series of advertisements and commercials for mobile phone network operator Softbank. Softbank bought Vodafone Japan a few years ago and are the smallest of the three main operators in Japan. They have been launching a number of very aggressive advertising and marketing campaigns in the last few years. Cameron Diaz and Brad Pitt have featured in many of their television commercials but now they’ve brought out the big guns: SMAP.

On the 1st of August, at 18:59, a television commercial lasting an incredible 60 seconds, unusually featuring the entire group, was broadcast simultaneously on 124 channels to the whole of Japan. The blog Naked Tokyo commented, “Pass the crackpipe”. Here it is:

I shudder to think of how much that cost Softbank. Let’s hope that they’re not leveraging themselves too hard with all of this marketing. So how can a boy band be so popular for such a long time? I think there are three important factors.

One is that Japanese pop stars tend to age well. Takuya Kimura still looks like he’s in his 20s to me. The other more important factor is the working culture. Japanese workers traditionally have the same job for life. The entertainment industry is influenced by this and there are many comedians and performers who have been in the business for a LONG time.

A good example is the comedian Tamori, who is 63 and appears on television every day on live variety programs. Due to a problem with one of  his eyes, he always wears sunglasses and they have become his trademark. Hilariously, he has even worn them when he has appeared in samurai dramas, set in times when sunglasses didn’t exist. Legend has it that he hasn’t taken a substantial holiday since 1984! He’s really entertaining to watch and like all Japanese comedians, comes across as a really nice guy.

The third factor is the company that holds SMAP and all idol groups on a leash: Johnny & Associates. Johnny Kitagawa and his talent agency recruits and trains male idols in Japan. They have enormous power in the entertainment industry due to their monopolization of male talent for the last 40 years. If you want male performers to appear on your show, you need to go through Johnny, who owns all of them. It’s obvious that SMAP are still a huge money spinner for Johnny and I reckon that his company drives them to continue working hard, despite the fact that any of them could retire right now. I know that if I had their money, and I was working as hard as they do, I would.

Johnny and Associates has been mired in controversy for a long time. In the 90s, a book was published by a male idol accusing Johnny of sexually abusing the young boys that he recruits. Subsequent to that, about a dozen other idols came forward to one newspaper, Shukan Bunshun, and on condition of anonymity contributed to a 10 part series detailing more accusations of abuse. Johnny sued the newspaper for libel and in 2002 won the case and was awarded 8.8 million yen (a relatively small amount). No other newspaper or media agency joined Shukan Bunshun in accusation. As one entertainment reporter put it in a New York times article:

"If you're a television station and you don't comply with Johnny's Jimusho's wishes then all the popular stars will be withdrawn from your programs, your variety shows will not get any interviews with celebrities, and your ratings will plummet," said Masaru Nashimoto, an entertainment reporter. "The same thing goes for publications," he added.

Despite these upsetting stories, and my joking earlier, I must give credit where it’s due and admit that SMAP are entertaining. I must confess to watching many of their TV programs and not switching the channel when I could. They do have personalities that make you watch.

More Difficulties in Claiming Overtime

In a previous post, I wrote about the work ethic in Japan and how it can be difficult to go home early and take holiday. Today, I’ve made some surprising discoveries about how my company operates.

Every month, I fill out an overtime sheet, writing down the hours that I’ve worked each day. Today, my boss came over and asked me what I was doing in the second week of last month. My overtime sheet stated that I had worked extra hours during those days. I told him that I had no idea and that I couldn’t remember. When I leave the office, I make a note of the time I leave. I don’t make a note of what I’m doing.

It turns out that my boss has been filling out his own excel spreadsheet for the past year that I have been working with him. For every day that I claim overtime, he has to write the reason why I’m working overtime. Every manager in the company has to do this. I couldn’t believe it, he’s been doing this for a year, and this is the first that I know about it! No wonder he gave me a funny look the first time I handed in my overtime sheet. Compared to other people who work the same hours as me or longer, I think I must be claiming much more.

On first inspection, there might be an argument that this is a good thing. If managers are told to report the reason for overtime, they might encourage their workers to go home when there’s nothing to report, and think carefully about why their workers are still in the office.

In reality, managers are just going to pass this responsibility on to the workers. This has happened to me. Every day, I’m going to write down exactly why I’m still in the office. I think that my colleagues, and the typical Japanese worker, will find it more difficult to claim overtime if they have to say why every time. If they’re still in the office simply because their boss hasn’t gone home yet, they definitely won’t claim. They will also worry about their manager coming over and saying, “Why were you here until 10pm working on this? Why didn’t you finish earlier?”

If Japan is going to address the working hours issue, the first thing that must be done is to face up to the facts. Working hours should be logged impartially by a third party. Making a worker log them himself/herself is bad enough. Making the workers write down why is even worse.

(Photo taken by inoc)

Applause for the New Employee

I've posted before on how hard Japanese people work, and how you find yourself in an environment where you are encouraged and supported to do so. It all starts on the first day, when you are fully indoctrinated into the company...

As you can imagine, I was quite nervous on my first day at this company last year. It started with a private chat with one of the more senior members of the company. He and I sat opposite each other in the middle of one of the large meeting rooms. It was the first time that my company had hired a westerner and he was very curious about me. He asked me all of the questions that I had already answered at the interviews – “Why did you come to Japan?”, “Why did you apply to this company?” etc. I must have given some good answers because he has been very friendly to me ever since. Whenever he passes my area of the office, he comes by and asks me how it’s going, how I am, and says “Gambatte!” with a big grin and slaps me on the shoulders.

After this informal chat, I was given a tour of the office and introduced to each department. Two new employees joined today and the same thing happened to them. A member of HR guides you round and introduces each department and its boss. Everyone in that department will stop what they are doing, stand up straight and face the new employee. The new employee then says, “My name is …. I have been recruited to the …. department. Yoroshiku Onegaishimasu.” He then bows and everyone bows in response.

I hadn’t anticipated the tour, but when it happened it was similar to normal introductions in Japan; a bow instead of a handshake and a few standard words and phrases. What I hadn’t anticipated, was the applause that followed! I found it flattering and embarrassing. In my arrogance, I suspected that it might be due to my nationality. I immediately said thank you and put up my hands to petition them to stop! I have since discovered, after the arrival of many new employees, that it had nothing to do with my nationality. Everyone gets applause and this happened today too. I should have just smiled and accepted the welcome.

After the tour of the departments, I was taken into the palatial section of the office that houses the executives. There are five executives in the company and their offices occupy the same floor space as 100 normal workers. They enjoy a lot of privileges and exercise complete and absolute control over the company. Almost nothing is done without their approval or design. The conversations that I had with each of them went well since I knew what they wanted to hear. Every employee I met that day wanted to hear the same thing: an introduction and a promise to work very hard for the company. They wanted to hear that I would join the team and be part of the collective.