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Japan-Update

Rakuten takes the lead in Japan's credit card market

Rewards program keeps shoppers within the Japanese e-tail giant's ecosystem

TOKYO -- Rakuten's credit card unit apparently led Japanese card issuers in purchasing volume for the first time in the six months through September, thanks in large part to a loyalty program that the online mall operator plans to expand further.

Consumers spent 2.99 trillion yen ($26.5 billion) on cards issued by Rakuten Card between April and September, up 21% on the year. This was the highest figure among Japanese credit card issuers, not counting co-branded cards, Rakuten Card President Masayuki Hosaka said. Merchants outside the Rakuten group accounted for more than 80% of this figure, according to Hosaka.

Rakuten's rewards program is the biggest driver of this growth. The group handed out some 200 billion yen worth of Rakuten Super Points to customers in 2016. Though Rakuten cards generally offer a return of 1%, typical for the industry, the rate jumps to 4% for purchases on the Rakuten Ichiba virtual mall.

Rewards program members can spend their points within the Rakuten group, creating a virtuous cycle in which generous point offers draw more customers to Rakuten Ichiba. Though the large volume of points adds to Rakuten Card's liabilities, the additional business the program brings to the virtual mall makes it worthwhile, Hosaka explained.

Rakuten Card is weighing letting customers redeem points for credits on their card statements, according to Hosaka. Rakuten also plans to expand the network of partner companies that accept Super Points, looking to grow the group's sphere of influence.

Outside Japan, Rakuten Card is looking to use its foothold in Taiwan -- where its base of cardholders is still growing in its fourth year of operation -- to expand elsewhere in Asia, as well as make headway in Europe and the U.S. In Europe in particular, it is mulling how to leverage Rakuten's affiliation with Spanish soccer powerhouse FC Barcelona.

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