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FinTech Business

As of March 31, 2016

Credit Cards (EPOS Cards)

First Credit Card in Japan

After issuing Japan's first credit card in 1960, MARUI GROUP has continued to innovate its cards while responding to changes in social trends and customer needs, thereby spurring on the evolution of its credit card services business. In 2006, the Company began issuing EPOS cards—Visa cards equipped with IC chips that were usable for a wider range of purposes than prior cards. These cards addressed an even greater variety of customer credit needs.

Strengths of EPOS Cards

1. Ability to Improve Value for Collaboration Partners through Personnel with Retailing Experience

EPOS card application centers are staffed by full-time personnel that possess both retailing and card expertise. Such personnel are able to provide fine-tuned support to partners through means including offering advice on how sales staff can encourage customers to use or apply for credit cards. This support can help create fans of partner facilities, thereby improving the value of collaboration for our partners.

2. IT Frameworks

EPOS cards are IC-chip-embedded VISA cards that can be issued on-the-spot at stores and are immediately usable. We have also introduced other frameworks taking advantage of cutting-edge IT, such as our system for high-speed issuance of cards via tablets and our patented credit card application app. These frameworks help us limit costs while realizing high card usage ratios.

3. Unique Credit Expertise and Customer Assets

Since its founding, MARUI GROUP has operated under the basic belief that creditability should be built together with customers. As opposed to being assigned based on a customer's age, profession, or income, we feel that credit should be shaped through a customer's usage and payment records. This belief is one of the reasons that our cardholder base is characterized by a large number of young people, who tend to have large demand for credit, and women.

EPOS Cardholders: 6,270,000 (As of September 30, 2016)

4. In-House Development of Systems

Our ability to exercise the strengths of the FinTech business is supported by MARUI GROUP's unique business model that integrates the operation of this business with that of the Retailing business. In addition, by working together with the Group's system development company, we have created an in-house structure capable of developing more than 100 systems a year. This type of inter-Group coordination drives the swift evolution of our business model.

Operating Environment

The Japanese credit card market is still developing. It is expected that the installation of infrastructure leading up to the Tokyo 2020 Olympic and Paralympic Games will stimulate average annual growth of 8% in this market and that annual transaction amounts will increase from the current ¥50 trillion to more than ¥70 trillion. The growth of EPOS card transactions is particularly strong, exceeding the industry average, and we will target further growth in the future.

The number of cardholders of EPOS Card was roughly one-fourth that of other retail-type credit card companies, standing at only 6.1 million on March 31, 2016. Similarly, while EPOS card transactions have risen above ¥1 trillion, those of other companies' cards amount to more than ¥4 trillion. Nonetheless, the amount of operating income per active EPOS card is exceptionally high in comparison to rival cards, making for impressive profit margins.

Card Shopping Transaction Trends and Future Credit Card Market

Source: Consumer Credit Statistics from Japan (FY2015), Japan Consumer Credit Association for data from the fiscal years ended March 31, 2012–2016, preliminary calculation by MARUI GROUP for the fiscal year ending March 31, 2021

Comparison with Competitors (Figures from FY2016, segment based; Source: MARUI GROUP)

Receipt of 16th Porter Prize by MARUI GROUP's Credit Card Services Business

MARUI GROUP's credit card services business has a long history dating back to its founding and the installment payments offered then that gained additional depth when the Company issued Japan’s first credit card in 1960. This business was awarded the 16th Porter Prize. The rationale for this selection included a high evaluation of factors such as how we ensure the convenience of credit card issuance in recognition of our cards' position in supporting retail, how our cards are largely held by customers under the age of 40 due to our policy of building creditability together with customers, and the large ratio of revolving payment usage.

About the Porter Prize
The Porter Prize is an award that was created in July 2001 to bestow recognition on Japanese companies that have achieved and maintained superior profitability in a particular industry by implementing unique strategies based on innovations in products, processes, and ways of managing. The name of the award is derived from Professor Michael E. Porter of Harvard University.

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