Sign of the Times
Public institutions should adopt point reward system for ID cards
It's not uncommon for the Japanese today to open their wallets to find dozens of cards, including transportation passes, bank cards, credit cards, and discount cards from department stores and mass retail outlets.
Credit cards alone account for 300 million cards issued in this country, and IC cards used as electronic currency account for 100 million. Add to that the various printed "point cards," or loyalty program cards to reward returning customers, and we're talking a lot of cards. High-tech cards such as IC cards, rewritable thermosensitive recording cards and network-based service cards are more common in Japan than they are in other countries.
The most "high-tech" of these all are the contactless IC cards used in the railway system. With the capability of such IC cards, it is not difficult to integrate the functions of dozens of cards into one such card. In fact, Suica and other transportation-related contactless cards are multifunctional and can be used as a commuter train pass, reserved-seat ticket, and electronic money.
In a real mature society, however, the fact that something is "technologically viable" doesn't mean that it will be realized. Every company issues cards to lock in customers to itself; they expect that customers who own a card for their store will be more likely to come back later. Customers, on the other hand, make companies compete for their patronage by collecting cards from various shops.
Nowadays, we face an overabundance of cards promising a multitude of services with a variety of conditions. It's difficult to figure out which card used in what types of situation works best to one's interest.
While one of the emerging sales pitches of "point cards" is the transferability of points among member companies of the same corporate alliance, the competition among these alliances to lock in customers is very fierce. Moreover, the conditions of point-transferring are very complicated.
For a company, electronic money and points are a type of debt. With the expansion of points programs, there has been a growing international trend to regard the issuance of corporate points as an "accrual of debt" in order to protect consumers who have collected points.
It's one thing if points are redeemed with a service provided by the company that granted the points. New complex accounting issues are raised if points are exchanged for another company's services. The companies involved must settle the transaction monetarily. Settling accounts using electronic currency with its all-purpose versatility is bound to be even more of a hassle than a simple exchange of money. This is why the process of exchanging points is a complete maze, even between group companies in an alliance.
The idea of "a good deal" is growing increasingly complex and new services pop up constantly to the extent that advice on making the most out of cards, including their optimal combinations, have become the subject of special television programs and magazine features.
It is thanks to -- or unfortunately because of -- computers and networks that such elaborate services have been made possible. It is simply impossible to manually handle the awarding of points to small amount purchases, say a few hundred yen's worth, across the country every day based on a convoluted combination of conditions. Managing intricate point-based transactions between member companies can't be handled manually either in today's complex scheme.
Once a card infrastructure is established, it is very easy to start new services as they're conceived simply by making changes in computer software. It also becomes easy to adopt a competing group's ideas and appropriate them with a minor change. Service providers want to draw as many customers as possible with services that differentiate themselves from competitors. Customers look for the best deal possible. Together, they have created a proliferation of complicated card services beyond quick comprehension.
The battles for survival and the symbiotic relationships among the services developed by various companies make up the ecosystem of the business world today, the drama of which is played out by the cards in our wallets.
Incidentally, we have accumulated quite a number of cards from public institutions as well, such as driver's licenses, health insurance cards and personal and corporate seal registration cards. Past plans to integrate the functions of these separate public service cards into a single card, namely the Juki Net card or Basic Resident Register card, fell through. While privacy was highlighted as the foremost concern regarding the consolidation of services to the Juki card at the time, it has been said that a typical Japanese jurisdictional turf war between various government agencies had erupted behind the scenes. It seems that the same proliferation of cards that plagued the business world is taking place with cards in the public sector. This is a quintessential Japanese situation, for ordinarily, it should be the role of the state to carry out what the private sector cannot.
Of late, there has been renewed debate in Japan on the implementation of the taxpayer identification number system. If the system actually goes into effect, this would mean the public would be issued another card, i.e. a taxpayer ID card. If, like private companies, public institutions find it difficult to consolidate their competing cards into one, then why don't they go all out and adopt a point reward system, just like the private sector?
Entrusting various public functions to non-profit organizations to realize a smaller government is a worldwide trend. When taxpayers make donations to non-profit organizations, why not give them "points" instead of just making the donations tax-deductible? What if one's card were to be upgraded to "gold" or "platinum" after a certain number of points are accrued, entitling the cardholder to go through a special embarkation procedure with minimal hassle when traveling abroad, or to more pleasant experiences during errands run at government offices, complete with a welcome greeting by personnel, tea and a moist hand towel to freshen up? The public would be much happier with competition over who can provide better services than from turf battles among ministries and agencies. (By Ken Sakamura, Professor of Applied Computer Science at the University of Tokyo)
(Mainichi Japan) September 3, 2009