|No.107 August 1, 2006|
|Secondary Currencies: "Mileage Points"
—What can Japan learn from the US business currency alliances?—
Nomura Research Institute (NRI) has estimated the total annual value of business currencies issued in Japan in 2005 as more than 330 billion yen. Business currencies, together with the spread of credit cards and electronic money, are likely responsible for a fall in the amount of cash in circulation.
In the past, US airlines have used mileage points to retain customers and generate profit by selling their miles. For these purposes, they restricted the use of their mileage points to purchasing reward tickets and focused on the spread of their own business currency. However, the increase in the number of mileage points in circulation has led to difficulties in ensuring that rewards can be provided. As a result, there is a move away from restrictions to enable rewards to be more readily available. One example of this move is the appearance of business currency exchange platforms.
In Japan, also, business currencies have thrived with tie-ups centered on the airlines. The direction pursued under these tie-ups is to generate the effect of driving customers to partner companies and to carefully adjust the "exchange rates" for each company's business currency to generate profits by considering business currencies as business opportunities.
In addition to the existing alliances centered on the airlines, as we approach 2010, we propose new types of tie-ups based on product value chains, services and areas according to the customer behavioral processes and product life cycles.