Providing a Multitude of Financial and Payment Solutions 

Offering Total Solutions—From Actual Logistics to Information Management 
The Kuroneko Anshin Kessai Service Also Supports B-to-B Businesses

Established in 1986, Yamato Financial Co., Ltd. (YFC) is the core provider of the Yamato Group's financial and payment solutions, including processing delivery fees or payments for mail order items delivered via TA-Q-BIN. With the recent diversification in payment methods, YFC is now focusing on enhancing the customer satisfaction of consumers receiving packages through TA-Q-BIN, as it launched a new system in May 2011 that can process payments for nearly every type of e-money used in Japan. YFC is also actively looking into new business opportunities, such as the Kuroneko Anshin Kessai Service in which the Yamato Group directly collects and guarantees accounts receivable on behalf of wholesalers and manufactures doing small-lot B-to-B business transactions.
(Reporting and editing by Nikkei BP Consulting Inc.)

Helping Enhance Company Logistics as well as Consumer Lifestyles through Financial and Payment Solutions

Kenichi Shibasaki

Yamato Financial Co., Ltd. (YFC) handles payment operations on behalf of the Yamato Group, such as the collection of TA-Q-BIN delivery fees and collect on delivery (COD) services for mail order items. In fiscal 2011 alone, YFC handled more than 1 trillion and 28 million yen in payments involving some 108.62 million transactions. "Money collected through TA-Q-BIN for product purchases represents the hard earned cash of the buyer. This is why the decision was made for an entity to manage this money outside of Yamato Transport. That entity is YFC, which was established in 1986. In addition to cash management, our mission from a financial and payment standpoint is to constantly pursue customer convenience and contribute to society," emphasizes YFC President Kenichi Shibasaki.

Since YFC's founding, the Yamato Group has gone on to increase the number of parcels it handles in its TA-Q-BIN and mail order businesses, which has helped to steadily boost YFC's business performance. However, "Recognizing that we cannot rely solely on growth from the mail order market, YFC continues to take on a wide range of challenges in new sectors by leveraging its long-standing expertise in developing payment services and its user-driven sales competencies. The fruits of our labor are finally beginning to pay off," notes Shibasaki about the current situation of YFC.

Through expanding these new businesses, Shibasaki plans to grow the net sales of the Yamato Group's financial services arm, including Yamato Lease Co., Ltd., which works with YFC to provide leasing services, and Fine Credit Co., Ltd., a credit company, to 85 billion yen in 2013, or 1.5 times today's figure, and all the way to 150 billion yen in 2019. "In the B-to-C sector, we are aiming to make payments more convenient in a wider range of situations, centered on our ability to process multiple types of e-money—a service only available through the Yamato Group. In the B-to-B sector, we will combine our Kuroneko Anshin Kessai Service (a collection service for companies' accounts receivable) with the logistics technologies of the Yamato Group to provide an innovative new one-stop solution for company procurement and product deliveries, which will help enhance the management of both the buyer and seller," explains Shibasaki as he introduces his strategy to achieve this plan.

Spurring Demand from Consumers Who Want to Earn Loyalty Reward Points by Accepting 99% of E-money used in Japan

As part of its payment solutions for the mail order segment, YFC has focused most on enhancing the convenience of buyers who pay for a product upon delivery. To date, YFC's COD services have included not only cash but have expanded to credit card and debit card payments, payments made at a convenience store or post office, and payments made on the computer or using a mobile phone.

Recently, YFC has begun processing payments made with e-money. In June 2010, the Yamato Group became the first in the industry to accept payments made with retail-related and independent electronic prepaid cards, such as nanaco, Edy and WAON. As of May 2011, it now accepts payments from the eight main transit-related e-money, including Suica, ICOCA and PASMO. "Today we are able to accept payments from 99% of the e-money used in Japan. Only the Yamato Group offers such a wide range of e-money payment options," states Shibasaki proudly.

In order to accept payments for mail order items using e-money, YFC became the first in Japan to develop a handy terminal that can process payments made with the main types of e-money used in Japan. Shibasaki states, "The best thing about this terminal is the fact that it is mobile and can process nearly every type of e-money used in Japan."

Hiroyuki Ito
B2C Payment Service Company

The reason why YFC is focusing on the diversification of payment methods is it wants to strengthen its support of mail order businesses, which have shown continuing growth, especially in the online shopping sector. "We have data that shows nearly half of all online mail order buyers will switch sites if it does not offer their preferred payment method; even if that site has the product they want. As evidenced from growing demand, especially from female consumers, for payments to be made with e-money that has a loyalty reward point program, online mail order businesses now find it essential to accept payments using e-money," says President Hiroyuki Ito of B2C Payment Service Company.

As around 60% of all e-money is used in the greater Tokyo metropolitan area, where Suica and PASMO dominate, "Since May 2011 when we began to process payments using the eight main transit-related e-money brands, the number of mail order businesses that have decided to accept e-money payments has risen sharply with the hope of capturing new customers," adds Ito.

Mail order businesses are also anticipating an increase in the amount each buyer spends. "Perhaps this is because consumers want to earn loyalty reward points, but data so far shows that spending using e-money has risen above 10,000 yen per purchase and has grown some 10% to 20% more compared to spending with other payment methods. This trend is clear across all product segments," says Ito as he highlights the hidden effect of e-money. Businesses that have begun accepting e-money using YFC's payment system have sharply increased from around 5,000 to some 15,000 as of August 2011.

Reducing Mail Order Business Costs by Cutting Administrative Work

Mail order businesses that use YFC's payment services stand to benefit in many ways, not simply through gaining access to a variety of payment processing methods. "As a financial services company that can process the largest range of payments in Japan, including e-money, our customers stand to benefit through reduced mail order business costs if they use us to process all of their payments," Shibasaki notes.

In order for a mail order business to offer a variety of payment methods they must sign individual agreements with each credit card company and e-money provider. This requires cumbersome administrative processing operations, which creates higher personnel costs and as a result becomes a major factor behind rising costs for mail order businesses. By consolidating payment processing with YFC, a mail order business stands to reduce these administrative costs. In the case of small and medium-sized mail order businesses, it is more cost effective to use YFC rather than sign an agreement with each credit card company and e-money provider. Therefore, these businesses stand to also benefit from reduced payment processing costs.

In addition, Ito shares the following insight. "The number of successful cases is also on the rise where a business outside the mail order segment was able to streamline their reconciliation operations and cut their administrative processing costs by taking advantage of our COD and e-money settlement services. This shows that YFC's solutions are evolving from streamlining payment processing to rationalizing back office operations."

Kuroneko Anshin Kessai Service—Directly Collects and Guarantees the Payment of B-to-B Accounts Receivable

New solutions are beginning to bear fruit in B-to-B sectors outside the mail order segment. One such example is the Kuroneko Anshin Kessai Service that was launched in April 2009.

The service primarily supports small-lot transactions involving manufacturers or wholesalers. Recently a large number of regional second- and third-tier wholesalers, which had handled the distribution needs of small and medium-sized retailers, have gone out of business, and so these retailers have been looking to deal directly with first-tier wholesalers. However, B-to-B business dealings primarily involve credit transactions (sales on credit). Fearing the risk of delinquencies and irrecoverable receivables, major wholesalers have shied away from doing business with these retailers. Furthermore, major wholesalers do not have a system in place to deliver small-lot purchases to rural areas in Japan.

The solution for these challenges has been the Kuroneko Anshin Kessai Service. In the service, the Yamato Group ships small-lot deliveries to the retailer from the wholesaler's distribution center, while YFC handles all payment processes, from requesting payment to collections, and in certain instances performs a credit investigation and guarantees the accounts receivable. Therefore, "Wholesalers begin business transactions [with these retailers] with peace of mind. One of the companies in the Yamato Group's financial services arm, Fine Credit, retains broad expertise in credit management, which has helped make this service a reality," Shibasaki stresses.

Satoru Kubota
B2B Payment Service Company

This service also benefits retailers who are the buyers in this scheme, notes President Satoru Kubota of B2B Payment Service Company. Until now, many retailers were forced to make all cash transactions in order to start a business relationship, but now with the use of credit transactions, these same retailers can improve their cash flow. Kubota says, "There were also retailers that had trouble keeping popular items in stock since each transaction [with the wholesaler] was small-lot and fewer deliveries were made. Using the Kuroneko Anshin Kessai Service, items are shipped via TA-Q-BIN, so products can be delivered promptly when needed, even if they are small-lot."

The Kuroneko Anshin Kessai Service is used not only by wholesalers but also by manufacturers who engage in B-to-B mail order business. Examples include a medical manufacturer that sells pharmaceuticals and medical consumables to hospitals, as well as a food and pet product manufacturer that sells directly to retailers, bypassing wholesalers.

These manufacturers have provided hugely positive feedback regarding the service as they no longer face the burden of credit management and can reduce the added effort and expense of shipping products as well as collecting receivables. In the case of a medical manufacturer that introduced the Kuroneko Anshin Kessai Service for its mail order business targeting hospitals, the company was able to successfully and significantly expand its customers, as it saw sales grow some 30% over the same period from the previous year.

Reducing Route Sales Costs with the Kuroneko Anshin Kessai Service

"This service has been used by companies not only for a new business venture, but also to reduce costs. For example, even companies that use route sales to deliver products and collect receivables are weighed down by costs to keep this structure going, with some unable to get around to their small and medium-sized customers. Therefore, more and more companies are using the Kuroneko Anshin Kessai Service to address this issue," says Kubota.

"The Kuroneko Anshin Kessai Service is a service where products are delivered via TA-Q-BIN and the collection of receivables guaranteed. There are a growing number of companies utilizing this service together with TA-Q-BIN COLLECT (COD) to help replace small-lot and faraway transactions that make the conventional route sales format inefficient. As delivery fees and payment processing commissions are a variable expense, there have been many companies that have successfully cut costs by a wide margin," explains Shibasaki.

Shibasaki adds, "We have also begun to offer sales promotion assistance to companies that employ the Kuroneko Anshin Kessai Service." For example, YFC has proposed a sales promotion solution for its customers where direct mail is sent through Kuroneko Mail to dig up demand from their previous customers that no longer do business with them. There have been cases where these previous customers were forced to end their business dealings because of cumbersome payment processing and the frequency of delivery, even if they liked the product they were buying. Employing the Kuroneko Anshin Kessai Service eliminates these problems and paves the way for business dealings to start back up. "There is a higher success rate [for this method] when compared to sending direct mail out of the blue to a new prospective customer. There have even been cases where this success rate was nearly threefold," stresses Kubota.

Use of the Kuroneko Anshin Kessai Service has also enabled some companies to cultivate rather unconventional customers. "Major first-tier wholesalers have begun direct sales at factories and offices as well as sales aimed at nursing care facilities and day cares. Even if a certain sales volume can be achieved, this market was considered difficult in light of the conventional costs associated with credit management, order taking, delivery and collections," explains Kubota.

YFC has also begun efforts to utilize the Kuroneko Anshin Kessai Service concept in international commerce. The scheme for this solution involves the Yamato Group handling the procurement of products or components in Japan for export, and once they arrive at the Group's warehouse, YFC then temporarily purchases the products or components and pays for them in cash. International procurement transactions are in most cases settled using notes, and "in some cases the payment term is 180 days into the future," notes Kubota. Therefore, this service carries with it the merit of improving cash flow for small and medium-sized companies in particular.

Opening New Markets that Aid Consumer Lifestyles

Although YFC's B-to-B related businesses have just taken off, Shibasaki feels an avalanche of momentum building as volume in the first quarter of 2011 increased 80 times over the same period in 2010.

"Moving forward, in addition to sales of distribution and payment functions, we will focus energy on solutions that help improve the management efficiency of our customers," stresses Shibasaki. "We hope to make payments even more convenient in the future across a wide range of consumer situations. There are still many markets out there that are losing sales opportunities because consumers cannot find the time or energy to pay amidst their busy lifestyle. If we can find a solution to such challenges, we will be able to generate new markets."

We have begun to look into new possibilities in a wide range of payment markets that have until now been largely overlooked, such as collecting membership fees for alumni associations, liquidating someone's personal belongings after their passing, or collecting donations for temples. "I expect our e-money handy terminal to play an integral role in a variety of payment solutions going forward," says Shibasaki.

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About the Yamato Group

The Yamato Group includes the following companies: Yamato Transport Co., Ltd., which has developed an express delivery network nationwide; Yamato System Development Co., Ltd., which develops and operates diverse IT solutions including data centers; Yamato Home Convenience Co., Ltd., which transports and sets up consumer electronics, household goods, and machinery that cannot be transported via express delivery; Yamato Logistics Co., Ltd., which specializes in domestic and overseas logistics outsourcing; Yamato Financial Co., Ltd., which provides settlement services; and others. These companies pool their talents, which encompass "information, logistics, and settlement", to provide optimal solutions from a comprehensive perspective to the problems of client companies.