After Starbucks announced launch of its prepaid card with a new loyalty program, messaging application Line has launched its prepaid debit card called the Line Pay Card at the brand’s Line Conference Tokyo 2016 occasion. The card has been developed in partnership with the credit card company JCB and is supported by a well-developed loyalty program along with Line’s app integration.

1. After Starbucks now messaging app Line launches
its prepaid debit card
Analyst View Point Series

2. Table of Contents
Market Context
Key Insights
PayNXT360 View

3. Market Context
After Starbucks announced launch of its prepaid card with a new loyalty program,
messaging application Line has launched its prepaid debit card called the Line Pay
Card at the brand’s Line Conference Tokyo 2016 occasion. The card has been
developed in partnership with the credit card company JCB and is supported by a
well-developed loyalty program along with Line’s app integration.

4. Key Insights
Starbucks loyalty program through prepaid card system
Starbucks is all set to launch its new loyalty program effective from April this year. The
major change which has been implemented in the new loyalty program is the earning
of stars. In the old system, the number of stars earned was based on the count of
transactions of a customer. In the new system, the stars would be awarded based on
the amount spent at each transaction. Another significant aspect of the loyalty
program is that, the prepaid card system will be launched by the end of 2016, which
would function like a Visa Card and would be acceptable at other retail outlets too.
The reward point structure on the card usage outside of Starbucks has yet not been
structured, but it will soon be in place.

5. Key Insights
According to the old loyalty program of Starbucks, each transaction earned customers
a star. This resulted in rewards in terms of a free coffee or snack after 12 visits with
spending as less than $2. It took 12 stars to reach the Gold status. This also resulted
in the increasing trend of splitting the bill. However, according to the new loyalty
program, customers will be awarded reward points based on the expenditure amount.
Starting from April 12, customers will be awarded two stars per dollar spent at
Starbucks. Also under the new program, it will take 125 stars to reach the Gold status.
The company has announced that at the launch of the new loyalty program, existing
customers will benefit from the program, as their reward points will be multiplied by 11.
This step is expected to increase the acceptance of the new scheme among present
customers.

6. Key Insights
The brand has stated that the new program was launched after going through the
customer feedback and suggestions on the “My Starbucks Idea” program. On the
Starbucks Rewards Prepaid Card front, the company has partnered with Chase for the
launch, later this year. This reloadable card could be used for purchases even outside
Starbucks outlet with Visa Card acceptance..

7. Key Insights
Another interesting thing to note is there is no service charge or charge of loading
money in this prepaid card. However, it might attract foreign transaction charges in
case or lose or replacement. The card can be applied using the Starbucks mobile app
or through company website. The reward point earning system on usage of this card
against other retail outlets has yet not been declared by the brand. It can be presumed
similar to other cards. It might be a point for a dollar spent in some cases or three or
four times over, with a merchant.

8. Key Insights
Starbucks, the brand which bases its business mainly on coffee sales, expects that
the new program will aid the better store functionality in the long run. It is also
expected to increase the other food item sales among people in order to earn extra
reward points. The Prepaid Card system is also expected to draw in millennials.

9. Key Insights
Line Pay Card
Currently, the card will be available to Line users across Japan which accounts for 68
million customer base. The Line Pay card can be used by people across 20 million
merchant outlets around the globe and 9.6 million merchants within the country due to
the affiliation of JCB with American Express. The card can be tied up with Line Pay
application which was launched back in 2014 as a standalone mobile app for online
and store purchases. It will be available in four designs showcasing the popular Line
characters. The major advantages of the Line Pay card are it does not require any
credit screening verifications, does not have age limits and no annual fee is charged
for registration.

10. Key Insights
Interestingly, a brand new reward point system has also been formulated with the
card. A 2% cash value on every purchase will be awarded and one point will be
equivalent to one Japanese Yen. The process of merging the present Line Free Coins
reward program is also on its way. This will enable the users to earn points through
the main Line app. The brand announced that usage of the card for purchasing Line
services such as mobile internet or viewing advertisements will benefit the users with
2 points per 100 Japanese Yen spent. The accumulated points could be used for
purchases in Line Store and Line Friends online platform. If a user accumulates more
than 1000 points, then it could be converted to Line Pay balance or real time cash.
This could be used for sending money, withdrawing cash at selected bank accounts or
can be used at Line affiliated stores.

11. PayNXT360 View
This may indicate a new trend where core companies from retail and other consumer
centric businesses with sizable consumer base are going to use open loop prepaid
card as a strategy to boost sales and increase loyalty. This would indeed impart
momentum to growth of prepaid cards across developed and emerging markets.

12. To Know More
To know more and gain deeper understanding of
prepaid card industry in Japan, click here