The "pitfalls" of My Number Points that caused some businesses to suffer unexpected losses

"My Number Points" is a Japanese project that gives points that can be used for various cashless payments to those who obtain My Number cards.

Japanese government has invested 1 trillion yen of the national budget in this project as a measure to promote the spread of My Number cards, and the first phase will be carried out in 2020 and the second phase in 2022. A total of 75.56 million users are supposed to apply for My Number Points by September 2023, when the project ends. It is still fresh in people's memory that this was a good opportunity for payment companies to acquire members and use the service for payments.

However, it is surprisingly unknown that some businesses have faced unexpected losses due to My Number Points.

For example, Seven Bank, a subsidiary of Seven & i Holdings, reported a loss of about 1.2 billion yen at its April-December 2023 financial results briefing. The core of the loss was Seven Card Services, a subsidiary of Seven Bank that issues credit cards and electronic money "Nanaco."

Seven Card, which participated in the My Number Point Project, recorded an unexpected 1.2 billion yen as an expense as a result of the Nanaco points it had given out being used more than expected. The company also expects to incur another loss of around 2 to 2.5 billion yen in the January-March 2024 period, and says that Seven Card alone is expected to fall into the red for the full fiscal year.

The reason for these losses is the design of the My Number Point Project.

The My Number Point Project allowed users to receive points worth 5,000 yen in the first round and 15,000 yen in the second round, which could be used for various cashless payments, but the payment companies designated as the users had to deduct the points from their sales or record them as expenses for accounting purposes.

The government therefore decided to provide subsidies in the amount of the points given out, but points have an expiration date, and points that expire and become invalid will be treated as revenue for accounting purposes, meaning that some companies will benefit from the invalid points.

In light of this situation, the government has decided to require businesses that wish to participate in the My Number Point Project to submit to the secretariat in advance the "lapse rate" of points based on usage records over the past few years, and to deduct the amount that is expected to lapse in advance and provide subsidies only for points that will actually be used.

In other words, if the lapse rate is as expected, the subsidy is provided for the points used, so the business will neither lose nor gain, but if the points are used more than expected when the secretariat submitted the data, the number of lapsed points will decrease, but the subsidy will only be provided based on the lapse rate at the time of submission, so the business will incur a loss. This is why Seven Card ended up recording a loss.

Furthermore, Seven Card said that it had miscalculated that the points given to users in the project would be used sporadically, and that it was a miscalculation that many users used up their points all at once.

According to a survey by Toyo Keizai, the expiration date of My Number Points has not yet been reached and many businesses have not yet reached their final break-even point, so this is still just a prediction, but there are potentially many businesses that will incur losses like Seven Card.

In addition, some businesses have not set expiration dates and therefore will not be affected.

POINT

Major businesses that had unlimited My Number points usage period

Seven Card set an expiration date for the My Number Points granted under the My Number Point Program (until the end of March the year after next if granted between April 1st and the end of March), but some participating businesses did not set an expiration date.

For example, Rakuten Group's Rakuten Edy and AEON Group's WAON had no expiration date. Also, PayPay and au Pay did not set an expiration date for the My Number Points granted.

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