Competition heats up among Japan loyalty programs

Competition is getting increasingly fierce among Japan's hugely popular customer loyalty programs. Two of the biggest players to offer points-based reward systems have joined forces in a bid to solidify their hold on the sprawling market.

Culture Convenience Club and Sumitomo Mitsui Financial Group made the merger official on Monday. The firms combined their T Point and V Point programs, keeping the V Point name for the new system.

Culture Convenience Club operates a chain of movie rental shops and bookstores. It launched T Point in 2003. The pioneering program enables users to collect points when they shop at business partners such as convenience stores and online shops. The users can then redeem the points in place of money.

But T Point has faced increasingly stiff competition from mobile phone companies, which have launched their own loyalty programs.

Users of the V Point system rack up points by using their credit cards to make purchases.

Customer loyalty programs are big business in Japan.

More than 110 million people have accounts with Ponta Point, which is operated by mobile carrier KDDI and others. Rakuten Point operated by Rakuten Group and D Point operated by NTT Docomo have about 100 million registered users each. SoftBank's PayPay Point has over 63 million.

As of the end of March, T Point had 128 million registered accounts, and V Point 26 million.

Analysts say the merger is likely to accelerate competition for users. They note that big retailers, airlines, and rail operators are also working on their own loyalty programs.