Are point cards worth it?

November 16th, 2009 by Philip Brasor & Masako Tsubuku

Did I really shop there 22 times?

Did I really shop there 22 times?

The other day I was at OD Box, a sporting goods store in Ueno, buying my annual supply of SmartWool socks. I gave the cashier my OD Box point card, which, utilizing some clever technology, displays the number of points accumulated right there on the front of the card and revises the number with each purchase. After I paid, he handed me my change, the receipt and my card.

Something wasn’t right. The card showed that I had only two points after the purchase. I was sure I had more points before that.

He told me the points I had accumulated before were erased because I hadn’t made a purchase in over one year. Apparently, that was in the contract when I made the card a few years ago, and in fact was written in very small print on the back of the card. I only buy socks there, and I only buy them once a year so I suppose I have nothing to complain about. But one point is the equivalent of 75 yen, and since I had 5 points on the card previously, I could have saved ¥375 on the socks if I had bought them a few weeks earlier.

I know this is a common condition with point cards and that I should have expected it, but I was still a little put off, especially since I had just seen a report on NHK a few weeks ago where a woman complained of the exact same thing. She had point cards that expired without her knowing about it because the conditions weren’t explained when she received the card, which usually involves nothing more than the cashier asking if you want one and you saying “yes.” I suppose what really bothered me was that the cashier didn’t say my points had expired until I mentioned it myself.

If it sounds like a big deal over nothing, the fact is, as explained on that NHK report, “points” are becoming the equivalent of cash. One economic think tank quoted on the show estimated that the points given out this year in Japan constitute a market that is worth more than ¥1 trillion. (¥800 billion in regular points plus about ¥300 billion in “eco” points given out by the government) The thing is,  some points are more portable than others. The points you accumulate with some credit card companies, for instance, can usually only be redeemed for gifts, meaning selected merchandise designated by the card supplier. The most obvious example of point systems with no time limit and portability is airline miles, which used to be given only if you flew, but now you can add “miles” by shopping at certain stores, eating at certain restaurants, staying at certain hotels, and using certain credit cards.

In Japan, every retail outlet and service provider has some kind of point system, and many are a waste in that you really have to patronize one particular establishment a lot in order to get anything out of them. That, of course, is the whole point of points. I don’t have cards for HMV or Tower Records because you have to buy a lot of music within a one-year period in order for it to mean anything, but the larger discount electronics retailers, like Bic Camera and Yodobashi Camera, are quite generous with the points, though they, too, have time limits–usually two years after your last purchase.

In addition to “rewarding” regular customers of certain businesses, point cards are also nifty POS market research tools since they give companies a more detailed idea of the demographic they attract. This information can then be used in concert with other companies who want to target the same demographic. That’s why the future of point systems is with cards like T-point, which was established by Culture Convenience, the company that operates the Tsutaya video rental chain. As NHK pointed out, T-point cards have revolutionized the points game by inviting an ever-expanding list of businesses, including Family Mart convenience stores, Eneos gas stations, Warner Mycal movie theaters, Tokyu Hotels, Pizza Hut and Aoyama clothing stores, all of whom both give points and redeem them for people with T-point cards. But while there is no time limit for the points, you have to renew your T-point card once a year in order to continue carrying your points. If you don’t renew the card before you redeem the points, you’ll lose them all. Also, some retailers give you coupons when you redeem your points that can be used for your next purchase, and the coupons themselves often have time limits.

Common sense says you should probably “spend” your points as soon as you get them so as not to risk losing them, but at the same time paying too close attention to your points can be something of a mug’s game. I could have bought my SmartWool socks at any sporting goods store in Tokyo, but I decided to wait until I was in Ueno so I could buy them at OD Box simply because I had an OD Box card and didn’t want to waste my points. Stupid me.

According to NHK, the government is considering regulating point systems because it has become such a huge business. In fact, it isn’t too far-fetched to imagine that, as point systems become more sophisticated, someday you’ll be able to trade and sell them as you would securities, but I certainly hope that it won’t lead to a points “bubble.” I think we’ve had enough of those.

4 Responses

  1. Agreed. Some cards are great but those are limited to places like petrol stations. Nothing else is really worth having. My local bookshop has a one year expiration period but 1000 yen spent gets only 1 point, 100 points brings a 500 yen discount. So you have to spend 100 000 yen in a one year period to get a .5% discount? Also, the money you spend is rounded down to the nearest 1000 yen so you really have to spend 150 000 – a .33% discount. What a joke.

  2. I think points are somehow indexed to common interest rates in your bank. Hence a mere 1% to 2% discount. Apart from this system are Bic Camera points (and similar shops) who raises prices and then apply 10% or 15% points in order to get you to stay shopping at the same place. But you can find the same items cheaper on Internet nowadays, even with the 10 or 15% reduction.
    What I do is:
    - never use points cards: worthless
    - buy online for consumer goods: TV, hifi, even shoes if you know the brand
    - convert all you can in miles, which really worth it, with airlines company credit cards.

  3. The author wrote, “The most obvious example of point systems with no time limit and portability is airline miles. . .” I believe this statement is in error because I have mileage cards with three airlines (one Japaanese and two non-Japanese airlines) and they all have time limits.

  4. Do you know what technology they use for these point cards, or rather the type of cards? I’d like to read more about it!

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