(Apple Pay information here is out of date. See Apple Pay Japan Intro Q&A for up to date information)
Go to the Apple Japan iPhone 7 page and scroll down to the Apple Pay section. Take a good look then go to the Apple Pay details page. Take another good look at the first three image and text sections. What do you see in every screen shot and throughout the text? Suica everywhere. All other cards are secondary information.
Sony invented FeliCa technology but the East Japan Railway Company (JR East) put it on the map with the release of the Suica (super urban intelligent card) platform in 2001. They developed a lot of infrastructure technology to make FeliCa reliable at enormous scale. JR East also owns a large FeliCa patent portfolio with Sony.
Apple was very smart to launch Apple Pay in Japan with Suica as the center. Suica has massive Godzilla-size coverage of the greater Tokyo area via the JR East RR (rail and retail) empire. Where Suica goes everybody else follows, or gets squashed. But what’s in it for JR East? Will they use the momentum of their Apple Pay deal as an opportunity to export FeliCa infrastructure and systems expertise, and if so, how? This is the question burning in the Japanese blog sphere and on Twitter.
Inbound FeliCa Support?
We know that only iPhone 7 phones sold in Japan support FeliCa (NFC-F). I can’t believe that Apple is making a special iPhone 7 just for Japan and suspect that Apple is turning off FeliCa on iPhone 7 phones sold outside of Japan via software (NFC-A/B only). This is alluded to in a Apple Event exit interview with JR East vice chairman Masaki Ogata, posted by Japanese journalist Tsutsumu Ishikawa who broke the Apple Pay-JR East story. In it Ogata san talks about the close relationship between Apple and JR East (several JR East executives were invited to the Apple event).
At the one minute mark Ishikawa san asks about FeliCa support for “inbound” iPhone customers from abroad.
Ogata: We are putting a lot of effort into supporting inbound (iPhone users). Current support is what you saw announced today, but it would be good to have (Apple Pay) Suica available for inbound users whose numbers are rapidly increasing.
Ishikawa: Does this mean Apple and JR East are working on this?
Ogata: We’ll work more closely together
to raise the barin many ways. We just want to deliver good service.
The context of the exchange heavily suggests inbound iPhone 7 customers will, at some point, be able to add FeliCa Suica.
My feeling is the current block was put in place to make sure that Apple Pay Suica procurement could only be linked to Japanese issued credit cards. Once JR East and Apple have the kinks worked out for Apple Pay Suica procurement with credit cards issued overseas, they will hit the on switch. If regulatory issues are worked out between Apple, the Japanese Ministry of Internal Affairs and Communications (MIC), and JR East, Apple can hit the on switch for all iPhone 7 users.
Making It Simple
It is clear from Ogata san’s statement and reports from Japanese journalists who got iPhone 7 hands on time, that Apple and JR East worked very closely together to make the Apple Pay Suica experience seamless and far better than Suica on Android and Japanese keitai (feature phones). iPhone 7 instantly reads and loads information from the physical Suica card including commuter rail pass and debit balance information. That’s it. Everything is on your iPhone and the old Suica card is obsolete.
Mobile Suica for Japanese keitai has been around for a long time but actual useage, from my long time observation, remains low. I just don’t see mobile Suica that much on my daily Tokyo commute grind. Apple and JR East are making it easy for those users, Android too, to migrate their Suica info to iPhone 7.
All the pieces are in place: a huge, well established FeliCa installed base , a UI that elegantly ties together all the disparate parts as only Apple can do. Apple has a very unique opportunity to disrupt the contactless payment market in Japan, and drive it to a whole new level. JR East has an opportunity to leverage their unparalleled FeliCa systems expertise and export their technology.
It will be fascinating to see how things play out when Apple Pay launches in Japan in late October.
Update: Tsutsumu Ishikawa posted a transcript of his interview with Masaki Ogata and I corrected my translation. Ishikawa san also explained that some people have misinterpreted Ogata’s comments. Ishikawa thinks Ogata is referring to the next iPhone which implies the current ‘only iPhone 7 phones and iWatch 2 watches sold in Japan’ FeliCa support is hardware based, not software. I still find that a stretch but we will soon found out after iPhone 7 ships later this week.
On the other hand, if Apple really is shipping special hardware for Japan, that would be eye opening evidence illustrating how important Apple Pay entry into the Japanese contactless payment market is for Apple. Hardware teardown confirm all iPhone 7 phones use the same NFC chip. Apple’s ‘Japanese iPhone 7 only’ FeliCa support is implemented via software.
If you read Japanese (and pay the 500 JPY a month subscription fee for his “Tsutsumu’s SmartPhone Times” Newsletter), Ishikawa san’s newsletter covers all the behind-the-scene buildup to the ‘Apple +JR East + iPhone 7 = FeliCa Apple Pay in Japan’ story that he broke in August (and Bloomberg later claimed for their own because it was in English, not Japanese).
It’s an entertaining read and really drives home the point that Apple making JR East the keystone founding relationship for Apple Pay was a genius move. It guaranteed a huge rollout of Japanese card services for the Apple Pay launch in October.
Finally, my sincere apologies to Tsutsumu Ishikawa san. I misspelled his first name in all previous blog posts. He does not read this blog but I wanted to apologize. All his mentions have been corrected.
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