A Chinese reader tweeted me asking why global FeliCa was a big deal because the Guangzhou metro already uses Apple Pay. Before I could answer another Chinese reader tweeted that Guangzhou metro NFC A-B with Touch ID is dog slow. I guess the Guangzhou metro don’t have anything like Apple Pay Suica Express Transit.
Contactless Payment Turf Wars
The exchange perfectly captures the contactless payment turf wars most people don’t seem to be aware of. EMVCo would like to lock everybody into EMV contactless so that EMV members can sell EMV POS systems everywhere, even though the slow processing speed is a poor fit and poor choice for transit operators. They do this to capture all the transactions processing fees they can.
You can see the contactless payment turf wars playing out in many ways. Remember Walmart’s CurrentC? Everybody ridiculed CurrentC QR codes as a clumsy attempt to shut out NFC and Apple Pay. They missed the point, it was not about Apple Pay. It was about shutting out EMV contactless and building their own POS-transactions processing kingdom.
This is happening right now in China with, you guessed it, QR codes with AliPay and WeChat Pay. AliPay and others are trying to market their “exciting new” QR code POS systems in Japan through Japanese partners like Rakuten who want to grow their Chinese business opportunities. Japanese reporters like Junya Suzuki think QR codes could catch on. Again.
They will not. Japanese customers moved on to NFC payments long ago and will not return. QR code POS systems in Japan are all about capturing transaction processing fees from the million or so Chinese who live in Tokyo, and the Chinese who visit Japan. It is nothing more than that.
EMV Contactless vs FeliCa
EMVCo does not like FeliCa. Actually I think they detest it. They had a chance to incorporate the NFC-F interface portion of FeliCa during the contactless payment NFC normalization process but did not. Why? What’s the big deal, it’s only NFC-F?
NFC A-B-F can be written as PHILIPS-Motorola-Sony and Europe-USA-Japan. One reason I believe was that Japanese Government promotion of Japanese industry and technology was dead under DPJ rule from 2008~2012; at the same time Sony was in a crisis death spiral under Howard Stringer’s disastrous CEO stint.
With the major FeliCa promotors sidelined it was a perfect excuse for EMVCo to shut FeliCa out of the NFC global transaction processing party, limiting it to Japan. And they did. But now Apple has cut FeliCa back into the global game with NFC A-B-F support in iPhone 8, iPhone X and Apple Watch Series 3.
Apple’s global NFC choice does not sit well with Visa, the V in EMV, in Japan. I think iOS 11 Apple Pay makes it clear that NFC switching/dual Apple Pay ID is the reason Visa has not signed a deal with Apple Pay for Japan, and the reason why Japanese issue Visa cards cannot be used to recharge Suica.
It doesn’t matter much and will matter less as time goes on. Japanese Apple Pay users are dumping Visa for JCB and other cards that, ‘just work’. One interesting fact you may not know: NFC A and NFC F are required for NFC certification. NFC B is optional. This means any device with NFC certification already supports NFC F, it simply a matter of the vendor adding software support for FeliCa, a license and key from FeliCa Networks and NFC switching.
CurrentC as FeliCa Suica
Let’s imagine that all smartphones have global NFC support and NFC A-B-F switching. Now re-imagine CurrentC as a Suica-like pre-paid card as this is easiest kind of card to launch without the credit card processing baggage, and that the CurrentC consortium has built a nice big FeliCa based processing backend system.
Customers can load CurrentC/Suica in Apple Pay and recharge it with any Apple Pay credit card. But let’s say there is an Apple Pay Walmart credit card that gives customers lots of loyalty points for recharging the CurrentC/Suica card. And let’s also say customers get special discounts and points for purchases made with the CurrentC/Suica card at CurrentC members stores.
And finally let’s say that CurrentC offers their super fast FeliCa based POS system technology and processing backend to transit operators allowing them to locally brand CurrentC/Suica cards that are still compatible with CurrentC/Suica cards everywhere. Transit operators can join forces with local retailers and offer the locally branded CurrentC/Suica cards for transit and purchases backed with points and discounts to promote local services and products.
This is the kind of scenario that Apple’s global NFC choice makes possible. Everybody can move to NFC and deal with the EMV credit card processing infrastructure baggage as much as they want. Or not at all.
Isn’t it nice that Apple choose to give us all more choices with their 3rd revolution.