The Apple Pay Japan One Year Mark

The short story
Apple Pay in Japan is all about Apple Pay Suica which we already knew. In the Suica home base area, the Kanto region, contactless payments grew from 20% of total transactions to more than 40% in the year that Apple Pay Suica has been available. My analysis is that Apple Pay Suica is responsible for driving that change. What used to be ‘some people some of the time’ is quickly transitioning to ‘most people most of the time’.

One 7-Eleven store owner summed it up nicely: “e-money (Suica) purchases have really taken off this past year.”

The long story
There has been hand wringing in the Japanese media recently that Japan is missing the contactless payments boat because QR Code payments are all the rage in mainland China and Japanese don’t care about them. How ridiculous. IT journalist Junya Suzuki and NHK both ran similar stories the same day.

The NHK piece in particular reads like QR code payment stealth marketing in a news report wrapper. If you have ever eye-witnessed the incredibly shoddy and slanted NHK report creation process from the inside, you know that outside of weather, traffic news and the occasional nature program, believe NHK news at your own risk.

Junya Suzuki’s report has much more depth and insight but suffers from what I feel is poorly focused analysis. Sometimes the big data doesn’t convey the big picture because in this case it only shows Japanese smartphone contactless payment usage rates endlessly stuck at 7.5% of the install base.

Credit Card Usage
Credit Card usage by country. The VISA marketing slide doesn’t communicate anything useful.

For example Suzuki san points out the Visa Corp marketing slide showing Japanese credit card use at 17% vs. South Korea at 73%. That sounds like a huge gap. But the reality is that the entire economic volume of South Korea comfortably fits into the Tokyo area economy with room to spare. The Japanese 17% represents a much larger amount of money.

Analyzing the rich and complex Japanese contactless payments landscape demands a different measuring stick and approach.

Unpacking the big picture
People in Japan, America, and Europe, countries where credit cards have been around a long time, have entrenched spending habits. My mother for example used checks for bread and butter supermarket purchases, and department store credit cards (Lord & Taylors, etc.) for bigger ticket items.

In the 1980’s her local checking account bank issue VISA card finally replaced the checkbook but different cards filled different purchase needs: one for small, one for medium, one for large. This is exactly what most Japanese seem to do as well.

The logical starting point for contactless payment uptake is small purchases. The 7-Eleven lunch, the cup of coffee at Doutor, the vending machine bottle of green tea. The convenience for customers is they don’t have to deal with coins.

The Japan e-money map
Japan pioneered contactless payments built on FeliCa technology and the market is rich, complex and regional. Denshi Money, e-money, is a Japanese term that specifically refers to FeliCa based payment networks.

Japan e-money map
Apple Pay in Japan supports QUICPay, iD and Suica. Transit cards are compatible so Apple Pay Suica works nationwide.

Stored value cards are the contactless payment entry point for the masses. They are not credit cards so anyone can buy one at the convenience store or local station and start using it right away. Stored value transit cards in general and transit card commuter passes in particular however are the golden uptake to contactless payments and constant use.

Japanese companies reimburse worker commuting expenses every month and workers can squeeze a little more money out of the arrangement by purchasing 6 month transit passes. For a Japanese iPhone user with a Suica commuter pass it’s a no brainer to add the pass to Apple Pay because the company pays for it.

When a person adds a Suica commuter pass to Apple Pay they quickly discover how convenient Express Transit is, but the secret ingredient is the Apple Pay credit card ‘anywhere, anytime’ Suica recharge feature. This completely changes how Suica is used and makes the experience entirely different from using plastic Suica. The convenience of the Apple Pay backend also sets Apple Pay Suica apart from other stored value cards. The next step is using Apple Pay Suica for convenience store and cafe payments. Apple Pay usage takes off from there.

There’s one very important point to remember however: Apple Pay Suica works across Japan, but Apple Pay Suica Commuter is limited to the JR East region. All commuter transit cards in Japan remain locked to the card locales they are issued in. This effectively limits the golden uptake of Apple Pay Suica to the JR East Kanto region.

The Golden Uptake in Kanto
Junya Suzuki’s piece refers to the Mobile Marketing Data Labo report released in December. It’s a good take on what is happening in the Apple Pay Suica Commuter home base Kanto region one year after the Apple Pay Japan launch.

MMD Data 5
Contactless Payments: Plastic vs. Smartphone
MMD Data 3
e-money payment network usage ranking (plastic and smartphone). Note that stored value cards are the top five and used much more than credit cards.

Important points:  Nearly 40% of contactless payments are on smartphones and the majority of smartphone contactless payments are stored value cards, not credit cards.

MMD Data 1
Smartphone contactless payment method usage ranking.

Osaifu Keitai is the FeliCa e-wallet feature phone service that Docomo launched in 2004 and was later offered by KDDI and SoftBank. Today it more or less refers to the e-wallet services that Docomo, KDDI and SoftBank bundle with their Android based carrier models.

Line Pay is a complicated stored value beast that is an outliner for this analysis because Line Pay has no plastic card equivalent and requires an online account that covers: online Line Store purchases, payments between Line users, and convenience store purchases. Also Line Pay’s core user group is college age and younger, in other words people without money. In short Line Pay doesn’t see much action at the cash register.

The interesting point is that Apple Pay has made a big impact in one year beating out the long-established Rakuten Pay.

MMD Data 3
e-money payment network usage ranking. Note that Stored Value cards are used more than credit cards and Stored Value transit cards the most.
MMD Data 2
Smartphone contactless payment usage ranking. Suica is the only transit card on mobile. Not having PASMO on mobile is holding back mobile payment uptake for transit.
MMD Data 4
Japanese e-money (Plastic and smartphone) usage ranking. PASMO is still only plastic which accounts for the usage ranking difference compared to smartphone usage ranking.

Important points: top ranked Suica and PASMO simply confirm that stored value transit cards are the golden uptake path for contactless payments. If PASMO was on Apple Pay transit use would likely be the top item in both usage ranking charts.

My private data
I have 10 or so stores where I regularly use Apple Pay Suica. I’m friendly with the store managers, the ones who have manned the cash registers for a long time and know what they are taking about. Every month I ask them the same questions: what’s the ratio of contactless payments from total transactions and what % of those are Apple Pay Suica?

Area: Suica/PASMO Home Region (Kanto)
Time: October 2016 ~ December 2017
Store profile: Convenience stores, cafes, bread stores

Theory: Japanese customers use contactless payments most for small daily ‘on the go’ purchases.

Finding: Store managers report a surge in e-money contactless payment use for the period. On average e-money contactless payments of total transactions grew from 20% to 40%. In JR East station area malls and stores located near stations usage is approaching 50%.

Key quote: “e-money (Suica) purchases really taken off over the past year.” 7-Eleven Store Owner/manager in Ikegami Ota-ku

Analysis: Most of the growth seems to be stored value transit cards on smartphones. As Apple Pay has been the single largest change in the market this past year I think it is safe to conclude that Apple Pay Suica has been driving this change.

Summary and thoughts
Apple Pay has brought tremendous change to the Japanese market but it is hard to see because it’s regional and tied to the Apple Pay Suica commuter Kanto area. If Suica supported commuter passes nationwide or the other transit cards were on Apple Pay, the ‘golden uptake’ would be much larger and easier to see.

The challenge for Apple is to get the other commuter transit cards on Apple Pay. The challenge for the other transit cards is to get their mobile service act together, or cut a cloud deal with JR East.

The story arc is very simple. Once Japanese users start using mobile contactless payment services like Apple Pay Suica for small purchases, the usage sticks. It will evolve to bigger things over time.

If Apple can keep the momentum going, and if the other transit cards can get on both Apple and Android platforms, the next 2 years leading up to the Tokyo Olympics are going to be very interesting indeed.

Update: Junya Suzuki reached out and explained that his article was ‘repositioned’ by the editor to focus on QR Code payments which was not his original intent. It is good to know that he has not lost his keen insights on Japanese contactless payment market trends.


iOS 11.2.5 and Apple Pay Suica Error Flicker (U)

The iOS 11.2.5 update has improved iPhone X Apple Pay Suica performance for myself and others but some readers are still seeing full errors similar to what is shown in the video above, or more commonly ‘error flicker’ where the gate flashes a momentary error but immediately clears.

Based on limited feedback I suspect this is affecting iPhone X users with Apple Pay Suica Commuter passes. The commuter pass start point or the end point gate flashes an error and the issue seems limited to JR East gates. Non-JR East gates on an Apple Pay Suica Commuter pass are not flashing errors.

I spent a day getting on and off every station on my commuter run and after many cups of Beck’s Coffee along the way, managed to capture a sysdiagnose file of the error flicker gate issue. I reported it on Apple Bug Reporter #36424202. They are investigating. I am opening up comments in case readers would like to share any Apple Pay Suica issues they are experiencing with iOS 11.2.5(日本語も英語もオーケイ!)

If you comment please include device (iPhone X, iPhone, etc.), Suica type (commuter or regular) and station name (Asagaya, Shimbashi, etc) where gate errors are occurring.

Thank you for reading Ata Distance.

iPhone X has a NFC hardware problem, for more information see:
iPhone X Suica Problem Q&A Exchange Guide (English Version)
iPhone X Suica問題Q&A交換ガイド(日本語版)

Rating Apple Pay Suica Performance in iOS 11.2.5

Japanese Apple Pay Suica users and iPhone X users are tweeting and blogging about the Apple Pay Suica performance improvements in the iOS 11.2.5 update. So far the reports are good. But how good is good and can it be even better?

iOS 11.0.x ~ 11.2.x Apple Pay Suica performance on iPhone X was a big step backwards from iOS 10.3.x on iPhone 7. There were three kinds of errors:

  1. Transit errors: the gate flashes an error and closes forcing you to wait a moment to let it clear and try again. The second try always works. Approximately 1 in 10 gate transits resulted in error.
  2. Transit error flicker: when you touch iPhone to the transit gate, the gate flashes an error but immediately clears. Normal Suica transaction time is under 200 milliseconds. With error flicker transaction time is about 400 milliseconds but the momentary error flash is irritating. Approximately 1 in 5 gate transits resulted in error flicker.
  3. Store reader errors: this was never a problem with NEC or Panasonic NFC readers but J-Mups and UT1-Neo NFC readers were a big headache again. Things were so bad that JR East issued a support notice. Every purchase with J-Mups or UT1-Neo was a two touch, or more operation.

During the iOS 11.2.5 beta test period and a weekend with the official release golden master, transit gate errors are a thing of the past. Store reader improvements are tricky because J-Mups and UT1-Neo are always finicky but performance seems about on par with iPhone 7/iOS 10.3.x

What about error flicker? This one is also tricky, and subjective. 1 in 20 6 feels about right. An interesting aside is that error flickers in iOS 11.2.5 only happen on JR East gates, not on other rail line or subway gates.

If iPhone 7 on iOS 10.3.x is the gold standard Apple Pay Suica benchmark, a 10, then iOS 11.2.5 on iPhone X rates an 7. Apple needs to improve Apple Pay Suica Express Transit performance. An 11 rating for Apple Pay Suica on all devices running iOS 11 would be a great and welcome achievement.

Because of the annoying iPhone X Suica problem, I’m downgrading my original 9 rating to 0 for iPhone X, iPhone X Suica performance is a failure. The 9 rating remains in place for iPhone 8/8 Plus.

iPhone X has a NFC hardware problem, for more information see:
iPhone X Suica Problem Q&A Exchange Guide (English Version)
iPhone X Suica問題Q&A交換ガイド(日本語版)

Apple Pay Japan Maintenance 11PM~6AM (U)


Apple’s iCloud Status page lists Apple Pay maintenance this evening from 11PM until 6AM. Sumitomo Mitsui card holders will not be able to add or delete cards in Apple Pay Wallet during the maintenance period.

Update: the iCloud Status page now shows Apple Pay maintenance as successfully completed. Apple Pay Japan is up and running.AP Update over

iOS 11.2.5 Update Recommended for Apple Pay Suica Users (U)

The iOS 11.2.5 update is available for download. I recommend it for all Apple Pay Suica users and especially iPhone X Apple Pay Suica users. The Apple Pay improvements include:

A fix for the iMessage CoreText “Text Bomb” is included as well. Full release notes here.

iOS 11.2.5 has been the first iOS 11 release that comes almost comes into focus for me on iPhone X. The teething issues of iOS 11 on iPhone X are gone mostly gone. Speed, Suica performance, stability finally reach equilibrium. I hope things stay here awhile.

Overall speed and Suica performance is improved from previous versions of iOS 11. However there are some lingering Apple Pay Suica performance issues on iPhone X. iPhone 8 / 8 Plus and Apple Watch Series 3 work great.  I hope Apple continues improve iPhone X Apple Pay Suica performance in future updates.

iPhone X has a NFC hardware problem, for more information see:
iPhone X Suica Problem Q&A Exchange Guide (English Version)
iPhone X Suica問題Q&A交換ガイド(日本語版)