Why VISA Refuses to Join Apple Pay Japan

Apple Pay Wallet has an interesting animation that shows you exactly which card brands are supported in the selected region. The Japan region animation shows: Suica, American Express,  Mastercard and JCB. No VISA. But wait, you can use JP issued VISA cards on Apple Pay with QUICPay and iD payment networks right? Yes but only on QUICPay and iD payment in stores, not for Apple Pay In-App and Apple Pay Web purchases. This is why Japanese issue VISA cards don’t work for Apple Pay Suica Recharge in Wallet but VISA cards issued from other countries do.

Apple Pay Japan VISA cards are ‘backdoor’ indirect support because VISA is required to support QUICPay and iD store purchases and licensees from previous agreements. To date VISA has yet to sign on officially with Apple Pay in Japan even though VISA issued a comment that they ‘hope to support Apple Pay Japan soon’ when the service launched in October 2016. They have been saying different versions the same thing every since.

I have long suspected that VISA simply does not want anything to do with Apple’s support of the Global NFC standard put in place by the NFC Forum and GSMA/GCF in 2017. It’s not only Apple either. VISA refuses to support dual mode (EMV/FeliCa) Docomo iD/NFC for Android Osaifu Keitai users abroad which Mastercard, American Express and JCB do. VISA simply wants to bide time until NFC Pay/EMV contactless support in Japan is everywhere and then simply ignore FeliCa (NFC-F) all together.

In short, it’s a marketplace power play to bypass FeliCa payment networks and grab a larger share of the cash register processing fee with payWave. Unfortunately this strategy has only accomplished one thing: it provided an opening for QR Code payment system players like PayPay and others.

Reddit user FeliCaDude has written extensively and authoritatively on all things FeliCa smartphone for a long time. His take on VISA’s Tokyo Olympic strategy matches mine, he also explains why Google’s HCE-F strategy for Google Pay in Japan was a dead-end:

If you want to talk about the Olympics, what you will see instead is more Contactless EMV terminals and Japanese issuers starting to issue Contactless EMV cards. That is the only thing acceptable to Visa and their huge piles of sponsorship money.

Google also has no interest in anything other than Android Pay. Their strategy will be to ride Visa’s coat-tails and wait for additional Contactless EMV deployment, at which point they will tie up with a major issuer and start Android Pay service in Japan. Currently what they have is a marketing sham that builds a thin veneer over Osaifu-Keitai. HCE-F cannot be used to emulate existing FeliCa-based payment systems because of the system code restrictions and lack of secure key storage.

Read the original posts on reddit, they are well worth your time. FeliCa Dude was right about Android Pay which morphed into Google Pay but the same problems still exist, and the release of Google Pay Suica only proved that HCE-F was dead end.

In Japan, aka the contactless payment turf war epicenter, the battle lines were stored value vs. credit card with stored value cards the clear winner on the card side, but now there are QR Code payment services are taking advantage of the opening that VISA stupidly provided, taking everybody down with them. Let’s not forget there isn’t any money in Japanese merchant support of EMV contactless because most Inbound tourist business is mainland Chinese who only want to use QR Code AliPay and Wechat Pay.

It’s a shame but not suprising that VISA wants EMV contactless and payWave to be the only game in the world but that is just their business model. For transit systems there are better business models out there. Global NFC (A-B-F) is just a platform to build new kinds of business models on. Diversity is strength, and offers better business opportunities in the long run. Who cares about NFC flavors when smart devices take care of it all. It’s as simple as that.

UPDATE: Tokyo Cashless 2020: Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

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