QR Codes and Big Data

After the 7pay QR Code launch and security meltdown, Twitter is full of Japanese tweets asking ‘why do we need QR when we already have fast secure FeliCa services like Apple Pay Suica?’

It’s a very good question. Finding the reasons behind the manufactured QR Code in Japan mania is not easy. On the surface it looks like a strange retro attempt to replicate the success of AliPay and WeChat Pay in the Japanese market and lower operating costs are certainly part of the allure. A close examination of actual QR use boils down to LinePay and using LinePay points to buy stuff on the Line Store (stickers, coins, etc.).

So why is 7-Eleven aiming to trash their FeliCa nanaco card and push their user base to 7pay QR, and why are all the other convenience store chains doing the same? IT journalist Junya Suzuki, Japan’s top reporter covering all things cashless has posted a great explanation: Big Data.

If you have lived in Japan for any length of time you are probably familiar with the T-Point card. A few years ago Doutor, FamilyMart and many other business were pushing T-Points. Now they are not. Doutor dropped T-Point for Docomo d POINT in June, and the arrival of QR FamiPay is FamilyMart kissing T-Point goodbye.

As Suzuki san points out, from the convenience store point of view, the problem with customers using Suica, nanaco or T-Point is that they don’t have personal data attached to them. Anybody can buy a Suica card at a JR station or a nanaco card at 7-Eleven and use it on the spot. The only piece of data going into the system is the card id#. They can’t get your name, phone, etc. and profile the customer.

With QR Code apps and an account signup/sign in, QR Code platform operators get the information they want to profile customers and plug it into Big Data. The customer ends up being the product. It’s not about offering better service or technology. How useful QR Code payment apps are in the long run, or how much they actually end up being used, is anybody’s guess.

Unfortunately the current messy situation is only going to get worse as Japanese bank QR Code platforms start launching this fall. Smartphone users will have to find their own way through a growing maze of QR payment apps and different UIs, each one vying for attention with campaign booty. The freebie startup campaigns will eventually end, The inevitable consolidation process will be painful. There is no doubt however that the 7pay startup fiasco is a tipping point, the reevaluation process has begun.

Advertisements