Tokyo Cashless 2020: Consumption tax relief with the CASHLESS rebate program

With less than a year to go until the Tokyo Olympics, Tokyo Cashless 2020 is a periodic look at all things cashless as Japan gears up for the big event. If there is a topic that you’d like covered tweet me @Kanjo

A reader asked if I knew of any comprehensive English guide for the various Japanese point systems: Rakuten, T Point, JRE POINT, etc. It’s a good question, and a timely one. Unfortunately the short answer is no, a guide like that does not exist.

It took me a year to put together a good Apple Pay Suica ecosystem guide (at least I think it’s good for covering the basics, if not let me know). It’s impossible to intelligently catalog the various Japanese card and payment app ecosystems into English less than two weeks before the consumption tax CASHLESS rebate program kicks off.

Instead of a broad useless sweep, I have updated my JRE POINT guide that covers the JR East ecosystem of Apple Pay Suica and View Card, and how they work with the CASHLESS rebate program. The basic concepts apply to all CASHLESS rebate program qualified cards and app systems. Hopefully this post and the JRE POINT guide will give you enough information to find the right setup for your card/app payment system of choice.

You may not have to do anything to get ready. As the rest of this post shows, credit card users don’t need to do anything more than use a Japanese issue credit card. And don’t feel bad if this all seems arcane, language is no barrier for feeling lost, some Japanese feel lost too.

The JAPAN CASHLESS Rebate Program

The Japanese Government CASHLESS rebate program, CASH=LESS get it?

In tandem with the 10% consumption tax starting October 1, the Japanese government is launching a CASHLESS rebate program that offers a 5% or 2% rebate with cashless purchases at participating stores and online shopping sites like Amazon JP, Rakuten JP and Yahoo Japan Shopping. The idea is to ween Japanese society away from its infamous “cash addiction”.

The CASHLESS program is run by the Japanese Ministry of Economy, Trade and Industry (METI) and will be valid for all cashless purchases from October 1, 2019 until June 30, 2020 at qualified participating stores. A METI outline of the CASHLESS program is available in PDF (Japanese only). The CASHLESS web site is informative and constantly updated, hopefully with English at some point.

How do you get the rebate? This part is easy: make purchases at any store displaying the red 5% or 2% CASHLESS logo with:

  • Japanese issue credit/debit cards, either plastic or on Apple Pay (iD/QUICPay)/Google Pay
  • Japanese e-money cards (Suica, nanaco, WAON, etc.) either plastic or Apple Pay Suica/Google Pay
  • Japanese QR Code smartphone payment apps (PAYPAY, Origami Pay, Rakuten Pay, etc.)

There are 3 basic rebate models related to the type of transaction:

  • Credit (post pay): CASHLESS program rebate amount calculated by the card company at billing and automatically deducted from your monthly credit card bill. Credit card CASHLESS rebates are not tied to point systems.
  • Debit (instant pay): CASHLESS program rebate amount calculated by the card company at end of the month and automatically refunded to your bank account, or instantly deducted from the purchase amount at transaction. Debit card CASHLESS rebates are not tied to point systems.
  • Prepaid (stored value): CASHLESS program rebate amount is calculated at the end of the month and refunded as points. The point system depends on the type of e-money prepaid card: JRE POINT for Suica, Rakuten point for Rakuten EDY, etc. The point rebate model also applies to QR Code systems like PayPay. Prepaid e-money rebates are tied to point systems, QR Codes are tied to the user account be sure to check the CASHLESS details of your QR Code payment system.

The CASHLESS web site maintains comprehensive lists of qualified credit/debit cards, and prepaid e-money cards/QR Code Apps. The site is constantly updated with direct links to all participating payment system CASHLESS rebate information pages. Search your payment system, and it will link you with the CASHLESS rebate information for your payment system. All pages are in Japanese language, there is no English.

Surprisingly Easy
Japanese credit card users have it easy and this is good: credit cards are the cashless platform that has been around the longest and most people have one. All they need to do is use their credit card at any store displaying the red CASHLESS logo, that’s it. Credit cards will have the widest footprint in the CASHLESS rebate problem because they are not tied to point systems. Debit cards are straight forward too but users should check how the rebate/refund is handled for the card. QR Code systems sign up users with an account and should be automatic but be sure to check the rebate/refund method.

Prepaid e-money card users enjoy the most security and privacy. Anybody can buy a Suica at a train station or a nanaco at 7 Eleven, but unless you take time to register the card to its matching point system, either online or in an app, you will not get a CASHLESS rebate. Register your prepaid e-money card with the appropriate point system. For Apple Pay Suica users this is covered on the JRE POINT guide.

Prepaid e-money cards are generally at a disadvantage compared to credit cards because they are tied to point systems and have a smaller footprint: Suica for example, can only get CASHLESS rebates at stores displaying both CASHLESS and JRE POINT logos:

The CASHLESS + SUICA JRE POINT logo

JAPAN CASHLESS will be releasing iOS and Android map apps for finding stores near you participating in the CASHLESS rebate program. I will update this page as new information becomes available.

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Apple Global NFC Lineup 2019

With the removal of iPhone 7 and Apple Watch Series 2, the new 2019 iPhone and Apple Watch lineup on the Apple Store is finally global NFC across the board. The Apple Watch Series 5 S5 chip did not gain ‘Express Card with power reserve’ or NFC background tag reading this time. The former would be a very welcome addition for the eternally battery challenged Apple Watch, while the later is necessary at some point if Apple wants to use the ‘yet to be formally unveiled’ NFC Tag Apple Pay to kick QR Code payment systems to the curb.

There is something missing in the lineup however: a low cost entry level global NFC iPhone that’s even lower than the price cuts Apple implemented with the 2019 lineup. As Ben Thompson of Stratechery explains in a great post:

That means that this year actually saw three price cuts:
•First, the iPhone 11 — this year’s mid-tier model — costs $50 less than the iPhone XR it is replacing.
•Second, the iPhone XR’s price is being cut by $150 a year after launch, not $100 as Apple has previously done.
•Third, the iPhone 8’s price is also being cut by $150 two years after launch, not $100 as Apple has previously done.

The rumored A12 chip iPhone SE2 may well be pie in the sky, but that doesn’t mean that there isn’t market appeal for an inexpensive global NFC iPhone for places like Japan and Hong Kong. Those markets have highly integrated transit networks coupled with highly evolved transit card systems like Suica and Octopus. With both of these on Apple Pay there’s a good opening for a small SE size inexpensive global NFC iPhone, it would do very well.

UPDATE: What’s the best iPhone for Suica?
A reader asked for my recommendation of a good Suica use iPhone in the 2019 lineup. I do not recommend iPhone 8. The superior NFC and Suica performance, plus the Express Card with power reserve and background tag reading features of A12 Bionic and later is a huge leap over previous models. These enhanced NFC functions are important for new Apple Pay features yet to come. I think it comes down to a choice between iPhone XR and iPhone 11, and how long you plan to use it in Japan.

It’s also helpful to remember that 2019 is the last lineup of 4G/LTE only iPhone. I think iPhone 11 is better optimized for 4G in the long run as Japanese carriers start to switch over bands to 5G. There is also the much better camera to consider. Last but not least is battery. The power optimization of A13 Bionic is going to deliver much better battery performance over a longer period of time.

It boils down to this: if you plan to use the iPhone for 2 years iPhone XR is a good choice, if you plan to use iPhone for 3~4 years iPhone 11 is the better choice.

Multifunction cards and iOS 13 Apple Pay Wallet

Leaks continue as Apple Event Day (September 10) and the iOS 13 release date (September 19) approach. The latest screenshot shows an Octopus Card Limited (OCL) co-brand multifunction credit card.

Octopus multifunction cards are similar to JR East View + Suica cards that combine credit and transit card functions with auto-recharge in one plastic package. When loading multifunction cards into Apple Pay only the credit portion is added. The functionality of the transit card is preserved instead of killing the plastic card altogether, which is the case when regular Octopus or Suica plastic transit cards are added to Apple Pay, a one way trip.

This ‘only adding the credit card to Apple Pay’ feature allows users to migrate back to the plastic combo transit card at any time. These cards are expensive to make and maintain, and card issuers want the full functionality of the card to be preserved. For this reason I doubt the ability to read multifunction cards into Apple Pay will ever happen. It’s far easier to only add the credit card portion and leave the plastic card untouched. The user can easily create a virtual transit card directly in iOS 13 Wallet and link it to the credit card for auto-recharge with the Octopus App or Suica App.

It’s only natural that Octopus multifunction cards join the parent Octopus transit card on iOS 13 Wallet to make one big happy Hong Kong Apple Pay family with multiple Express Transit Card (FeliCa and EMV) goodness. I sincerely hope the EMV Express Transit support shown in the screenshot does not mean that super slow EMV Contactless will be bolted onto MTR transit gates any time soon.

At any rate there should be some other Apple Pay goodies along with the official Apple mention of Apple Pay Octopus on September 10. Enjoy the show.

Update: a Hong Kong reader reached out to inform me that Octopus co-branded credit cards have been available on Apple Pay since the service started in Hong Kong. It’s nothing new. However, the multifunction angle is a new wrinkle when adding the Octopus co-branded cards to iOS 13 Apple Pay Wallet. Hong Kong iPhone users with multifunction Octopus cards will have to create a new Octopus transit card for Wallet use. OCL will undoubtedly update Octopus App with more auto-recharge options that relink the cards in Apple Pay Wallet.

Update 2: more Apple Pay Octopus service details, screenshots and new in development version of Octopus app

Apple Pay on Event Day

Apple Pay is sure to have a segment during the September 10 Apple Event. Here is my roundup of what to expect based on previous coverage.

Apple Card
Apple Card did not get its own press event rollout in August, this will be the closest thing. We will certainly get a feature review and some launch statistics. Long shot call: if lucky we may also get mention of a few more Wallet card feature goodies with the iOS 13 golden master.

Apple Pay for NFC Tags
This was previewed by Jennifer Bailey at her Transact keynote just before WWDC19. There has been no coverage since. NFC Tag Apple Pay works hand in glove with the Background NFC tag reading feature on iPhone XR/XS and later, and the Sign in with Apple feature of iOS 13. The Apple Pay segment makes the most sense for Apple to mention any other products or services that use the enhanced NFC Tag functionality of iOS 13.

The level of global NFC functionality integration across iPhone and Apple Watch is unique. There is nothing on the Android side that matches the seamless combination of Apple Pay Suica + iPhone + Apple Watch, a hardware combination also coming to Hong Kong transit with iOS 13 Apple Pay Octopus. An Apple Watch Series 5 that delivers background NFC tag reading ability integrated with Apple Pay along with Express Transit power reserve would be a very unique feature set indeed.

Apple Pay Transit
Apple Pay Octopus for Hong Kong is on tap for iOS 13, already announced by Octopus Cards Limited. We should get service start updates and details for Octopus, Apple Pay Ventra, EMV Express Transit for TfL. Mentions of Apple Pay myki, EMV Express Transit for LA TAP and more are possible but iffy.

May the NFC be with you.


Bonus iOS 13 Update
Apple’s Where you can ride transit with Apple Pay lists 2 kinds of Apple Pay Transit. Here is a brief explanation of what they mean.

iOS 13 Apple Pay Transit, entries such as Melbourne and Los Angeles will arrive later in the iOS 13 life cycle
  • Where you can use Apple Pay for transit with Express Transit Mode
    ‘A List’ transit that supports both native transit cards (faster than EMV except for China) and EMV style bank cards (slower) for Express Transit.
  • Where you can use Apple Pay for transit without Express Transit mode
    ‘B List’ EMV style bank card transit that requires Face ID, Touch ID or passcode at the transit gate. One benefit of this mode over regular plastic bank cards is that all Apple Pay loaded cards (China again is the one exception, UnionPay all the way) are certified by Apple for the listed transit agencies. This means Apple Pay cards will always work, while plastic versions of the same card sometimes do not.

Dear Apple: We need a Global NFC iPad

Now that iOS 13 is almost here, it’s time to sit down and think about the enhanced Core NFC Read/Write functionality and what it means for iOS/iPadOS. Core NFC “requires a device that supports Near Field Communication.” Theoretically this means iPhone and Apple Watch, but the reality is that only iPhone iOS supports Core NFC, NFC Tag Read/Write and new services like NFC Tag Apple Pay that use Background NFC Tag reading.

Until now nobody has discussed the need for a NFC capable iPad. Without the enhanced Core NFC functions of iOS 13 which limited NFC to Apple Pay Wallet card, there wasn’t a reason. After all who would want to use iPad for Apple Pay Suica transit in Tokyo, you’d look as silly as watermelon man (watermelon in JP = suika…get it?).

But iOS 13 Core NFC changes all this: sure you still don’t want to use an NFC iPad at the checkout line, but businesses would love an NFC iPad loaded with all kinds of enhanced Core NFC apps to do all kind of work as all-in-one mobile POS systems, factory inventory NFC tag read/write systems, and much more. Imagine how an NFC iPad bundled with Recuit’s AirPAY would appeal to Tokyo area businesses as they gear up for the 2020 Olympics. The possibilities are interesting and not insignificant.

What is the optimum global NFC iPad hardware configuration? Background NFC tag reading ability is an absolute must which means A12 Bionic is the minimum support configuration. Outside of that I would say: iPad Air and iPad mini, not iPad Pro, a NFC + cellular model, and a WiFi only model. The NFC iPad needs to be as inexpensive as possible with A12 Bionic and Touch ID. I think it could do well.