The JAPAN CASHLESS Rebate Week 1: MiniStop Reports 6% Cashless Payment Use Increase in First Week

This is what we were waiting for. After all that hassle of getting ready for the CASHLESS rebate program, how many people were actually going to go cashless to get the rebates? NHK reports that the MiniStop convenience store chain saw a 6% rise in cashless payments use rates in the first week of the rebate program, rising from 24% to 30%. MiniStop president Akihiro Fujimoto said he was surprised at the quick uptake. I’m not.

30% was the informal Apple Pay Suica use rate I found in station areas in 2017. The MiniStop number is just one data point from one store chain, so it will be interesting to see how cashless use rate averages pan out over time. Convenience stores chains offer 2% rebates with cashless purchases, calculated and deducted from the customer bill at checkout. Smaller store 2%~5% rebates are post-transaction refunds. Despite the small data sample size, I think we are already seeing the beginnings of a tipping point here.

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

1️⃣ Dear JR East, we need a new Suica Charge App
2️⃣ Consumption tax relief with the CASHLESS rebate program
3️⃣ Are Apple Maps and Siri really Apple Pay level ready for the Tokyo Olympics?
4️⃣ > Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

Tokyo Cashless 2020 is a series covering all things cashless as Japan gears up for the big event. If there is a topic that you’d like covered tweet me @Kanjo


Japanese journalist Akio Iwata just published a piece explaining why VISA has not signed with Apple Pay in Japan. It is paywalled and I have not read it, but Japanese readers noticed similar points in my earlier piece Why Visa refuses to join Apple Pay Japan and tweeted about it. The subject is timely and worth visiting again after the events of the past year.

Some western business journalists and industry pundits look at the Japanese payments market and write about failure: the failure of FeliCa to be universally accepted, the failure of Japanese society to use cashless payments instead of hard cash. It’s a kind of cut and paste narrative construct journalism that you see too much of these days, like the recent Financial Times piece, or worse the NFC TIMES. The narrative is persuasive enough to blind some Japanese journalists as well.

This kind of reporting plays to the expectations of a certain readership, but it completely fails to capture or explain the massive changes happening in Japan right now, set in motion by the arrival of Apple Pay in late 2016. The bulk of the cut and paste argument is that FeliCa failed to take off in Japan and because Japan failed to switch to the EMV ‘world standard’, that’s why we have the current messy situation. End of story. I don’t buy this argument at all.

FeliCa was around long before the EMVCo consortium got it’s NFC act together in the early 2000s. NFC-A is Philips, NFC-B is Motorola, NFC-F is Sony. The ISO/IEC 14443 standard was supposed to include NFC-F but the ISO ultimately decided not to include it. EMVCo created the EMV contactless standard on ISO/IEC 14443 NFC A/B.

With lots of help from JR East, NFC-F was added to the ISO/IEC 10373-6 and GSMA/GCF (Global Certification Forum) TS. 26, TS. 27 specifications. From April 2017 GCF certification for all NFC mobile devices requires NFC-A, NFC-B and NFC-F support.

It is this later development, and especially the fruit of that development, Apple Pay Suica, that I believe is unacceptable to VISA and by extension EMVCo. VISA cooperates with Apple Pay in other countries because it promotes EMV, VISA refuses to cooperate with Apple Pay in Japan because it promotes FeliCa. Instead of promoting bank card use and new services VISA is promoting technology.

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…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…

Unfortunately this strategy has only accomplished one thing: it provided an opening for QR Code payment system players…

Why Visa refuses to join Apple Pay Japan

My argument is simple. The VISA and EMVCo mindset is stuck in the one size fits all single mode plastic card era. This is easy to understand as the plastic card issuing business is a very lucrative one.

But like all things there is a downside: instead of embracing the full promise of global NFC digital wallets that can match the best NFC technology for the job with multiple mode cards that do everything and ‘just work’ everywhere, we have the contactless payment turf wars which are really just plastic era fighting moved to a digital arena.

Instead of pursuing the advantages of digital wallets that merge the best of native transit cards on the front end with the best of bank cards on the back end, where they perfectly complement each other, we have bank cards fighting to be everything, which they are not and will never be. This is why Apple markets Apple Card as ‘a new kind of credit card, created by Apple, not a bank.’ It’s the reason why Apple Card is Mastercard brand, not VISA.

In Japan specifically we have VISA refusing to join Apple Pay Japan and for the most part Google Pay, and VISA Japan key player Sumitomo Mitsui fighting on and off with Mobile FeliCa key player Docomo. And the result? None of this nonsense helped strengthen VISA Japan’s market position one bit. On the other hand VISA’s arrogance pulled all the other card companies down with it and provided a huge opening for the Japanese QR Code players like PayPay.

When I wrote Why Visa refuses to join Apple Pay Japan the frenzy of Japanese QR Code payments was just getting underway. Over a year later I think this conclusion is stronger than ever and the only one that explains the reality of the current market. VISA may like to think that the Tokyo Olympics is the last great opportunity to finally kill FeliCa. That’s not going to happen.

Only by setting aside the past and embracing the multimode digital future with forward looking cooperation, can VISA (and by extension EMVCo) help bring order to the payments chaos of the Japanese market. Only cooperation can deliver the promise of cashless payments to Japan, and strengthen the long term market opportunities for all players.

The JAPAN CASHLESS Rebate Inflection Point

On the eve of the CASHLESS Rebate program launch I wrote:

Regardless of whether the CASHLESS rebate is ‘a success’ or not, it will be a tipping point. Already I notice a shift in public perception: if a store is cash only, it definitely looks behind the times in the minds of customers. I think that’s the whole point.

Consumption tax, Cashless rebates and Coffee shops

It really doesn’t matter if the CASHLESS Rebate program is a success or a dud. It’s an inflection point tick mark in the mind of Japanese society, the ship of Japan is making a tiny course correction that will veer the vessel off in a very different direction over time. We already have the big changes that the Apple Pay Suica ‘black ship’ brought to Japan since 2016, and that was just the start.

Junya Suzuki, Japan’s top journalist for all thing cashless, posted a new article: The Real Reason for the Cashless Rebate Program. Suzuki san makes the same argument: the Cashless Rebate Program is an inflection point, but with much more detail and depth. It’s a great read and worth a look even just for the pictures and captions.

The JAPAN CASHLESS Rebate Day 1: convenience stores

It was a fun day. I tried out some local CASHLESS rebate stores and it was…boring. I paid with Apple Pay Suica like I always do. A close examination of the receipt showed that the 2% rebate was instantly deducted from the transaction amount. I didn’t have to say anything or do anything but wave iPhone to the reader.

That was not clear from the CASHLESS web site: When you make a cashless purchase with any of the certified methods (credit card, Suica, QR, etc.) at a convenience store, the consumption tax is automatically calculated at 8% or 10% depending on item (food vs. household items). The 2% rebate is instantly implemented in the transaction as a discount from the sub-total (items plus tax). For people who don’t want to bother with JRE POINT, paying with Apple Pay Suica at convenience stores is a JAPAN CASHLESS no brainer.

I am still digging but the instant 2% tax discount appears to be the case only for convenience store transactions. Other stores (without the fancy POS systems) calculate the transaction with tax but the CASHLESS rebate is refunded later as outlined.

It will be interesting to see how many stores end up being classified as ‘convenience stores’ for the CASHLESS program as supermarkets are explicitly left out of the the equation. All the major convenience store chains will be onboard, but will AEON ‘My Basket’ stores be classified as a convenience store or a supermarket? It’s a squishy line.

Some quick impressions:

  • everything happens automatically on the backend, there is nothing the customer or merchant needs to do, just follow the usual routine
  • if you pay cash at convenience stores you are throwing away money
  • I can’t wait for the CASHLESS program to expand to DOUTOR so I can kiss Starbucks goodbye for the duration of the program
  • Ditto for MiniStop, 7 Eleven ice coffee sucks and they don’t have those cheesy dog things

UPDATE: MiniStop is on the CASHLESS map now:

Consumption tax, Cashless rebates and Coffee shops

In case you are not a DOUTOR regular, you may not have noticed that they recently added QUICPay and iD to their cashless payment options. What’s interesting is that QUICPay and iD are the only way to pay with credit/debit cards. It’s completely contactless, the only swipe-able item is the DOUTOR prepaid store card (which is MIFARE on the reader btw). In other words DOUTOR is all ready for the CASHLESS rebate program that starts tomorrow along with the 10% consumption tax.

But DOUTOR is not listed in the iOS CASHLESS App. 7 Eleven, FamilyMart and Lawson are listed there, but MiniStop is not. What is going on? The CASHLESS rebate program is rolling out in waves. The first cut of 500,000 CASHLESS rebate stores goes online October 1, with successive waves at, hopefully, regular 10 day intervals until everybody is onboard. This keeps payment systems from overloading which I think is smart, as a Japanese friend put it, “It’s the smartest thing the Japanese government has done so far.”

You might notice double listings for CASHLESS rebate stores, one for credit cards, one for QR, one for e-payment cards. This is also a startup limitation. Store listings will be consolidated after the program starts.

There are some interesting startup store differences, DOUTOR and Starbucks are not listed, but Cafe Colorado is, and get this: they have the Odagiri Joe marketed AirPay system in place that takes everything from Suica to credit cards to NFC Pay. The local franchise owner is even excited about putting up his CASHLESS poster tomorrow.

If that’s not cashless progress, what is? Regardless of whether the CASHLESS rebate is ‘a success’ or not, it will be a tipping point. Already I notice a shift in public perception: if a store is cash only, it definitely looks behind the times in the minds of customers.

I think that’s the whole point.