Welcome Suica

JR East announced a special plastic Suica card for inbound tourists called “Welcome Suica” that will be available from September 1, 2019 at major Tokyo area stations and service centers. The main attraction according to the press release is that the Welcome Suica card does away with the ¥500 deposit, and the hassle of getting it back when leaving the country, but the card is only valid for 28 days from the issue date.

You can be sure that Welcome Suica cannot be added to Apple Pay or Google Pay and will strictly be plastic issue like Rinkai Suica and Monorail Suica. JR East also says that unused Welcome Suica balances will not be refundable but the unique card design makes a nice souvenir.

The whole thing sounds like it would have been a nice idea before Apple Pay Suica and Google Pay Suica, both of which allow users to add digital Suica cards without a deposit.

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Unbundled World

Tim Cook on the 1Q 2019 iPhone sales decline in Japan:

In Japan, iPhone purchases were traditionally subsidized, bundled with carrier contracts. Today, local regulations have significantly restricted those subsidies as well as related competition. We estimate less than half of iPhones sold in Japan in Q1 this year were sold via subsidy.

That and the battery replacement program were the official reasons. The unmentioned unresolved iPhone X Suica problem was another.

UPDATE
Tim told Reuters that, ‘Apple is rethinking how it prices the iPhone outside the United States after largely setting the price in U.S. dollars, which made the phones more expensive in local currencies as the dollar strengthened.’ Hopefully Japan is one of the markets that could see iPhone price adjustments. There are also other things Apple can do in Japan to help offset the iPhone sales decline.

JR East Reserve Seat Ticket Machines Going Cashless


2019 looks to be a year of change and going cashless. JR East is swapping out old reserve seat ticket machines with new ones that only take credit cards and transit cards (Suica, PASMO, etc.). This sign in Ikebukuro station says the last day for cash purchases is February 27, cashless operation starts March 1. From this date customers who want to buy reserve seat ticket purchases with cash have to line up at JR Ticket Offices (Midori-no-madoguchi) and at Travel Service Centers (View Plaza).

It will be interesting to see if the new machines will use the ‘smart bin’ design approach that accepts both plastic cards and smartphones for Apple Pay Suica, etc.

Yes, QR Codes Suck for Transit

Here are QR Codes in action at subway transit gates in Beijing.

And here is Suica in action.

Working Backwards from the User

The Suica development starting point was a user problem with magnetic card commuter passes. Old style paper passes were visually inspected at gates and could stay ‘in-wallet’ with a clear plastic opening. Magnetic card commuter passes had to be removed from the wallet and feed through the gate reader. Engineers wanted to recapture the simplicity of paper passes with IC cards.

The development process involved a lot or trail and error but Suica turned out not only to be convenient and fast but also user friendly in the way that people use things, in-wallet or otherwise. This is a classic Steve Jobs design principle: start with the user experience and work backwards to the technology.

Smartphones replicate the in-wallet experience as ‘Express Cards’ on digital wallet platforms like Apple Pay and Google Pay. The user pulls out the device and holds it to the reader. No unlocking or Touch ID/Face ID required.

QR Codes and EMV contactless on smartphones share the same transit problem of old magnetic card passes: they are not ‘in-wallet’. Devices have to be unlocked to open an app or perform a biometric authentication. This problem is compounded by poorly designed transit gate QR and EMV readers that end up forcing users to adapt to the technology and it slows everything way down. This is a design failure that would never meet the requirements of Tokyo stations where a gate has to clear 60 people a minute.

What’s fascinating to me is the assumption by some people in China, Hong Kong and even Japan that the QR Code success in China automatically qualifies it as a global payment standard regardless of the technology and business models already in place. This doesn’t ring true to me, there is something else going on.

China for example has put a lot effort into creating and promoting the China T-Union transit card standard which can be added to MI Pay, Apple Pay and Huawei Pay. Nevertheless there are not many people using China T-Union in the video. The Japanese tweet comments say that recharging China T-Union cards are not very convenient and do not offer the point goodies that AliPay and WeChat Pay do. Bingo. Is it really is that simple?

Technologies that have viable business models attached to them work better in the long run. FeliCa fares better than China T-Union or CEPAS (EZ-Link) because a transit platform like Suica does better job of attaching services and point goodies on the back end. Perhaps if China T-Union had a better business model that offered more recharge reward goodies and services on the backend to compete with QR ecosystems people might use it more, unfortunately business promotion is hard for government run transit authorities.

Joe Odagiri AirPAY Ads

OK, things are heating up in the Japanese cashless payments market ahead of the 10% consumption tax hike with cashless incentives. And things are getting fun. What other country in the world runs TV ads for cashless payment terminals?

Recruit’s AirPay POS system for small stores deftly navigates the entire Japan cashless map and is running an TV ad campaign featuring Joe Odagiri and rich visitors from abroad in various roles with credit cards. The punch line is “Do you take cards?” to which Joe Odagiri the store owner invariably replies, “cash only”. The rich customers walk away and Joe says, “I wish we had AirPay.” It pokes fun at the Japanese penchant for cash.