Apple Pay and the art of 2-way disruption: how Super Suica will change contactless payments in Japan and beyond

Super Suica Card
The new ‘Super Suica‘ card will replace all local transit cards for a single national transit and e-money card but still offer all the local commuter plans and point systems.

Global FeliCa iPhone, FeliCa Pixel, Super Suica and all that
Apple Pay Japan arrived just 2 years ago and has clearly disrupted the Japanese contactless payments market in many important and interesting ways. Things can change quickly and the disruption isn’t one way. Here is a timeline:

As I predicted a year ago, the global FeliCa iPhone with NFC switching took Apple Pay to a whole new level and made FeliCa a de-facto NFC smartphone standard checklist feature that Google Pay could not match unless Google made their own hardware version of it, which they have done with Pixel 3 in Japan, their first official entry with Japanese carriers. If Google continues to follow Apple’s lead then Pixel 4 should be global FeliCa with NFC switching that further divides the ‘pure Google’ Google Pay haves from the have-nots.

The Apple Pay Black Ship
Japanese IT journalist Junya Suzuki wrote that Apple Pay would be the ‘black ship’ that would revolutionize Japan’s contactless payments market. Apple Pay was the match that finally lit the fuse of the huge Japanese contactless transit and payments infrastructure investment and launched it into orbit. In the 2 years since it’s arrival. Apple Pay Suica kicked Japan Transit IC card e-money growth into high gear 20% YOY growth even though most of the action is Tokyo area based: estimated e-money transaction growth rates in Tokyo alone are 40%. The first year of Apple Pay Suica proved that stored value (SV) transit cards, not credit cards, are the golden growth path for contactless payments.

And now because of the success of Apple Pay Suica, JR East and Sony are taking it to the next level developing the next generation Suica container format, which doesn’t have a real name yet (local coop transit smartcard?). I call it Super Suica and it’s due to launch April 2021. Super Suica will change Japanese contactless payments and transplant the Apple Pay Suica transformation from the Suica Tokyo home area to all transit regions nationwide. Everything transit will be on Apple Pay, everybody everywhere can use it for transit and e-money. Google Pay and Osaifu-Keitai will be there too.

But Super Suica isn’t just for Japan, it’s part of the vision JR East unveiled at the July 2016 NFC Forum Japan meeting to have NFC transit payment standards that work everywhere:

With a single seamless NFC standard and certification process in place, JR East roadmap goals are very clear:

  • Japanese customers with Mobile Suica devices can use their devices for public transportation and transit payments abroad.
  • Global specification certified NFC devices from abroad can use Mobile Suica.

Current limitations
NFC certification and global FeliCa smartphones are taking care of the hardware side, but NFC transit payments interoperability isn’t there because there hasn’t been a roadmap. Super Suica is the first step to create one. Japanese transit cards have been compatible with each other for transit and e-money since 2013 but important pieces are missing: commuter passes and point systems are still chained to local transit cards and have to be managed locally. You can travel with Apple Pay Suica anywhere, but you can’t add a commuter plan for an area outside of the Suica transit network.

Because of the costs associated with maintaining local data and account management it’s very difficult and expensive for large transit companies to host systems on mobile digital wallets. Nobody outside of JR East has managed to do it. It’s expensive for smaller local transit companies to issue smartcards and impossible to host them on mobile. Super Suica containers will solve these problems and greatly reduce costs not only for plastic card issuance and operation but also for hosting them on mobile digital wallet platforms.

Super Suica Roadmap

Super Suica Containers
The JR East and Sony co-development announcement of a ‘national’ super Suica card sounds exactly what the Aso government proposed back in 2008: one card to replace local Japanese transit card variations such as ICOCA, TOICA, SUGOCA, Kitaca, PASMO, manaca, Nimoca, Hayaken and others into a single card that does it all. JR East and Sony plan to have Super Suica in circulation starting April 2021.

Development is divided between Sony, JR East and JR East Mechatronics (JREM), the JR East subsidiary company that manages Mobile Suica.

  • Sony: updating FeliCa OS for the new format
  • JR East: coordinating the deployment effort with the other transit companies
  • JREM: physical card development, providing background services for issuance and mobile

The press release is terse and light on details but 3 points are very clear:

  • Cost reduction
  • Support for local commute plans, points, branding and more in addition to the regular stored fare transit and e-money features of current issue cards
  • Everybody on board

The aim is clear: instead of complicated expensive account management systems that babysit all the extra functions the cloud magically attaches to current transit cards, with every transit company doing it differently, Super Suica will be a universal container that takes care of the extras on the card itself. There will be established protocols and one common format with a new FeliCa OS version to handle everything.

Current Account based Mobile Suica

Containers vs account management

This approach will streamline and simplify the entire Japan Transit IC system process for plastic cards and mobile, significantly lowering costs without sacrificing the great things about Suica: blazing speed and local processing without a network.

Functions that are geeky and complex like setting up auto-charge or purchasing Shinkansen e-tickets will become much easier and accessible. Missing functions like discount tickets, special fares, and regular line express train ticketing will be possible on mobile. JR East has talked about raising the current 20,000 JPY Suica balance limit, Super Suica is the perfect opportunity to finally do it.

The outcome for Japan
The change for Japan is obvious: the success of the Suica transit payment platform in the Tokyo region is made available everywhere. Actually it already is available everywhere but Super Suica will supercharge it.  JR East will offer to host everything on mobile so that everybody in Japan can use Apple Pay, Google Pay or Osaifu-Keitai for local transit, purchases, while offering all the local goodies and incentives.

Other big players like JR Central and JR West may not opt-in for hosting on Mobile Suica for political reasons but the incentives are certainly there and the cost of getting somebody else’s cloud service to do it will be much easier and cheaper than it is now. JR East looks eager to go the extra distance to get everybody on Mobile Suica cloud and should make clear that Mobile Suica is only managing containers, not account data.

The outcome outside of Japan
The possibilities outside of Japan are going to be interesting. Could the Hong Kong Octopus system opt for the new format and could it be made cross compatible? It’s nice to think that sister systems like Octopus and Suica could do that some day. Even if that doesn’t happen, the Super Suica container format will offer Octopus the same benefits of lower costs and make it easier to deploy on other digital wallet platforms outside of the currently exclusive Smart Octopus in Samsung Pay.

More than cross compatibility however I think Super Suica will shine a much brighter light on the shortcomings of using ‘Open Loop’ EMV contactless credit card payment networks for transit: non-existent account management, simple fares only, no commute plans, no points that tie in with other transit company services, etc. These are problems that are prohibitively expensive for any transit company to fix on their own and the banking industry payment networks will not.

EMV contactless transit shortcomings

You know things are really bad when 9to5 Mac writes this about using Apple Pay on the Milan Metro:

A handy tip for anyone wanting to get around with Apple Pay without causing a fuss is to authenticate Apple Pay as you approach the gate. Doing it in advance helps remove the awkwardness of holding up other people if your fingerprint or face isn’t recognized first time, for instance.

This is a perfect example of dead-end last century credit card vs. smartcard, open loop vs. closed loop thinking and where it has brought us. Digital wallet platforms like Apple Pay and Google Pay collapse the differences of open loop vs. closed loop and destroy the old arguments while combining different NFC technologies and middleware software into one compelling new whole the creates an entirely new game: Build a transit payment platform instead.

A stored value native transit card on the front end with a credit/debit card on the backend for Apple Pay or Google Pay recharge is the best arrangement that leverages the strengths of both approaches working together instead of the old antagonistic and wasteful A or B arguments. In the long run it’s a win-win for transit companies and the banking industry.

For Asian countries that already have FeliCa transit systems (India, Indonesia, Hong Kong, Vietnam) Super Suica will let them do more. For transit companies in America and Europe, Super Suica will be a great chance to re-examine long-term goals and choose the best mix of technologies in light of the new business opportunities and models that digital wallets and Super Suica roadmap will offer.

One thing is clear: transit companies that stick with the old ways of thinking will miss unique new business opportunities offered by native transit payment platforms hosted on digital wallet platforms, opportunities that build on transit but also extend it into new places.

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The Contactless Payment Turf Wars: PiTaPa Pitfalls

Japan Transit IC Mutual Use Association Map
The Japan Transit IC Mutual Use Association project started in 2007 and achieved transit and e-money interoperability in 2013. It continues to evolve and incorporate other transit smartcard systems into a single standard. Wikipedia

PiTaPa is the perpetual outliner of the major Japanese transit smartcards: Suica, ICOCA, TOICA, SUGOCA, Kitaca, PASMO, manaca, Nimoca, Hayaken. Starting in 2006 the major transit cards were stitched together into one common national platform for mutual transit and e-money use achieved by 2013. The result is the fertile ground that Apple Pay Suica is growing and thriving in. Apple Pay VP Jennifer Bailey recently said that Apple Pay is doing well in Japan. The Apple Pay Japan story is all Suica and transit reamains the golden uptake path for contactless payments on smarphones.

And then there is PiTaPa. PiTaPa is the main transit smartcard for non-JR ‘private’ rail companies in the Kansai: Hankyu, Keihan, Nankai and Hanshin. The excellent Japanese Transit IC map graphic on Wikipedia perfectly captures the problem of PiTaPa incompatibility and isolation: the background blue is transit only compatibility, the red is transit and e-money compatibility.

The PiTaPa Story
PiTaPa has an interesting history but not a particularly happy or successful one. It’s the perfect case study of what happens when banks and credit card companies call the shots on transit ticketing system infrastructure instead of letting transit company management make those decisions. It’s also a story of how most Japanese transit companies, except for JR East, failed to see the coming revolution of mobile digital wallet platforms.

The PiTiPa founding members originally planned to build a transit IC smartcard system just like Suica: pre-paid stored value (SV). Then Sumitomo Mitsu stepped in with a seemingly good idea: a Sumitomo Mitsui credit card + transit card post-pay combo card to save transit users from having to recharge the transit card smartcard at all. A credit card transit card for transit and shopping. What could go wrong? The Kansai area is home town for Sumitomo Mitsu, the Kansai banking indsutry Godzilla for over a hundred years, how could transit companies, Sumitomo Mitsu borrowers all, resist?

And so PiTaPa was born in 2004 as a Frankenstein credit card grafted with a transit card appendage that was supposed to do it all, but never delivered the benefits of either one. Sumitomo Mitsui imposed all the hoary old credit card conventions on the shiny new creation: credit checks and spending caps. It immediately shrunk the PiTaPa user base from everybody to people with good credit ratings who passed Sumitomo Mitsui credit checks. Compare this to Suica where everybody from kids to retirees with a ¥1,000 bill can buy Suica card at a station kiosk. That’s the beauty of stored value cards, simple immediate purchase and use.

The original PiTaPa did not sit well with a lot of transit users so a ‘PiTaPa lite’ card with deposits instead of credit checks, without the e-money function, was added in 2007. Unfortunately since PiTaPa was post-pay, PiTaPa didn’t work with the Japanese Transit IC e-money standard and was shunned by payment networks and merchants. Good luck trying to use PiTaPa credit outside of its core transit ghetto at 7 Eleven, other convenience stores or anywhere else.

If you want to know how well PiTaPa is doing in 2018 all you need to do is check the commuter pass pages of the PiTaPa member railroads: Keihan and Osaka Metro offer ICOCA commuter passes. Not only that but Osaka Metro and Keihan have moved away from PiTaPa commuter passes for general issue and use ICOCA instead.

No Future
The decision to let Sumitomo Mitsui call the shots instead of transit management killed any viable future for the PiTaPa system. PiTaPa uses the same FeliCa technology behind the highly successful Mobile Suica and Apple Pay Suica, but the unique one-off system architecture, limited user base and transaction volume mean PiTaPa will never be hosted on any mobile digital wallet platform. PiTaPa transit partners don’t want to spend resources to build a cloud and host mobile service because there is too much cost for such little return. And Sumitomo Mitsu will certainly never foot the bill to clean up the mess they created.

Now that JR East and Sony have announced ‘Super Suica’ for April 2018 that will incorporate all Japan Transit cards into one card system for transit, e-money and mobile, the PiTaPa participants face a choice: junk the old PiTaPa and get onboard the Super Suica express or be left behind in isolation with no future.

Transit payment platforms
The basic unsolvable problem is that banks and credit card companies want different things than transit companies. Banks and credit card companies want credit checks and caps, transit companies need as many people going through the transit gate as efficiently and safely as possible. These fundamental business differences will never be resolved, there will always be tension. That is why banks and credit card companies should never be in charge of running transit gates. They simply want to take their credit card cut and run, leaving the scene of crime, and the cleanup bill, to others.

You can see the similar things playing out on other transit systems such as Hong Kong’s Octopus system with AliPay and other QR Code ‘virtual banks’ putting pressure on operators to change transit ticketing system infrastructure to suit their needs, all paid by the transit operator of course.

It’s wasteful nonsense and who needs it? It’s last century credit card vs. smartcard, open loop vs. closed loop thinking. Digital wallet platforms like Apple Pay and Google Pay conveniently collapse the differences of open loop vs. closed loop rendering the whole argument pointless while offering a whole new game. Build a transit payment platform instead, in the long run it’s a win-win for transit companies and the banking industry.

It’s very simple: transit companies and a finance industry that stick with the old ways of thinking will miss the major unique new business opportunities offered by transit payment platforms hosted on digital wallet platforms, opportunities that build on transit but also extend it to exciting new places, a transit platform that grows and benefits everyone.

Important Suica App update due October 10

JR East announced an important Suica App update that will drop immediately after the early morning Mobile Suica maintenance window that ends 5:30 am JST. The new version is Suica App v 2.3 with seemingly minor app UI changes but has big updates on the cloud service side. The new features are:

  • Mobile Suica password resets can be done from Suica App. Finally. Until the new system becomes operational, ‘I forgot my password’ resets can only be done with a web site form or calling the Japanese only, hopelessly overloaded Mobile Suica Call Center.
  • Mobile Suica members can cancel their account without logging in. This is very convenient for users who want to switch to Android devices. Because of the way Apple Pay and Mobile Suica are integrated, users have to cancel their account and set up a new one for Android use.
  • Mobile Suica members can see Suica cards parked on the Mobile Suica cloud. This is extremely useful to have in case you delete Suica on one device but have yet to load it onto a new one, or forgot you even had another Suica card. Anything parked on the Mobile Suica cloud will all be there and visible in Suica App.

There are great new features and I look forward to using them. It should also help free up the overloaded Mobile Suica Call Center as users can take care of mundane Suica account management without calling in. It would be great if the Apple Pay Suica performance enhancing iOS 12.1 update drops at the same time.

Suica Platform Update: JRE POINT September Point Campaign

JRE Points

Now that you have your JRE POINT account setup on the JrePoint iOS App, we have the perfect opportunity to get free JRE POINT with the just announced September Premium Point Campaign running September 28~30. If you purchase a grand total of ¥5,400 worth of goods on those three days you automatically get an additional 500 free points in addition to the regular points (¥5400=540 points). At least 1040 JRE POINT that you can turn around for a free ¥1,040 Suica Recharge.

In order to get the 500 free points you must first sign up for the campaign in JrePoint App. Launch the app, tap the Yellow campaign banner, scroll down the campaign page, tap “Entry” and you are done.

The only thing left to do is shop at any store that offers JRE POINT. Look for the green logo below. At the register give the cashier your plastic JRE POINT card and pay anyway you want to: Suica, credit, cash.

There is a Kaldi Coffee Farm store in the Asagaya Station Beans Mall. I need some coffee and things and can kill ¥5,400 in less than a minute there. I’ll pay with my BIC CAMERA View JCB card and get JRE POINT + BIC CAMERA POINT. The latter will kick me over the line so I can pick up a new Apple iPhone case there for free.

Now that’s what I call platform lock in.

Suica Platform Update: Using JRE POINT

JRE Points

The previous Suica Platform update outlined the upcoming migration of various JR East point systems for Suica, View Card, etc., into one single JRE POINT system. That happened on June 28 and is now complete. Here’s a quick overview guide to help you get the most out of using Apple Pay Suica. The initial setup seems convoluted but is gradually getting better and more streamlined. Setup complete you can start racking up points for free Suica Charging.

JRE POINT Setup

You will need a few things:

The first step is the JRE POINT Card. Get one at any JR station area store displaying the green JRE POINT logo and get a free JRE POINT Card by filling out a simple form with name, address and email.

Next step is creating an online account on JRE POINT WEB:

  • Create a temporary account with a email address and password. I strongly recommend using the same email address and password you have for Mobile Suica. It will make your life easier. JRE POINT WEB Online offers the option to sign in with JR-EAST ID but strongly recommend not using it.
  • After creating the temporary login and password you receive an email to complete the account setup. Follow the link and complete your JRE POINT WEB account. In addition to the regular login PW you also need to set a 6 number PIN that is called #2 Password. Be sure to write this down, I guarantee you will forget it otherwise.

The next important step is registering your card numbers in JRE POINT WEB:

  • JRE POINT Card# (You can register multiple JRE POINT Cards)
  • Apple Pay Suica ID# (You can register multiple Apple Pay Suica Cards)
  • View Card JRE POINT Card# (You can only register one View Card)

Install JrePoint App on iPhone and log in with your JRE POINT ID and password. The first time you log in you may encounter an annoying ‘confirm you are a person’ step where you have to find all the photos with car, a sign, etc.

If all is set up probably JrePoint App should display your current JRE POINT balance at the top of the main screen. You can also confirm the cards you have registered with JRE POINT.

Jre Point App Main Screen
When successfully logged into JrePoint App the main screen will show your ID and JRE POINT balance.

Getting JRE POINT

There are 3 ways to earn JRE POINT:

  • Use JRE POINT Card at stores displaying the green JRE POINT logo
  • Use Apple Pay Suica at stores displaying the yellow Suica JRE POINT logo
  • Use a JR East View Card for making purchases anywhere and for Apple Pay Suica Recharge

JRE POINT Card is a manual affair, present it when paying at a JRE POINT store and pay anyway you want to: Suica, credit, cash. Apple Pay Suica purchases at Suica JRE POINT stores and View card purchases anywhere automatically add JRE POINT to you account. Points are posted as follows:

  • JRE POINT Card points are added to JRE POINT account instantly
  • JRE POINT from Apple Pay Suica are added within 24 hours
  • JRE POINT from View Card are added at the end of the View card billing month

Do some research to find a card combination that makes your money work harder. For example: BIC CAMERA VIEW JCB Card + Apple Pay Suica + JRE POINT earns you JRE POINT and BIC CAMERA Points with store purchases and Apple Pay Suica Recharge that you can then turn around use for free Suica Recharge, buying anything at BIC CAMERA, exchange for gift coupons, etc.

JrePoint App Suica Recharge

We have finally arrive at the fun part of this whole exercise: exchanging hard-earned JRE POINT for a free Suica Charge. Open JrePoint App, login, tap ‘Use Points’, tap ‘Points Exchange for Suica Charge’ then tap ‘Suica ID#’.

The next screen shows you your current JRE POINT balance. 1 JRE POINT converts to 1 yen, 500 JRE POINTS for a 500 yen Suica Recharge, etc. Enter the number of points you want to exchange then tap ‘Confirm’. Check your information then tap ‘Apply’.

Suica Pocket in Suica App

You should instantly receive an email from JR East confirming your Suica Charge amount with a Suica Pocket ID# and a link. Tap the link which will take you to Safari page that says in Japanese ‘Open Suica App/Launch Suica App’. Tap Launch Suica App.

Suica App will launch and present you with a ‘Select Suica’ screen. Tap your Suica ID# which takes you to the Suica Pocket screen. Tap ‘Suica Charge’ and your Apple Pay Suica card should recharge immediately.

That’s it. Your JRE POINTS have been converted into Suica e-money you can use for Apple Pay Suica transit or purchase thus earning more JRE POINT. This guide barely scratches the surface. There are many more options and configurations available. Take some time with it and you’ll be rewarded much smarter e-money.