Cashless Creativity in Japan

The possibilities are endless…

Create a virtual map of Japan with your collection of Japan Transit IC cards, matching cards to regions
Decorate your business with every available cashless acceptance mark
Combine various Transit IC card mascot DNA for infinite design possibilities
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Lost and Found

I was not familiar with Tile but after reading Twitter user Ken’s lost and found on a Japanese train story, I’m intrigued, though I do agree that the community aspect sounds a little hairy. A good read and it’s great that he found his passport and luggage.

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.

The Japanese Transit Platform Business Model

It’s about time. Somebody from outside Japan finally took in the big picture of the Japanese Transit Platform model and wrote a business outline of it in English. Egon Terplan of the San Francisco Bay Area Planning and Urban Research Association (SPUR) came to Tokyo and liked what he saw: Falling in Love With the Trains of Japan.

By 2017, Japanese trains carried nearly 30 percent of all rail passengers in the world, more than all of Europe. But unlike many European countries, Japanese rail companies are privatized, with for-profit publicly traded companies running separate rail lines all around the country.

JR East, the largest of the JR companies, carries 17 million passengers per day on 12,300 trains. (By comparison, Amtrak carried just 31.3 million passengers during all of 2016, a record year in ridership; the New York City subway averages 5.5 million daily rides and BART, 430,000.) And JR East’s $26 billion in annual revenue includes no government subsidies.

Terplan then lists what he thinks are the major components:

  1. Allow rail operators to become real estate developers to capture the value they bring to the stations.
  2. Turn stations into major destinations.
  3. Build over tracks to create new land opportunities.
  4. Dramatic reductions in travel time between cities can lead to major increases in rail’s market share.
  5. Interoperable rail cards (Suica, etc.) are key to making rail easy to use nationwide.

Essential points all, but Terplan doesn’t explain the importance of how all the different infrastructure pieces not only integrate (Shinkansen, regular lines, subway, buses, station retail, services, Suica, etc.) but also create a whole that is much larger than the sum of parts, and why. Perhaps he is only outlining the model and will return with a deeper analysis later. I certainly hope so because it’s a great transit model for other countries to adapt and adopt. Hong Kong already has a similar system on a smaller scale as does South Korea and Taiwan.

The last component, nationwide interoperable Japan Transit IC prepaid cards for transit and store purchases aka Apple Pay Suica, is the secret sauce binding everything together into a tight slick business model. That is the missing why and it’s just starting: interoperable features like Shinkansen e-ticketing, commuter passes, local loyalty point systems and hosting everything on digital wallets are still weak points. JR East and Sony are busy creating the next generation ‘Super Suica’ format that aims to integrate everything while reducing costs and taking it to the next level.