The Future of Cashless Payments is Now

Some people look at Japan and see a crazy mess of cashless payment options: credit cards, iD, QUICPay, Suica, QR Code players like PayPay and Line Pay, all vying for customer wallet space. ‘It’s a shame,’ they say, ‘In our country we have it all worked out with EMV contactless bank cards that do everything.’

I’ve got news for those people, the mess they are seeing in Japan is the future, it just hasn’t come to their country yet. It’s the revolution of payments on smartphones that started with digital wallets like Apple Pay, Google Pay, etc. but it’s sure not ending there, the number of payment options is only going to grow. Get used to it.

The one size fits all thinking of the plastic card era is dead. Some people think it still lives on in digital wallets, but it’s dead. The future belongs to nimble players who mix and match the best payment technologies for the job at hand and offer customers better services along with it.

The so called ‘FeliCa failure’ curse is actually a kind of blessing: the market payment technology fragmentation gave new players a footing to try different payment methods. Diversity isn’t a weakness, it’s a strength. The diversity of Japanese cashless payment options is the result of its longer history of mobile payments.

That is what smart devices, digital wallets and payment apps do: they erode the old ways and bring fragmentation along with new opportunities. There will be cycles of expansion and consolidation but one size fits all will never come back. Call it cutting edge or call it stupid, like it or not, the cashless mess is coming your way.

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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 Day 6: Rebate Mana

2% and 5% CASHLESS rebates are processed and paid out at the end of each month. So I was a little surprised last night when I opened JRE POINT app, checked the transaction list and found lots of extra points listed as ‘rebate campaign’.

It took me a moment to realize that these were not JAPAN CASHLESS store rebate points but JRE POINT campaign rebate points. JRE POINT is running several point campaigns, the 2% one runs until June 30, while the NewDays Self Checkout one runs until October 30. If you are registered with JRE POINT, use Apple Pay Suica to buy your daily commute drinks at NewDays self checkout this month and rack up the points: the regular 2% + the 3% self checkout. Every other point system is doing the same from PayPay to Rakuten so keep an eye out for all kinds of campaigns.

The Global NFC + Background Tag Reading iPhone SE2

The on again, off again iPhone SE2 is on again now that Delphic oracle analyst Ming-Chi Kuo has checked in. As I wrote before, the iPhone/Apple Watch 2019 lineup is now entirely global NFC. The price cuts are great but there needs to be a lower priced entry model below the iPhone XR with:

  • NFC background tag reading in place for new Apple Pay features going forward.
  • Touch ID that removes the Face ID face mask problem in markets like China and Japan. This issue is a constant blind spot in the western tech press ‘In-screen Touch ID vs Face ID’ debate.
  • A13 Bionic for superior battery performance and Express Card with power reserve
  • Cheaper battery friendly Haptic Touch instead of the more expensive battery hungry iPhone 8 3D Touch.

There kind of device is perfect for the Japan and Hong Kong markets:

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.

I imagine the iPhone SE2 could do well in a lot of markets.

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.