EZ-Link Apple Pay

EZlink ApplePay

This means 2 things:

  • Credit cards make lousy transit cards which we already knew
  • EZ-Link has settled on being just a transit card, not a transit platform

UPDATE: a reader from Singapore says that EZ -Link Apple Pay is still in beta and only supports Mastercard.

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VISA Japan Shoots Itself in the Foot Refusing Apple Pay

What a difference a year of Apple Pay Japan makes.

I went to the local Docomo shop yesterday to help a friend move his au iPhone 6 to a Docomo iPhone 7. It took about an hour because he had to download au points to his au Wallet Prepaid card before switching the phone number to the Docomo SIM but all in all it was a smooth process.

The real eye-opener for me was that when he signed up for the Docomo dCard Mastercard appeared to be the only option. 2 years ago VISA and Mastercard dCards existed side by side. Not anymore. Docomo has gone all in with Mastercard branding. VISA is still available if you want it but is ‘not recommended’. The reason is Apple Pay.

It’s very simple. Docomo wants dCard to ‘just work’ on Apple Pay and on Docomo branded Android ‘Osaifu Keitai’ without limits both in Japan and abroad. VISA does not allow this. Mastercard does. I guess VISA thinks Docomo is dispensable even though Docomo pioneered feature phone contactless payments.

JCB has already seen healthy subscriber growth since Apple Pay launched in Japan simply because JCB, along with Mastercard is doing a better job taking care of Japanese customers. Instead of taking care of customers VISA seems more interested in playing market politics to sideline FeliCa payment networks in favor of EMV contactless.

Good luck with that.

Another Contactless Payment System Again

A sharp reader pointed out that in my previous post the PiTaPa NFC reader is a Panasonic JT-R550CR which is Global NFC A-B-F ready and capable of handling everything FeliCa and EMV contactless. The clutter of NFC readers is pointless. Why not consolidate all the payment networks on the JT-R550CR reader?  Would that it were so simple.

Part of the problem is PiTaPa. PiTaPa is IC transit card…sort of. PiTaPa was designed as a postpaid transit card instead of prepaid transit variety that everybody else in Japan uses. The transit portion is compatible with the Japan IC Transit standard so PiTaPa users can use the card for transit everywhere, and vice versa. But the e-money part of PiTaPa is incompatible with all other Japanese transit cards that reside on the black J-Mups reader next to the Panasonic white one.

The PiTaPa region is the Kansai which is the home power base for Sumitomo Mitsui Bank (SMBC) one of the powers behind the PiTaPa launch in 2004. SMBC wanted to sell PiTaPa as a new kind of SMBC credit card which is why PiTaPa applicants are vetted just like credit card users. Anybody can buy a transit card in Japan at the local station ticket machine. Not PiTaPa.

This is one reason that PiTaPa is a pariah with a very small retail footprint. It does not belong to the IC Transit stored value payment network or the FeliCa credit card networks, iD and QUICPay. Some users say, “a PiTaPa acceptance mark is a warning sign, not a welcoming one.” The lesson here is that credit cards suck at being transit cards no matter what BS the credit card companies or banks tell you, but we already knew that.

7-Eleven-Acceptance-Marks.jpg
7 Eleven Acceptance marks do not include PiTaPa

On the payment network side things are getting interesting. CardNet took over J-Mups operations on March 30 and should be rolling out the NFC-Pay support that CardNet announced back in 2015.

  • CardNet/J-Mups: Shops, cafe/restaurant chains
  • JSIC: Small shops, cafes, restaurants
  • C-REX: Japanese Inns and smaller hotels

CardNet and C-REX are shaping up to be the ‘go to’ payment networks for midsize and smaller businesses. Both are neutral and inclusive. Rakuten Pay (Rakuten) and AirPay (Recruit) make similar claims but are really more for businesses that already have close ties with Rakuten or Recruit. Neither or them seem eager to play with Aeon Waon or 7 Eleven Holdings nanaco both of which are popular stored value cards with customers who shop there.

Going back to the original reader question I have no idea why there are separate readers for Edy and Waon when they are clearly listed on the black J-Mups reader. Who knows, maybe the store got a better transaction deal directly from Rakuten and Aeon. Hopefully all this nonsense can be put to rest before the Tokyo Olympics in 2020.

And yes Union Pay QuickPass is finally coming to Japan (courtesy of SMBC) but only at the Matsuzakaya Department Ginza store initially because Chinese with money like to shop there.

 

Have Another Contactless Payment System

Have Another Contactless Payment System

In Nagoya and Osaka you sometimes run into a contactless payment hardware jungle cluttering up the check out counter like the picture above. Let’s see, we have a J-MUPS reader covering basic Transit IC cards (Suica, etc.), iD and QUICPay. Then we have a PiTaPa reader, a Waon reader and a Rakiten EDY reader. Pulling up the rear is a QR Code scanner and a plain old EMV chip and PIN reader.

Too much choice is just as bad as too little. I said it before and will say it again: no matter what the media says, Japanese customers will not take up QR Code contactless payments.

Why VISA Refuses to Join Apple Pay Japan

Apple Pay Wallet has an interesting animation that shows you exactly which card brands are supported in the selected region. The Japan region shows you: Suica, American Express,  Mastercard and JCB. No VISA. But wait, you can use JP issued VISA cards on Apple Pay with QUICPay and iD payment networks right? Yes but only on QUICPay and iD not for in-app and online purchases. This is why JP VISA cards don’t work for Apple Pay Suica Recharge in Wallet.

Apple Pay Japan VISA cards are ‘backdoor’ indirect support because VISA is required to support QUICPay and iD customers and licensees from previous agreements. To date VISA has yet to sign on officially with Apple Pay in Japan even though VISA issued a comment that they ‘hope to support Apple Pay Japan soon’ when the service launched in October 2016.

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 either. VISA refuses to support Docomo iD/NFC for Android Osaifu Keitai users abroad which Mastercard does. 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.

In short, it’s a power play to bypass FeliCa payment networks and grab a larger share of the cash register processing fee with payWave.

reddit user FeliCaDude has written extensively and authoritatively on all things FeliCa smartphone for a long time. His take on VISA’s Tokyo Olympic strategy matches mine, he also explains why Google’s HCE-F strategy for Google Pay in Japan is a dead-end:

If you want to talk about the Olympics, what you will see instead is more Contactless EMV terminals and Japanese issuers starting to issue Contactless EMV cards. That is the only thing acceptable to Visa and their huge piles of sponsorship money.

Google also has no interest in anything other than Android Pay. Their strategy will be to ride Visa’s coat-tails and wait for additional Contactless EMV deployment, at which point they will tie up with a major issuer and start Android Pay service in Japan. Currently what they have is a marketing sham that builds a thin veneer over Osaifu-Keitai. HCE-F cannot be used to emulate existing FeliCa-based payment systems because of the system code restrictions and lack of secure key storage.

Read the original posts on reddit, they are well worth your time. In Japan, aka the contactless payment turf war epicenter, the battle lines are stored value vs. credit card with stored value cards the clear winner so far. Let’s not forget there isn’t any money in Japanese merchant support of EMV contactless because most Inbound tourist business is mainland Chinese who only want to use QR code contactless AliPay and WePay.

It’s a shame but not suprising that VISA wants EMV contactless and payWave to be the only game in the world but that is just their business model. For transit systems there are better business models out there. Global NFC (A-B-F) is just a platform to build new kinds of business models on. Diversity is strength, and offers better business opportunities in the long run. Who cares about NFC flavors when smart devices take care of it all. It’s as simple as that.