PAYGATE Station Android based smart payment reader

It’s rather unusual that a company would hold a press conference for a payment terminal but Daiwa House Group subsidiary Royal Gate Inc did just that last week for their new PAYGATE Station smart reader. Japanese IT journalist Satoshi Tanaka covered the rollout for IT Media.

The ‘thin client’ mobile Android based smart reader handles every payment protocol there is.

Contactless: EMV, FeliCa, MIFARE
Hardware: EMV IC, Magnetic stripe
QR Codes: D-Harai, Pay Pay, Line Pay, Ali Pay, WeChat Pay, Origami Pay, Rakuten Pay
Reward Cards: D-Point, Ponta, Rakuten

GMO Payment Gateway provides the payments processing backend for Royal Gate and Daiwa House Financial handles the business client support side. The product video shows the business target: small cafes, restaurants, boutiques. With the ever-widening rollout of EMV contactless and QR Code payments, Japan is turning into a very interesting and unique intersection point of Western EMV payments, home-grown FeliCa and China market driven QR Code payment schemes.

I don’t think having home grown QR Code payment systems around is a bad thing even though most Japanese don’t use them. The value is that it gives Japanese banks and companies a bargaining tool to use with Apple, Google, Amazon, Alibaba Group and WeChat. Never get in a sword fight without a sword.

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Tokyo Disneyland goes FeliCa…Finally

Tokyo Disneyland goes FeliCa today accepting Suica, iD and QUICPay payments at shops, restaurants and hotels. Apple Pay Japanese users can now keep wallets closed and still get fleeced.

It nice that Tokyo Disneyland finally accepts FeliCa payments in addition to EMV, but why did it take so long?

Traveling abroad with Apple Pay NFC switching credit cards

Japanese tech journalist Satoru Nakayama who posted his experience of riding the Shanghai subway with an Apple Pay Express Transit China card loaded on his iPhone earlier, continues his Apple Pay NFC switching global travel adventures with trips to Taipei and London. His Apple Pay Rakuten Mastercard which uses the FeliCa QUICPay network in Japan, worked perfectly with Mastercard Contactless readers overseas.

He noted that Mastercard Contactless is making rapid progress in Taiwan, encountering none of the Mastercard Apple Pay refusals he experienced earlier this year. London was also easy and he rode the London Underground without an Oyster card (MIFARE), using Apple Pay instead (EMV contactless). His picture highlights one shortcoming of using ‘Open Loop’ EMV contactless credit card payment for transit: no Express Cards.

Another problem Nakayama san encountered is that many London stores only accept contactless payment for purchases over 5 GBP or restaurants that only accept contactless payment for 2 people or more. This is a problem that Japan’s Osaifu-Keitai solved long ago: the “e-money” contactless payments system that Sony and NTT Docomo pioneered in 2004 covered both credit cards and prepaid cards. It also eliminated signatures, PIN codes and ‘no contactless payments on sales less than XX’ nonsense. Sony and NTT Docomo knew that people would not use contactless payments if they were not accepted everywhere without conditions, just like cash.

NTT Docomo and SMBC bury the hatchet…maybe

It’s very strange that the JCB QUICPay network has gained the most benefit from the Apple Pay makeover of the Japanese contactless payments market instead of the Docomo iD network. Docomo invented the Osaifu-Keitai standard with Sony in 2004 and was the natural favorite, but iD has only treaded water while JCB has seen steady gains in QUICPay issue cards, customers and transactions.

Docomo iD problems boil down to bad blood between Docomo and Sumitomo Mitsui Banking Corporation (SMBC) who issue and manage Docomo d-CARDs and help run the iD payment network. Up until 2016 VISA d-CARD was king. Then something happened. Things got so bad between the 2 companies that Docomo removed all VISA branding from their website and Docomo stores strongly urge new customers to create a Mastercard d-CARD not a VISA d-CARD. VISA might seem like the target here but SMBC, the first Japanese bank to issue VISA back in 1968, are the real power behind the VISA throne in Japan, and the real target for Docomo ire.

VISA refusing to sign on directly with Apple Pay Japan or offer NFC switching that Mastercard, JCB and AMEX do is undoubtably a big friction point because it diminishes the iD brand and VISA d-CARD. VISA also half-heartedly pushing VISA Pay Wave again, with SMBC pulling, doesn’t help. Which makes the NTT Docomo/SMBC detente ‘let’s build a new future together’ announcement so interesting. Here are the 3 announcement points <with comments>

  • First of all Docomo and SMBC agree to start all over again to rebuild the d-CARD business and develop new services. <Nice boilerplate stuff with no promises and no deadline for delivering anything>.
  • Sumitomo Mitsui Financial Group will buy back all outstanding shares of Sumitomo Mitsui Card Co. (34% of the company) from NTT Docomo by April 1, 2019. <Why does Docomo want out of the credit card business? Do they think that credit card industry pricing and fee structures are unsustainable in the face of ubiquitous contactless payments of all flavors, online banking and ever more competition? Do they think the credit card industry is going to have to live on far less and have to aggressively restructure? Or is it something else like getting out of the 2 year contract subsidizing business? Inquiring minds want to know.>
  • Docomo NTT and SMBC will work together to develop and deliver more cashless solutions and expand the iD network. <That sounds nice but what does it really mean? Is VISA finally joining the Apple Pay Japan party? Is Google Pay support coming on iD?>

Like all cold war detente agreements, the proof will be in the pudding.

New NFC Pay Readers for J Mups and CardNet

New NFC Pay / EMV contactless capable readers are being deployed on J Mups systems along with the necessary backend support for VISA / Mastercard / American Express / J Speedy EMV contactless transactions. The flaky old FeliCa only but Apple Pay Suica Express Card dumb JREM readers are being swapped out with ultra reliable Panasonic JT R550CR units.

The finicky UT1-Neo readers used by CardNet systems will also be gradually replaced with new EMV capable UT-X10 readers with the necessary EMV backend support that CardNet announced back in 2015. The current installed base of UT1-Neo readers is 200,000. Hopefully the migration to the new NFC Pay capable devices will not take too long.

J Mups and CardNet are very popular payment systems for smaller Japanese retailers and shops.