Japan is the Contactless Payment Turf War Epicenter

QR Code Nonsense
QR Code vs FeliCa

Japan is known as the perfect guinea pig market. Not too big, not too small, tightly integrated, it’s the best test market that exists. Japanese also love to fill out questionnaires, the only people on planet earth that do.

Japan is also the world’s most interesting contactless payment market. There are the large well established FeliCa payment networks that cater to Japanese customers (QUICPay, iD, Edy, Suica, etc.), there are a number of QR Code payment networks catering to ‘inbound’ Chinese tourists (WeChat Pay, Origami Pay, etc.), and now there is NFC Pay (EMV) that will cater to ‘inbound’ westerners in the lead up to the Tokyo Olympics in 2020.

Rakuten and Mizuho Bank have been promoting QR Code payments for Japanese but Japanese are responding, “what’s the point? QR codes are so 2008.” Twitter user Takumi sums up the Japanese viewpoint nicely:

Demerits of OR Code Payments

  • QR requires a good network connection
  • Slow transaction speed
  • Weak Security and QR Code Chinese payment apps keep transaction records in Mainland China
  • Device needs be on and screen active
  • No ‘on the spot’ refunds

Merits of FeliCa (NFC-F) Payments

  • Works without network connection
  • Very fast transactions
  • High security and transaction records stay in Japan
  • Device can be off (Android only) or screen off (Apple Pay Suica, Mobile Suica Android)
  • On the spot refunds

What’s interesting is that Global FeliCa support in iPhone 8, iPhone X and Apple Watch 3 lets anybody visiting Japan with those devices add Suica to Apple Pay and instantly enjoy the benefits of Japanese FeliCa contactless payments.

Apple Pay in Japan is the only place in the world where you can mix and match FeliCa and EMV payments side by side with the same device. That’s astonishing, and lots of fun.


iOS 11 Apple Pay NFC Switching in Action

fullsizeoutput_882cThe Apple Pay NFC switching feature in iOS 11 along with global NFC A-B-F support in every iPhone X and iPhone 8 gives Japanese Apple Pay users the unique ability to use the same Apple Pay credit card with FeliCa contactless payment networks in Japan and EMV contactless payment networks abroad.

There is just one catch. Credit card issuers have to support it. American Express announced NFC switching support for Apple Pay Japan customers shortly after the Apple Event last September, the same time that J/Speedy and Mastercard Contactless Apple Pay Japan support was announced. KDDI au and Mastercard said they were also working on NFC switching support but nothing has appeared so far.

Twitter user Riikun shared his American Express Apple Pay Japan purchase experience in Hawaii. The FeliCa QUICPay mark in Wallet is visible on the left, the EMV contactless receipt is on the right. It looks boring but it all just works. That’s neat. It would be great if Mastercard and Visa joined the party.


The Incredible Shrinking FeliCa Contactless Logo

New POS systems are appearing in 7 Eleven stores with much bigger touch screens and NFC readers that add the EMV NFC logo while shrinking the FeliCa NFC mark down to a ridiculously small size.

New Panasonic JT-R600CR terminals at McDonald’s and MOS Burger are not much different and also shrink the FeliCa NFC logo until it almost disappears.

Big EMV – NFC Pay logos are mostly wishful thinking at this point rather than wide based FMV contactless support. There just isn’t that much, ahem, financial incentive on the merchant side to make it happen.

Of course the EMV consortium could always help things by adding NFC-F support to their NFC spec now that it is a requirement for global smartphone NFC certification. Wouldn’t it be nice to have one big EMV NFC logo that incorporates NFC A-B-F?

Mastercard the M of EMV would probably be willing as would JCB, but Visa the V would probably not. As always these things have nothing to do with technology and everything to do with politics, market share and money.