The Real Reason Japan is not Cashless…but eventually will be

Lots of silly western journalist reportage from the likes of the Financial Times (FT) and have attempted to explain the ‘cash addiction’ of Japanese society by spinning it as a failure of Japanese contactless payment technology: FeliCa, QR Codes, etc. They have failed miserably.

They would have done much better if they had gotten up from their desktops, loaded up Apple Pay Suica with a full charge of ¥20,000 and actually bothered to travel outside of Tokyo, with a few local train trips to the Japanese countryside to talk with Grandma Japan. Grandma Japan holds the family purse strings. Grandma Japan has credit cards and transit cards but those are just window dressing.

She is set in her ways, ways that have safely seen the family thought generations, the real household management is arranged around multiple hard cash osaifu ‘purses’. These purses are different accounts at different banks. Bank A is the medical purse, bank B is the insurance purse, bank C is the loan payback purse, and so on.

The Japanese Government knows this and is, slowly, weeding down the number of local banks, twisting arms, encouraging bank mergers while changing banking rules. X Day will finally arrive when Grandma Japan is forced to put all those purses in a single bank. The bank will kindly offer to manage all those purses for her, and oh, here’s this convenient Rakuten Super Suica + credit card that works everywhere in Japan for transit, shopping, getting cash when you need it, and getting points. You can also gift your grandkids with those cards too, and control how much they can use.

Get the picture? At that point Grandma Japan juggling too many hard cash accounts at one bank will be too much because it’s not traveling from bank A to bank B anymore. It’s all virtual in one place. She will throw up her hands and go cashless, and at that point Japan will truly become cashless in the more important way because it’s not about technology, it’s about households and family life. Unfortunately it’s a point that most western journalists in Japan don’t get, and can’t get, until they get their head out of technology and their body out of Tokyo.



The mercilessly hot Japanese summer is mercifully short. It is also silly and serious in equal measure. There is the mundane business of summer vacations, parents keeping kids occupied with things to do, visiting family, Obon and Bon Odori. There is also the higher order level serious and silly connected with the end of the Pacific War. Part of my job includes helping out with an annual ceremony honoring all victims of the war and praying for World Peace at the Chidorigafuchi National Cemetery. It’s a quiet dignified ceremony, but the number of participants has dwindled since the time the ceremony was started in the early 1960s and continues to shrink every year.

The number of family members from Japan and abroad honoring their war dead at nearby Yasukuni Shine continues to shrink too, but I am always surprised by the growing number of silly noisy activists, from Japan and abroad, lining the sidewalks leading up to Yasukuni and Chidorigafuchi. They are far too young to have any direct connection with the war, yet their numbers swell each year. I don’t know who funds those groups but it’s a demented kind of matsuri festival vibe of people not connected with the war that’s not only in Japan but also Korea. That’s why I call the first half of August the silly season.

The recent Aichi prefecture art exhibit After ‘Freedom of Expression?’ tempest in a teacup is a perfect example of silly season nonsense. When perennial troublemaker Daisuke Tsuda first hinted that his latest effort might be controversial, I checked and saw all the classic signs of silly season: early August, check, burning pictures of Showa Emperor, check, Comfort Woman statue, check.

I knew the resulting brouhaha would turn out to be the perfect summer gift to Motoko Rich of the New York Times who loves to write articles that illustrate what a bad society Japan is, I was right. There are lots of western journalists who make good money in Japan by bashing it. It’s a kind of fun sport for them, but it’s not good journalism or reportage of what’s really going on in Japan.

The fuzzy origins of comfort woman statue used in the After ‘Freedom of Expression?’ exhibit are interesting. The statue was originally designed to commemorate the tragedy of two junior high school students killed by an American army truck in 2002. I had always wondered about the empty chair. As the Japanese tweet points out, the other statue was removed because the image didn’t translate well to the appearance of the Pacific War era, but the chair remained. The comfort woman statue is repurposed history that has grown into a cottage industry. It is said a comfort woman statue costs about 3 thousand dollars to make and is sold for installations 100 times that, often more. Nobody asks where or whom the money goes to.

There was a lot more silly season nonsense this week from the Washington Post too: How Japan’s failure to atone for past sins threatens the global economy. In it, Gregg A. Brazinsky makes his case that Japan removing South Korea from the A group of preferred nations for the export of semiconductor materials, and returning it to the B group where it had been up until 2004, is ‘economic war’ saying “Japan’s moves have already caused a spike in the price of memory chips and are having a chilling effect on the global tech market.”

Actually, there’s a glut of memory chips in the highly cyclical industry. Korean manufacturers are still experiencing an inventory glut that is expected to last until at least January 2020. It’s a sly deception that Brazinsky does later on in the piece by mixing comfort women and war labor issues, finally arriving at his punchline: “Japanese society has failed to acknowledge and show remorse for what its armies did during World War II.”

I seriously question the morality of forcing a highly flawed history narrative, or any historical narrative for that matter, on younger generations that have no connection with said history, and demand that they must atone for it. Even from the tiny vantage point of Chidorigafuchi, I guess all that money and effort spent on all those memorial ceremonies 60 years running to honor all victims of the Pacific War and pray for world peace doesn’t mean anything to Gregg A. Brazinsky.

One of the interesting things about living in Japan is that there are lots of Koreans living here who don’t agree with the history narratives reported in the media like the New York Time and Washington Post. Particularly for the generation who lived during those times. One elderly Korean woman who’s family moved to Japan in the 1930s lectured me for over an hour once saying, “the Japanese were stern but fair.” Her family had done well, with her brothers and sons getting a good education, becoming lawyers and successful businessmen. Her story of those times is remarkably similar to others I have heard over the years and the one that Seoul University emeritus professor Lee Young-hoon discusses in a Japan Forward piece from 2017.

One of the hardest lessons I have learned from living in Japan a long time, is that things are never what they seem, and that history is just like any human creation. Like any human creation, like religion or philosophy, history can be used for good purposes or bad. History comes with a point of view, an ego, and the agenda of the person telling the narrative. It’s one small piece of a larger story that we, as outsiders, can never truly know.

To me, if history is not living in the history book, it’s being used as a tool to get something in the here and now, be it money or power politics. That’s not history, it’s something else. Two history wrongs don’t make a history right. Nothing can. That’s the reason I don’t listen to media reports about the Japanese, Korean or Chinese ‘history problems’ anymore. I listen to people, one on one, but not the media.

Tomorrow, August 16, is Okuribi, the small flames set outside a house at the end of Obon, sending the family ancestors back to heaven after honoring them. It marks the end of summer and the silly season, a slow return to regular life.

As we move farther away from the events and the people who lived in past times, it’s less about history, more about us. There’s a Buddhist saying that forgetting about ancestors is just as important as remembering them, it’s all part of respecting them. At some point we must let go and move forward to better things that I truly believe the people of those time wished us to do.

Perception and Reality

I like writing but am no writer, so I prescribe to the ‘if you’re not a sharpshooter shoot lots of bullets’ school of wannabes. When the Financial Times, “The painful path of curing Japan of its cash addiction” (paywalled) piece came out, I had 2 hours to kill before going on a business trip and decided to post something while my reaction was fresh, figuring nobody would read it. The piece has not gotten many hits, but a few western journalists based in Tokyo tweeted about it recently, defending the FT piece and the overall ‘Japan failed’ game over narrative.

Here’s the thing. The cashless payments market landscape in Japan is the most messy and exciting one in the world right now. Nowhere else can you find such a concentrated investment in contactless payment infrastructure and different technologies (EMV, FeliCa, QR Codes, smartphones, etc.) competing and playing out in the market.

Japan is also the world’s great guinea pig test market. What works here first is adapted and deployed in other markets, like mobile payments. My take, covered in countless messy posts over the span of 2 years, is actually quite simple. The market revolution of mobile payments and smartphones is just getting started. The hot messy exciting payments situation you see happening in Japan right now will play out, in some other form, in other markets later.

That’s the story I think western journalists are missing. The ‘game over’ Japan narrative has been a stock western journalist in Japan ploy since the end of the Japan bubble, almost 30 years ago. A lot of journalists stick with it because it still sells. It’s entertaining for some people, but it doesn’t convey reality or educate.

JR East getting NFC-F added to the NFC Forum certification process and getting Apple to add global FeliCa to every iPhone and Apple Watch, to me, is an interesting story. Google following Apple’s lead and adding that same capability to every Pixel 3 device (but only turning it on for the JP market), to me, is an interesting story. It tells us where Apple and Google are going.

Our smart devices are quickly evolving into ‘do everything’ devices that, unlike plastic, don’t care about any particular payment technology. They just work. That’s where the puck is going. If you sit around declaring that the game is over, you’re gonna miss the game. And the opportunity to tell people about it.

Financial Times Dissin’ Japan again: The painful path of curing Japan of its cash addiction

The UK media has a thing about Japan. Japan must always be portrayed as ‘pathetic’. Pathetic losers, pathetically isolated, pathetically out of step, arrogant, etc. Does this make UK readers feel better about themselves? I don’t know, but I have learned to take any UK media coverage of Japan with a large dose of skepticism, laugh at it, or do what the Japanese do: ignore it all together. After all, who cares what UK journalists think about Japan when they cannot be bothered to spend the time and effort to find out what’s really going on, and actually report it.

Case in point, today’s Financial Times piece: The painful path of curing Japan of its cash addiction (paywalled). It has all the nasty lazy hallmarks of UK style Japan reportage: the ‘Galapagos trap’ (Japanese isolated from the rest of the world), the ‘FeliCa failure’ (FeliCa has stunted the spread of cashless systems that have taken hold elsewhere in the world, i.e. EMV is king of the world and Japan is isolated), and now the ‘QR code failure’ (Japan was slower than China applying OR codes for mobile payments, isolated and out of step again).

This last failure, of course, leads into the recent 7-Eleven QR Code 7pay launch and security meltdown, and the narrative that FT really wants to sell here: the grand parable of modern Japan, a nation of has-beens:

the (7pay) incident has become part of a grand parable of modern Japan: a country in a permanent tension between its high-tech image and the realities of aging consumers and squandered opportunities.

WTF? I thought we were talking about contactless payment trends in Japan here, not the UK take of the world order. Why is the management failure of one company the only narrative that matters despite the many successes and changes happening right now? FT’s pathetic Japan narrative, is pathetic.

FT offers little hard evidence for the failure of FeliCa and QR, and of course completely ignores the success of things like Apple Pay Japan, the expansion of global NFC smartphones, the continuing growth of Suica use, and neglects to explain the reason behind the Japanese QR Code push: obtaining personal information for Big Data.

As any Japanese IT journalist will tell you, analyzing real Japanese contactless payments market trends is very difficult because the beast is highly regional. What you find in Tokyo is completely different from Fukuoka, or rural areas. You have to look at many different pieces to understand the trends and where they are going.

The best thing FT can offer is a 6,000 person web survey from MyVoice which does not include any crucial context, which in Japan is everything. What regions are we talking about here, what’s the age spread, the amount of use, average purchase amounts, etc. There are tons of little web surveys but they don’t convey the big picture. Sure, lots of people might use PayPay to buy this weeks discount gum or get the startup campaign goodies, but that has nothing to do real day to day contactless payments use.

The rest of the piece is padded out with phoned in quotes from the usual suspects: ‘financial analyst experts’ from Credit Suisse and Mizuho Financial Group, the latter of which have skin in the game with their own QR Code payment system.

All in all it’s the low easy road that big established media takes too often these days. The Financial Times had a great opportunity to explain the exciting changes happening in the Japan payments market right now, and open a lot of eyes and minds. Unfortunately they blew it. That’s a loss for everybody, especially FT.

Update: fellow blogger in Japan Michael Camilleri has posted his take of the infamous Financial Times piece, a highly recommended read.

Sayonara 10% Consumption Tax

There have been consistent rumors that the 10% consumption tax with cashless point rewards due to start in October was going to be spiked. Now that there are rumors of a ‘double’ election this summer, and especially after President Trump mused about scrapping the whole postwar American-Japanese defense treaty system, I think we can safely assume the 10% consumption tax is never going to happen. Prime Minister Abe can have a tax increase or he can change the constitution. He can not do both, and no politician is going to support the tax increase publicly going into the summer election, even thought the Komeito is said to want it enacted.

So who are the losers? Well, Komeito for one which the Abe government needs sidelined in order to amend the constitution, and Rakuten for another as they were hoping to ride the cashless point reward with consumption tax wave. Buckle up everybody, it’s going to be a long hot summer with lots of political debate over the constitution and Japan Self-Defense Forces.