JAPAN CASHLESS Inbound

2% rebate convenience stores calculate the rebate and instantly deduct the amount from the cashless transaction, effective tax rates are shown on the right of the chart

Anybody visiting Japan can buy transit cards like Suica and PASMO at stations, or e-money cards like nanaco or WAON at convenience stores. These cards are ‘Japan issue’ cards that qualify the holder for CASHLESS rebates at participating stores. But plastic e-money cards have a downside: you can’t check the card balance at a glance or recharge it with credit cards. That’s what makes Apple Pay Suica so great for inbound iPhone users.

Most rebates for prepaid cards are done through point systems such as JRE POINT for Suica. However there is an interesting exception: convenience stores participating in the 2% rebate program instantly give you the rebate deducted from your transaction at checkout. No point system or registration involved.

For Apple Pay Suica inbound users this is especially sweet: until June 30 using Apple Pay Suica gets you the 2% rebate at checkout. All you need to do is use Apple Pay Suica at 7-Eleven, Lawson, FamilyMart, MiniStop, etc. The list is expanding so be sure to check for the CASHLESS banner on the store door or the logo at checkout.

UPDATE: the tax free store program for short term visitors is a whole different thing and not covered here

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Apple Pay Global NFC Lineup Updated with iPhone 11/Apple Watch 5

The Apple Pay Japan page has a special place in Apple’s web site galaxy. It is the only page that lists global NFC specs for Apple devices. This was the page where we learned about global FeliCa iPhone 8/iPhone X/Apple Watch 3 because Apple didn’t announce anything. So the Apple Pay Japan page check is a ritual and final word of global NFC support for every new Apple device.

There were no surprises after the latest new iPhone announcement. We all knew the Apple Pay Japan device spec list would be updated with iPhone 11/iPhone 11 Pro/Apple Watch Series 5 at some point, which it finally was this week. The ritual and peace of mind is always a good thing.

Just one last little question for Apple: when does the Hong Kong Apple Pay page finally join the Apple Pay Japan page for global NFC device specs now that iOS 13 Hong Kong Wallet mentions travel cards and Apple Pay Octopus is coming soon?

Apple Pay Suica Market Share Math

One side benefit from the fake NFC TIMES article is that we now have the latest Mobile Suica issuance numbers direct from JR East: as of August 2019 total Suica issue is 78 million, Mobile Suica is 7.8 million. This is 10% exactly and has nothing to do with transaction volume, but let’s have fun and run some numbers.

If there is anything I have learned in the past 3 years, I am certain that Apple Pay Suica users use Suica much more than regular plastic Suica users. The Apple Pay ‘recharge anywhere, anytime’ factor, the ability to see what the Suica balance is at a glance, plus the magic of services like Suica Auto-Recharge, all combine to completely transform Suica into a super card. Let’s be conservative and say that Apple Pay Suica users use their Suica at least twice as much as regular plastic users, though it is probably 3 x ~ 4 x more.

In a simple hypothetical one on one scenario with 2x Mobile Suica transactions, Mobile Suica would account for 20% of total Suica transaction volume though I think 30%~35% is probably a more realistic estimate. When you factor in the cost of plastic Suica issue with its lower transaction volume, it’s clear that Mobile Suica is the future of the Suica platform.

What about Apple Pay Suica market share? There are 7.8 million virtual Suica cards installed on iPhone and Android smartphones. Let’s be conservative and say 40% of that total is iPhone/Apple Watch Apple Pay Suica, which is about 3.1 million. But let’s pull out that interesting survey from a few months back that found only 1 in 3 iPhone users who can use Suica (global NFC iPhone), actually install and use Suica: 3.1 x 3 = 9.36 million.

9.4 million Apple Pay Suica capable iPhones exist in Japan. This is a very conservative estimate but already more than the total Mobile Suica issue base. Add in all those iPhone SE/6/6S devices that can’t do FeliCa begging to be upgraded to global NFC spec iPhone… and I believe that Jennifer Bailey and the Apple Pay team are looking at a golden 2020 Tokyo Olympics opportunity for Apple Pay Suica. Now all we need is a good marketing campaign from Apple to mine it.

The FeliCa Fabulist NFC TIMES

The EMV TIMES trashed FeliCa Suica again NFC TIMES posted a story today: Mobile Suica Still Accounts for Disappointing Share of Suica Users and Transactions in Japan (paywalled).

The article revolves around information (not a direct quote) that NFC TIMES claims they got from JR East deputy general manager of Suica IT and business development, Tomohiko Umekawa. Umekawa “told” the NFC TIMES that Mobile Suica issue is 9.5% of total Suica issue: 7.2 million out of 76 million, no fiscal year was given. Mobile Suica transaction volume is then explained in the article as being 10%.

The slight of hand swapping card issue numbers for transaction volume numbers disconnect was so odd that I contacted JR East Public Relations with a link to the NFC TIMES piece and the JR East executive supplied information, asking if they could confirm the information and fiscal year. JR East PR said that while Suica issuance numbers are public, Mobile Suica transaction numbers have not been released or made public. It looks like NFC TIMES made it up.

Dan Balaban says:

Mobile Suica and Osaifu-Keitai-Keitai in general have largely been a disappointment…even with Apple Pay supporting Mobile Suica for the past four years

What exactly qualifies as a disappointment, or a success here? And to who? More importantly, who exactly are we making look good by comparison…EMV Open Loop? Balaban concludes:

FeliCa Mobile Payments and Ticketing Nothing New in Japan, as Apple Strains for Apple Pay Developments to Spotlight

Let’s count, shall we? Apple Pay Suica launched on October 25, 2016. That makes it “almost four years” in that Apple Pay Suica is almost turning four, not “the past four years” as in a full four years going on five. Buddhists count birthdays starting at year one, the day of birth, so I guess Balaban is a Buddhist. Or he’s making shit up, again.

It’s a sad state of affairs and a comment on the current state of industry newsletter sites. Given all the cut and paste context and apparent fabrication in the piece, I say call the whole thing off and compare real honest numbers after: the JAPAN CASHLESS rebate, the Tokyo Olympics, and the big bad Rakuten Suica tie-up which is going to be huge. Believe me, things are only getting started.

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.