T-POINT? We don’t need no stinkin’ T-POINT

In the ephemeral COVID era we live in assurance don’t come easy, especially with JP cashless market data. Half the fun is taking the crumbs you find, a 1000 person web survey here and there, and seeing what trends you can tease out of it.

First of all the usual disclaimer: cashless use is highly regional, depending on transit use and many other factors like age group, shopping habits, and reward points. It’s this last item that makes the CreditCard no Yomimono survey so interesting.

Reward points are the dangling carrot all Japanese cashless players use to drive card use. New comers like PayPay use them shamelessly to capture customers and build their platform. Japanese customers love to play the ‘what combo gets me the most points’ game but they are also notoriously cold shoulder when they feel gypped. And once they drop something, they never come back.

The survey skips over regional point systems like JRE POINT (though I think that’s debatable considering Mobile Suica on Apple Pay/Google Pay/Osaifu Keitai), and examines ‘national’ point systems: d POINT, T-POINT, Rakuten POINT and PONTA with a simple question. Which one do you use? 2,271 people said:

  • Rakuten POINT: 59.9%
  • d POINT: 18.4%
  • T-POINT: 14.4%
  • PONTA: 7.3%

It’s clear to see why JR East cut that special deal for Rakuten Pay Suica: the different online Rakuten businesses for shopping, travel, etc. mesh well and there are a lot of people invested in Rakuten POINT. The deal puts Super Suica in a good 2021 launch position for new local transit partners, MaaS NFC Tag Suica and more as the platform grows.

It’s a bittersweet deal however for JRE POINT. It’s a real shame and missed opportunity that the major IC transit cards (Suica, ICOCA, TOICA, etc.) are compatible for transit and eMoney, but not for points. Even if they all kept their own point branding and simply offered 1=1 point exchanges, people would use them more.

The decline of T-POINT is not surprising, dropping from 60% in a 2015 survey. Culture Convenience Club (CCC) and SoftBank ran T-POINT into the ground and it’s not coming back. It’s only a matter of time before SoftBank kisses T-POINT (and CCC) goodbye and unveils PayPay POINT.

PONTA is another major that has not gained much traction so far but this might change with the recent LAWSON Bank PONTA Plus branded credit card push. All of the point systems need to add Apple VAS and Google SmartPay support and drive acceptance on the merchant POS level. The less we have to deal with separate plastic point cards, all the better.

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Japan Cashless X-Day

Anybody care to chart the Japanese cashless transformation?

Now that the CASHLESS Rebate program is over with transaction rates reportedly going back to ‘normal’ (an estimated 1% rise over rebate program rates), JP media outlets report that some smaller merchants might go back to cash to keep profit margins intact. Real transaction rates are always hush-hush but QR payment rates recently revealed in connection with the Japan QR (JPQR) unified code scheme give us an idea what goes on behind the curtain:

NTT Data already lowered basic CAFIS transaction rates in response to the stera payment co-venture from SMBC-Visa Japan-GMO. As the JPQR transaction rate chart makes clear, banks and payment players have plenty of transaction rate wiggle room. The Japanese government is pushing cashless. If necessary the push will become shove for lower rates and yet another cashless program but where do things stand right now?

July 2020 is the proverbial “X-Day” crossover point: Japan is cashless now, even though the transformation is uneven, ongoing and very messy. On the customer side cashless is the mindset and survival behavior for many Japanese, even for older folks who under normal circumstances would prefer using cash until they day they die.

Faced with the reality of handing money that carries the risk of infection, people are going cashless instead especially with contactless smartphone payments. Junya Suzuki was right all along: Apple Pay turned out to be “the black ship of payments” catalyst that finally nudged Japan from cash to cashless. That and COVID.

Market analysts will undoubtably demand chart data that clearly explains and quantifies the transformation before declaring a ‘winner’ but they have a long wait. That’s because the cashless transformation is sloppy with huge regional variations, all happening right before us. But all of this is an afterthought and our priorities are different now, getting accurate market survey information of any kind in the current environment is extremely difficult.

The Tokyo Olympics was supposed to be the event heralding the cashless era but the COVID crisis has forced much more change very quickly. Evidence is best found in the countless little rituals of daily life that have evolved and are not going back. Merchants who do go back to cash face the risk of fewer customers: when offered a choice people choose cashless.

This realization hit me yesterday when my partner complained about his Docomo dPAY points taking a hit because the Summit supermarket staffer tapped a wrong payment button on the new POS cashless menu options added on July 1. He wanted to pay with iD. A year ago he never used iD, dPAY or Apple Pay and never wanted to, but life changed.

These days I hear contactless reader sounds everywhere, FeliCa chirps and EMV beeps are common as clear plastic sheeting and foot position floor stickers at checkout. And just when posting this the Ministry of Land, Infrastructure, Transport and Tourism announced that Japanese Expressways will be going cashless only with ETC. If there’s anything that defines this sea change it is this: it’s not a ‘victory’ over cash that the media sometimes depicts, nor does it feel like progress. In the COVID era it merely feels like survival.

Sayonara Cashless Rebate Program, we hardly knew you

The CASHLESS Rebate program ends June 30. After that date we have 8% consumption tax for takeout, 10% for eat in, and 10% for everything else. In the long ago world of October 2019 the CASHLESS Rebate program looked like the perfect run up to an economic boost courtesy of the Tokyo Olympics with lots of inbound cashless using visitors.

Now the program is ending. Inbound business has collapsed. And a Japanese economy in retreat needs relief, especially the 5% family business rebate sector. There has been talk of extending some tax relief for family owned ryokans, hotels and the like, but no action has been taken.

It’s impossible now to analyze how much cashless transaction growth the program drove because COVID pushed cashless use into hyperdrive. Nobody wants to handle anybody else’s anything, especially cash.

The real value of the program was that it helped smaller businesses get onboard with cashless payments. The little Colorado Cafe near the office added cashless with the start of the program in October. At the end of the program 50% of the transactions are cashless. That’s not bad considering that most of the clientele is retirement age. In another era we might call this success. In this age, it’s survival.

Out of Time

Is this the last time? Just a few thoughts as iOS 13.5 closes in on what hopefully will be a late May delivery, also rumored to be the launch iOS for Apple Pay Octopus. Recent beta test feedback says the minimal system for using Apple Pay Octopus was raised from iOS 13.2 to iOS 13.4.5 (rebranded by Apple to iOS 13.5). Also a new Schedule of Fees and Guidelines is due May 20. The Hong Kong Economic Times eZone site has taken this to mean that both iOS 13.5 and Apple Pay Octopus will launch on the May 20 Octopus Fees and Guideline update day.

The enthusiasm is understandable, but a similar situation happened in December with no launch. You might remember that Apple Pay Octopus was announced in July 2019, promised to launch “as soon as possible within the year,” in September, then delayed to “later in 2020” on December 19.

In short, hope for the best but don’t get your hopes up. We’ve been down this road before, but time is running out. If Apple Pay Octopus doesn’t launch in the iOS 13.5 timeframe, it’s not launching at all.

There aren’t any technical reasons for the delay; after all the Smart Octopus mobile service on Samsung Pay has been operating since December 2017 with Mobile SIM service before that. I believe it’s a result of the pressure politics facing Hong Kong, pressures both economic and governmental.

Octopus was the world’s first transit platform business that extended the transit smartcard to include payments and many other services but Octopus Cards Limited (OCL) has been slow extending the service to include mobile. Instead of putting early effort into digital wallet support for Apple Pay/Google Pay/Samsung Pay, OCL wasted time and resources developing the niche Mobile SIM product which really didn’t pan out.

This lag coupled with the rise of AliPay and WeChat Pay QR Code payment empires put enormous pressure on OCL to do something comprehensively mobile which it did with the O! ePay service in early 2019. But it’s not the only pressure: with so much traffic and business from the mainland, OCL owner MTR is looking to add QR Code Open Loop transit support (paywalled link) at some point. There is also the pressure of creating a Greater Bay Area transit card, and pressure from credit cards and banks. Every player wants a piece of the action.

Perhaps MTR gates will eventually look like the ones in Guangzhou with PBOC/FeliCa/QR Code readers supporting Octopus, China T-Union, AliPay/WeChat Pay, perhaps even EMV contactless bank cards:

At which point I say OCL doesn’t have a viable transit platform business anymore. Mainland China dumped the MIFARE based Beijing and Shanghai card architecture for their own slower PBOC 2.3/3.0 China T-Union standard, I don’t think it’s a stretch to see the same thing happening to Hong Kong Octopus at some point.

Supporters will undoubtably point out the technical merits of China using a single transit standard but that’s just a red herring. Smart devices and digital wallets handle all protocols and will continue to incorporate new technologies. The deciding factors will be good old money and politics: is it more profitable to keep Octopus in place or junk it in favor of QR and China T-Union, and who benefits from it all?

Octopus is living on borrowed time. If it doesn’t aggressively expand services on digital wallet platforms, it doesn’t have a future. Apple Pay Suica turned things around for Suica, let’s hope the Apple Pay Octopus launch can do the same for Octopus.


Apple Pay Suica had a huge impact on Mobile Suica use
Modern digital wallets like Apple Pay seamlessly support multiple payment technology protocols

UPDATE: on May 18 at 4:30 PM, an Octopus system glitch temporarily showed an option to add Apple Pay Octopus cards to Wallet to some iOS Octopus app users, but the feature not functional on the Apple Pay Wallet end. The glitch was quickly fixed but could be a sign that a service launch is imminent (edit: post glitch rumors say June 2).

The latest word from beta tester code leakers is that virtual Octopus creation and recharge in Apple Pay Wallet is limited to Hong Kong issue Mastercard, Union Pay and VISA. The May 20 Schedule of Fees and Guidelines update should show any changes for Smart Octopus (edit: “new restriction, 21 (cb), blocks the transfer of money from a Smart Octopus to O! ePay, probably to prevent the abuse of credit card cashbacks since service fees are waived for Apple Pay”).

PS: Barring the Apple Pay Octopus launch or official announcement, this is my last post on the subject.

QR Apple Pay Cards for iOS 14 Wallet?

UPDATE: No WWDC20 mention of AliPay for Apple Pay Wallet but there are code references in iOS 14 beta 2, also iOS 14 PassKit: WWDC20 details and developments here


The recent iOS 14 feature leak report from 9to5 Mac closed with an interesting line, “Another change includes AliPay support for Apple Pay with iOS 14.” A reader steered me to a set of images posted to the Octopus on Apple Pay thread on the LIHKG site.

The images suggest a few possible scenarios for iOS 14 Wallet:

  • QR Code payment system players have a PassKit API method to add a ‘QR Card’ to Wallet.
  • Wallet QR Cards set as the main card directly invoked with a side button double-click for Face/Touch ID authentication and dynamic QR Code payment generation without an app.
  • Direct static QR Code reads with Apple Pay payment.

It makes sense that Apple wants to encourage major Chinese QR Code players to join the ranks of top tier Wallet cards like any Apple Pay credit card and not be stuck in an app. Direct Apple Pay Wallet QR integration makes things more convenient for iPhone QR Code users. The Wallet card metaphor is rather strange for QR Codes but that is what the Wallet UI is built around and it differentiates cards from passes. Apple already refers to Apple Pay credit/debit cards as ‘Payment Cards’, QR Code cards will be just another Apple Pay Payment card.

Questions: Will it work offline like Wallet NFC cards? Will Wallet QR Code Payment cards require QR Code PassKit Certificates with NDA similar to NFC PassKit Certificates and will they be renamed Secure Element PassKit Certificates? Is this what the new “PKSecureElementPass” PassKit framework addition in iOS 13.4 is for (in addition to CarKey)?

We’ll find out details online this summer at WWDC20.