9 months is a pretty quick turnaround for announcing and launching an entirely new mobile transit service across 2 digital wallet platforms: Android (Osaifu Keitai) and Apple Pay. As early as April Apple dropped hints that Apple Pay PASMO was on the way. It sure beats big bad Cubic Transportation Systems who have yet to get Apple Pay Ventra out the door after it was first announced in March 2019 on the far less complicated Chicago transit area.
While many Apple Pay users in Japan are happy to have PASMO, there is always that nagging question: if I already have Apple Pay Suica what’s the point of Apple Pay PASMO, what’s the difference? The only difference is commuter passes…and reward points. As FeliCa Dude so astutely explained in his excellent Reddit post, Mobile PASMO is a boondoggle, the result of JR East and PASMO Association failing to cooperate and mutually host commute plans…and points.
All Japanese transit cards are slightly different versions of Suica. There could easily be one national transit card and many Japanese users absolutely want it, but ICOCA, TOICA, manaca, SUGOCA, Kitaca, nimoca and Hayaken want to hang on to commuter passes…and points. The good news is that (1) Mobile PASMO got off the ground in a very short time, (2) Mobile Suica is providing the IT assets. I suspect Mobile Suica is likely hosting Mobile PASMO as well but whatever deal they cut is hush-hush.
Suica growth, the CASHLESS tax rebate effect, COVID and all that Junya Suzuki beat me to the punch today with an excellent piece that covers the Apple Pay PASMO announcement and several recent Suica trends including the recent addition of Suica to Square. The most important one to me is the July 2020 edition JR East factsheet Suica section: “Number of e-money available shops”. The number of Suica ready stores increased 50% YOY by 324,000 in the March 2019~March 2020 fiscal year with store growth outside of station areas increasing the most.
This is a direct result of the CASHLESS Tax Rebate program which provided merchant subsidies for cashless infrastructure. That program ended June 30 but there is talk in government circles of implementing a similar program to boost the economy and drive cashless use in the COVID era.
Suzuki san points out what I have said in other posts, Mobile Suica growth from the October 2016 Apple Pay Suica start point is remarkable: 9.3 million users as of March 2020. And the growth rate is accelerating. Smaller and less expensive mobile devices like Apple Watch with Apple Pay Suica and Garmin Suica make the mobile transition attractive for a wider number of users.
With restricted travel in the COVID era every single transit company in Japan is facing increasing pressure to reduce costs. Moving away from high cost plastic transit cards with cut and past Mobile Suica IT assets and next generation Suica card architecture will be the easiest way to do that.
The rush to mobile It starts now. My take is that Apple Pay PASMO marks the start point of a transit IC card rush to mobile digital wallets. Mobile PASMO is rebranded Mobile Suica. With next generation aka Super Suica coming in 2021, at the very least I think we’ll see similar arrangements from JR West ICOCA, JR Central TOICA and other major transit IC cards. With the addition of MaaS NFC Tag Suica, we’ll see a faster, wider uptake of Mobile Suica and sister services for payments everywhere.
And for those Open Loop advocates out there Junya Suzuki has some surprising analysis regarding the Japanese transit scene: despite some limited installation such as Okinawa Monorail, he does’t see transit companies going in for Open Loop in any big way. Mag strip paper ticketing will gradually be eliminated as next generation transit gates go into service over the next few years but mobile transit cards and paper QR Codes will be the replacement, not Open Loop.
As I have said before, the whole ‘Open Loop vs Closed Loop aka EMV contactless bank cards vs Native IC transit cards’ debate is pre-mobile plastic era out of date thinking. Mobile wallets and apps have tossed that whole game out the window for good. Why do you think QR Code payments and UWB Touchless are coming to Apple Pay in iOS 14? It’s a whole new crazy game. Better get used to it.
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％
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.
The biggest change is that Ekinet points are morphing into JRE POINT…finally. Just like you use JRE POINT for a free Suica recharge, you can use JRE POINT for ticket purchases, updates to reserved seats, Green Car seats, etc. The expanded Ekinet will support more Shinkansen eTicket discount options and Business Ekinet will be gaining Shinkansen eTickets for the first time. The press release says that the inbound only JR-EAST Train Reservation system will be getting an overhaul at the same time.
Let’s hope the renewed Ekinet is easier to use than the current one.
A reader pointed out that not only was I wrong, he reported that iOS still uses the PassKit Suica Shinkansen call with Ekinet eTickets. Notification Center throws out the same ‘Shinkansen’ Suica Notification when the user goes through a JR East Shinkansen gate with an eTicket.
This is handy for the user event transaction record even though the Shinkansen transit fare is not recorded: eTickets have nothing to do with Suica balance transactions, they’re along for the ride so to speak. The interesting thing is that the Shinkansen notification does not show when using the JR East ‘Touch and Go’ Shinkansen service which does use the Suica balance. It also does not show when using the JR Central Shinkansen SmartEX/EX Reserve eTickets which are cloud based like Ekinet.
The eTicket side attraction offers some insight into the ‘what stays offline and local, what goes to the cloud’ dilemma JR East (JRE) faces as it closes in on the next generation ‘2 in 1’ Suica architecture due for release in spring 2021. JRE has said many times and in many ways that the future of the Suica platform will combine cloud services with the fast local processing of the FeliCa powered Suica architecture. However, details are few, with different pieces dribbled out in bits like the new Ekinet Shinkansen eTicket service.
What’s the overall vision and goal of next generation Suica which I call Super Suica? There’s a lot of ground to cover to find out so let’s examine things in 2 basic categories: the card architecture (offline and local) and the payment platform (cloud) even though those distinctions are increasingly blurred. Here is my take based on what JRE has announced so far.
Super Suica: the Transit Card
The next generation ‘2 cards in 1’ Suica architecture hosts partner transit cards and services on Suica infrastructure, effectively extending the Suica system to non-JRE transit companies. 2 in 1 partner transit cards gain the benefit of Suica hardware and Mobile Suica infrastructure with considerable cost savings related to plastic card issue and management. The heart of Super Suica remains the offline stored fare. JRE hopes to grow Mobile Suica cloud services as much as possible with the lower cost next generation Super Suica architecture.
Stored Value Update, Region expansion and Commuter Pass Changes Starting with the basics, it’s a no-brainer that Super Suica will raise the current ¥20,000 stored value limit, likely doubling it to ¥40,000. This would put it in line with other eMoney prepaid cards like WAON and nanaco, also similar to the recent Hong Kong Octopus stored value update. The increase would have broad appeal to tourists, business travelers and shoppers everywhere and extend the JR East ‘Touch ‘n Go” ticketless Shinkansen service area.
A long standing hurdle for Super Suica to clear is the transit IC card region limitation. The current transit card architecture assigns cards to a unique areas and the stored value doesn’t work across regions. Transit systems within the same card region such as JR East and PASMO have their fare systems connected so that a user’s transit card can enter a JR East station then exit a PASMO member station with the fare instantly calculated and deducted from the offline card balance.
This region limitation is a real problem for transit users in fringe areas. In order to use an IC transit card they have to exit and re-enter separate transit company gates at specific transfer station points. There is a Japanese word for this: matagaru which means ‘dismounting the saddle’. The only viable options are mag strip commuter passes or paper tickets.
The ‘2 in 1’ Super Suica concept has special meaning for commuter passes. The current Suica only supports 2 basic patterns via a card id commuter pass account number: JR East only lines, and connected commuter passes covering JR East and connecting lines. 2 in 1 Super Suica will support commuter passes on non-JR East lines and bus lines.
Super Suica: the Platform
The primary aim of Super Suica is extending the platform reach with shared infrastructure to rural areas too small to establish their own local transit cards. Pay close attention to the transit cards outside the pink area, with the exception of PiTaPa. These are 2nd tier local area transit cards currently orphaned from eMoney or transit interoperability. There are also ‘off the map’ areas such as Utsunomiya Light Rail and Iwate Transit Co. Ltd. who have announced Super Suica agreements with JRE. These are the initial target areas.
Super Suica enlarges the pink area to include those 2nd tier and off the map cards. Those who sign on join the common interpretability area for transit and eMoney, and also gain access to Mobile Suica hosted Apple Pay Suica, Google Pay Suica and Osaifu Keitai. This is a real boon for smaller areas who, up to now, couldn’t afford to launch their own card operations. I suspect it will be very attractive to all transit card operators who run on shoe string budgets, they can save money by offloading card operations to JRE and get the mobile goodies.
What does Super Suica mean for the major transit cards like ICOCA and TOICA? It depends on what kind of deal JRE offers them. Even if the majors don’t sign on directly I see them getting access to the new Suica card format and Mobile Suica IT assets. At the very least we’ll see something similar to Mobile PASMO: licensed Mobile Suica IT assets rebranded as Mobile ICOCA, Mobile TOICA, etc.
2 in 1 Reward Points and Auto-Charge In addition to the 2 in 1 commuter passes, Super Suica also supports different reward point systems. Users will be able to exchange points for a Suica recharge just like they do now with JRE POINT and Rakuten Pay points. Auto-Charge for 2 in 1 partner branded credit cards will certainly be supported as well. Points and Auto-Charge may seem mundane but they are very important to customers and transit companies, a vital part of luring foot traffic, new businesses and visitors to local areas in an era of shrinking passenger traffic.
Expanding and leveraging the Recharge Backend The ever expanding Mobile Suica recharge backend is a fascinating development mostly ignored by the media even though it’s where the action is. Suica and the other transit cards are a huge green pasture full of cash (less) cows waiting to be milked by card companies and payment platforms. JRE lets them milk Mobile Suica cows for a cut. Up until Apple Pay Suica came along in 2016, JRE was the only recharge backend. As of July 2020 there are 5: JRE, Apple Pay, Google Pay, Mizuho, Rakuten. 2 in 1 partners will have the ability to add their own recharge backends with apps, if they so choose.
Other points to remember: the recharge backend only works on iOS and Android platforms, point rewards can be used for Suica recharge. Currently that only works with JRE POINT and Rakuten Points but this will be extended to the ‘2 in 1’ partner point systems.
MaaS Suica It’s clear that the really big Super Suica changes will be on the cloud side. Transit card eMoney has been a huge success, but Suica has to evolve to remain a viable payment platform in today’s hyper competitive world of mobile payments.
That next step is Suica NFC Tag payments. Think of it as Suica transactions without a reader, where your smartphone is both Suica card and Suica reader and let’s call it MaaS Suica. JRE joined the MaaS alliance in November 2019 closely followed by an December 2019 press release announcing NFC Tag tests with 4 partners: JRE (Suica), DNP (NFC Tags), Sony (FeliCa) and AquaBit Spirals (NFC Tag SmartPlate payments software).
JRE & us (AquaBit Spirals) have announced to conduct technical verification for the use of NFC tags focusing on transportation and ‘payments’, and that the role of Sony is to investigate technical specs as part of promoting a lifestyle through ‘FeliCa’ tech. You may know what we mean😉
AquaBit Spirals CEO Tomohiro Hagiwara
It’s clearly implied by the diagram and by comments from AquaBit Spirals CEO Tomohiro Hagiwara that Suica powers the NFC Tag payments middle section via the cloud. This means the Suica card balance on smartphones works ‘over the cloud’. Suica is unchained from the NFC reader and can be used to pay for any kind of NFC Tag linked service or item.
NFC Tags and App Clips level the playing field with QR One of the ways PayPay and other QR Code players disrupted the Japanese market so quickly was leveraging the low entry point bar of static QR codes combined with mobile smartphone apps. All stores need is an official QR Code sticker. Small merchants are freed from having to invest in POS hardware to go cashless.
The pieces appear to fit very nicely now: the NFC background tag sheet pops-up ‘while the screen is on’, the right code snippets load in for a simple focused task, the user can Sign In with Apple ID if needed, and pay with Apple Pay. Simple, uncluttered action; no apps, no Safari launch. And we have background NFC tag reading on every current iPhone model.
MaaS Suica combined with new technologies like App Clips and background tag reading iPhone has the potential to take the Suica eMoney payment platform to a whole new level. Success depends on how aggressively JRE promotes the service and how they license it to sister transit card operators. It would be great if we got MasS Suica, MaaS ICOCA etc. working seamlessly as a single mobile payment just like transit cards do now.
Based on what JRE has said over the past 2 years in the press and in recent company announcements, it seems we’ll have 3 basic versions of Suica: (1) Hard-wire Suica (what we have now) for major stations and stores, (2)Wireless Suica, a simplified low cost cloud based gate terminals to cover rural stations not currently on the Suica map, (3) MaaS NFC Tag Suica to cover everywhere else.
There will be 2 kinds of Super Suica partners:
Direct 2 in 1 partners host cards on Super Suica with all the benefits of Mobile Suica.
Indirect partners get the new Suica card architecture, New FeliCa OS improvements, Mobile Suica IT assets and wireless Suica gate system technology. The arrangement will be similar Mobile PASMO who licensed Mobile Suica IT assets but run their own cloud service with their own backend mobile recharge, commuter passes and reward points.
If Mobile PASMO is any indication, I think most of the major transit card players will end up as indirect partners. It would be great if Super Suica turned out to be an all encompassing nationwide thing on digital wallet platforms. The truth is that commuter passes, recharge backends, auto-charge and point reward empires are the crown jewels. Transit companies will always want to keep those in-house.
Next generation Super Suica won’t be a slam dunk national transit card that does it all, but it will be start line towards that goal. Think of it as a new foundation of shared infrastructure and services with transit companies working toward a cohesive de facto standard that has lots of mobile potential.
The timing is also good: in these COVID challenged times all transit companies are under enormous pressure to streamline, consolidate and bury old grudges. The current situation will likely drive Super Suica uptake as the payoff is more mobile services with reduced operating costs. Another case of COVID driven ‘unfortunate success’. I remain hopeful that, in the end, we’ll be pleasantly surprised.
Mobile Suica issued a system notice today: there is a new version of Suica App (v2.7) on the App Store, users must update by July 21. After that date you must use version 2.7 to access Mobile Suica services. The only difference I could see is that Mobile Suica Shinkansen eTicket purchase history search has been added going back to July 2019. Mobile Suica Shinkansen eTicket service ended March 13, replaced by the cloud based Ekinet eTicket service.
Some users have been experiencing multiple Mobile Suica 1201 recharge errors recently. There’s a lot of cloud work JR East has to do on the Mobile Suica and Ekinet systems in preparation for the next generation Suica debut in spring 2021. The mandatory update requirement is a sign something is changing on the backend. Hopefully JR East is fixing all things Mobile Suica.