The 30% Apple Pay Japan Solution

Japanese IT journalist Sachiko Watatani who writes for MyNavi posted a fascinating 2 part (one and two) iPhone user survey regarding Apple Pay. There are many interesting details but the big summary points are:

  • Only 27% of iPhone users who can use Apple Pay use it
  • 50% don’t use Apple Pay but are interested in using it
  • 22% don’t use Apple Pay and don’t care about it

Other important data points are: 34.4% use Apple Pay daily, 24.9% use Apple Pay every 2~3 days, 37% use it for public transportation, 69% use it for convenience store purchases. Unfortunately the survey questions did not make any purchase distinctions between Apple Pay Suica which has Express Card functionality and other Apple Pay credit cards/pre-paid cards that don’t, they only addressed “Apple Pay” use.

Comparing results with the earlier MMD Labo report is frustrating because the surveys addressed different user sets with different questions. The only thing worth comparing is the “don’t use mobile payments but am interested” category. The MMD figure was 29.9%. The much higher interest in Apple Pay is probably due to Suica and the ubiquity of transit IC payment store options. Other noteworthy comparison tidbits from MMD are mobile payments for transit use @ 63.5% and convenience store purchases @ 59.1%.

Watatani san was confused about the low transit use result and thought it might be due to PASMO commuters answering the survey. I think she is partly right. One of the biggest findings from earlier this year was that Apple Pay Suica use is highly regional because the initial uptake is closely linked to commuter passes. Getting all the transit IC cards on mobile is something that JR East and Sony are already working on.

The good news for Apple is that 50% of Japanese iPhone users who don’t use Apple Pay are interested in using it. The bad news is that Apple has to give them better reasons to use it. A good starting point would be the items I outlined earlier: extend Apple Pay Japan prepaid card support while working to lower merchant side transaction fees, and for goodness sake issue a iPhone X Suica problem repair program.


Advertisements

SoftBank Outage Outs QR Code Weakness

The December 6 Ericsson induced SoftBank network outage could not have come at a worse time for SoftBank. The outage took down voice, data and SoftBank WiFi hot spots along with the just launched SoftBank/Yahoo Japan QR Code PayPay platform which was already off to a rocky start. Line Pay experienced serious problems as well.

Many SoftBank iPhone users on Twitter assumed Apple Pay Suica wouldn’t work without a network connection and they would be stranded, but this was not the case, Apple Pay works fine without a network connection. As Apple says in Using Suica on iPhone or Apple Watch in Japan:

Your iPhone or Apple Watch must be turned on, but it doesn’t have to be connected to a network. You don’t need to wake or unlock your device or open an app when you enter or exit the ticket gates. You’ll see Done and a checkmark on the display.

A network connection is necessary only when recharging Suica with Apple Pay, but not for an old fashioned cash recharge which can be done at any convenience store checkout, JR station smart charge kiosk or 7-Eleven ATM.

The network outage clearly reaffirmed the strengths of stored value cards like Suica: payment transaction processing is local and works without a network, stored value money and adding cash works anywhere, anytime. The outage also highlighted the perpetual QR Code weak point, they don’t work when networks are down.

There is also an important but overlooked advantage in this age of digital wallets, Suica is also a plastic card, the ultimate portable hardware backup in case of emergency or for elderly people who don’t like using mobile phones for anything other than, you know, talking.

The lack of a physical backup is what ultimately kills QR Codes as the front end transit payment solution. QR Codes will always work best in the role they are suited for: a backup role for adding money to smart cards or one-off ticket/coupons when neither time nor speed is a concern.

Huawei hopes to steal Japanese iPhone Market Share with Global FeliCa

Huawei released the Mate 20 Pro in Japan November 30 with a clear goal of offering a lower priced smartphone in the Japanese market where carrier subsidies are going away and iPhone XR sales rumored to be so-so. IT Media Mobile reports that Huawei’s Jeff Wang, regional president for Japan and Korea said that, “long-term the Japanese mobile market is becoming a fair and level one” competitively, with opportunities to offer users “revolutionary products.” The remark clearly alluded to the Japan Fair Trade Commission investigation of Apple iPhone sales strategy in Japan which resulted in the call to end carrier subsidies.

There’s just one catch: only the Docomo Huawei P20 has FeliCa, the Mate 20 Pro does not.

Wang said Huawei recognizes the need for FeliCa in the Japanese market and is working to add global FeliCa to all Huawei smartphone models. If this turns out to be true, Huawei will first smartphone manufacturer to follow Apple’s lead in adding global FeliCa. The sooner global FeliCa becomes a boring standard check box item for smartphone manufacturers everywhere the better.

New Apple Pay Suica ads

Google Pay Suica has been getting most of the JR East Suica marketing love these past few months but Apple Pay Suica is not down and out. JR East posted some new Apple Pay Suica ads on their website refresh which hopefully means that posters and train wrappers are coming soon.

In light of the coming changes in the Japanese mobile market, Apple is smart to market strengths, like Apple Pay Suica, instead of covering weaknesses, like iPhone XR pricing, with cool. Cool works best when you can rush out and impulse buy.

Why Apple Pay Suica is a success and Apple Maps is not

Inbound Apple Pay Suica user experiences are endlessly fascinating and occasionally enlightening. This tweet video captures the usual ‘whoa, that’s fast’ first time reaction.

The responses are equally interesting with a few ‘so what? we have that in (London, Moscow, China, etc.)’ which is true but it’s not the same. Almost all of them are slower, don’t have e-money functions, don’t have nationwide coverage and are not hosted natively on pay platforms like Apple Pay or Google Pay. They rely on slow buggy EMV contactless credit card transactions on transit gates instead, in short they are not transit payment platforms.

Apple Pay Suica is clearly a great service and success that has not only changed contactless payments in Japan but changed Apple as well, with Apple incorporating global FeliCa and implementing A-12 Bionic powered Express Card with power reserve technology which matches the performance of dedicated Sony FeliCa Chips on the A-Series.

What makes Apple Pay Suica a success? It is a unique layering of hardware and software that tightly integrates into a single seamless experience. At the core is the basic Suica IC card format and the transit gate system technology created by JR East and Sony in the 1980s to solve a user experience problem with magnetic commuter pass cards. Successive layers were added over time: e-money, nationwide Transit IC card interoperability, and perhaps most important of all, Mobile Suica. The Super Suica additions will further enhance the fundamental technology in 2021.

Apple Pay support arrived in October 2016, global FeliCa was added in 2017. These were 2 layers from Apple that fit perfectly and extended the entire platform with a whole new ease of use service level. The result is a service where each layer builds on and enhances the whole. This is Steve Jobs 101: work from the user experience back to the technology so that the total experience is greater than the sum of the parts.


The Apple Maps problem
Contrast this with Apple Maps. Justin O’Beirne recently published a detailed progress report of Apple’s ‘new’ (in America only) map. There was surprisingly little discussion on tech blog sites, Nick Heer was one of the few to share a few observations. O’Beirne and Heer both focus on data collection and prioritization as the core problem for Apple to fix if Apple is ever going to close the map gap with Google. I think that is a misconception that got Apple Maps in trouble in the first place.

I’ve never seen data collection as the biggest problem that Apple needs to fix. In Japan for example the data collection problem can be solved quickly by swapping out 3rd rate data suppliers with first tier JP suppliers like Zenrin who already field large data collection and verification teams. Google and Yahoo Maps Japan both use Zenrin and build on top of that solid foundation with their own data.

Integration and coordination have been, and continue to be the biggest problem. If Apple cannot do a good job integrating and coordinating different map service layers so that they build on each other, it will continue to be what it is now: a collection of loosely connected technology services that don’t work together very well and tend to pull each other down instead of up. A few examples:

  • Transit
    Apple has a very good Japanese transit data supplier Jourdan, the same one Google uses. Unfortunately the good transit data gets wasted by the limited search and sort App Maps transit UI that is completely manual, doesn’t dynamically update travel times or arrival estimates, or even provide location-based alerts when you arrive. Those kinds of integrated transit notifications on Apple Watch alone would sell a lot more devices.
  • Siri
    Siri is one the most important service layers for integrating navigation, transit and indoor maps. Unfortunately Siri is poorly connected where it should be hooked into every nook and cranny. Japanese Siri can locate the nearest station, usually, but that’s it. Siri doesn’t do transit searches or suggestions.
  • Navigation
    Turn by turn has been offered in Japan for a few years but it still basically useless without traffic information, which is still missing. Lane Guidance was only added just recently.
  • Data Duplication
    This happens all the time as Apple fails at coordinating and verifying data sets from different JP suppliers.

And so on. I included data duplication as it illustrates my basic point that no matter how good the basic data collection is, it’s worthless without a robust integration and coordination process. A smart team of human editors with deep local knowledge understand how services should connect, what works and how it should work. A truly  great team also knows how to focus and do more, much more, with less. This is impossible to achieve with the current one size fits all mentality.

Apple Maps Japan is a classic ‘the total is less than the sum of its parts‘ product. To be sure there are some good parts, but in Japan they don’t add up. The different layers stay separate and never integrate into a seamless whole like Apple Pay Suica does. It’s great that Apple is making process with its map reboot effort in America but the real test will be how well they integrate it all. A laser focus and smart integration is the only way Apple can close the map gap with Google.