WAON and nanaco coming to Apple Pay

Two of the last big three Apple Pay Japan holdouts are finally coming: AEON announced WAON and Seven & i Holdings announced nanaco for ‘later this year’. These popular prepaid eMoney FeliCa cards have been on Osaifu Keitai and Google Pay for some time. This leaves Rakuten Edy as the last, and largest, Wallet holdout although the iOS Rakuten Edy app recently received an update that supports Apple Pay for physical card recharge.

Despite the uptake of QR Code payment apps such as PayPay, prepaid eMoney cards remain popular and getting them on Apple Pay is an important development. The cards are also more secure: Seven & i Holdings experienced a huge embarrassment when they launched their 7pay QR Code payment service in 2019 that quickly failed due to a security meltdown. Since that disaster they have refocused on nanaco as their in-store payment + loyalty point reward strategy. Currently nanaco has issued 74 million cards, WAON has issued 87 million cards. For comparison Suica has issued 84 million plastic cards and over 14 million Mobile Suica digital cards that includes Apple Pay Suica.

Release details are sparse but it’s safe to assume they are coming after iOS 15 ships (probably 15.1). iOS 15 Wallet includes UI improvements that remove the confusing device region setting requirement and simplify adding transit cards like Suica and non-bank stored value (SV) prepaid cards like WAON and nanaco. As pointed out many times before, all iPhone 8 • Apple Watch 3 and later models support Apple Pay Japan cards thanks to Apple’s global NFC support. The big questions are: (1) Is direct Wallet add card supported that bypasses creating a WAON or nanaco account as part of the digital card issue process on Google Pay? (2) Can physical cards be transferred like Suica and PASMO? None of this is supported on Android.

These and other usability issues have kept these cards from joining Apple Pay. It will be interesting to see if Apple has solved them and persuaded AEON • Seven & i to simplify their digital card issue process to follow the great example set by Apple Pay Suica because that is the high bar: direct Wallet adding with no sign up and open ended Apple Pay recharge. The low bar is the Toyota Wallet app-like model of chaining card issue and recharge functions to a user account app. The cards should support Express Mode as they do for Mobile WAON and Mobile nanaco on Android. The press release Apple Pay WAON image suggests Express Mode, the Apple Pay nanaco image does not, however the dual press announcement does suggest a level of commitment and integration on the Apple Pay side. We’ll see.

Not many of new iOS 15 Wallet goodies announced at WWDC will come to Japan soon with the exception of digital car keys, adding WAON and nanaco now is a smart move that will keep users happy. With all the card possibilities coming to Japan this year, it’s a good thing that iOS 15 ups the Wallet card max limit to 16.

The Weekly #3

August 3, 2021

Busy week for Apple Pay and Mobile FeliCa

Since last week’s Australian Parliamentary Joint Committee on Corporations and Financial Services hearings regarding the so called Apple Pay monopoly and the pointless debate of Android only Host Card Emulation (HCE) ‘virtual secure element’ vs. a hardware embedded secure element (eSE), Apple has been busy rolling out new Apple Pay Wallet services: Australian health insurance Wallet card support and digital vaccination certificates, ING Belgium and FNB South Africa additions, and today’s Student ID expansion to more universities in America including the first international addition in Canada. The last item was particularly interesting as Apple issued a press release that included new partners beyond Blackboard: Transact, CBORD, TouchNet, Atrium, HID Global, and Allegion. MIFARE and FeliCa are the 2 big protocols used for ID cards, both fully supported in iPhone and Apple Watch. Hopefully we’ll see more international Student ID card support going forward.

Japanese IT reporters have been writing about the recent addition of Xiaomi Redmi Note 10 JE (Japan Edition) to the KDDI au lineup. All the Chinese manufacturers have been bringing new models with Mobile FeliCa Osaifu Keitai support as more or less standard, but like most Android smartphones including Google Pixel, even though the hardware is the same everywhere, Mobile FeliCa is only activated for Japanese models.

The Xiaomi product manager interview casually mentions that only 20% or so of Android Osaifu Keitai device holders actually use the feature. Why bother adding it then? I suspect Osaifu Keitai usage rates vary widely depending on the region, much higher for Tokyo and other metro areas, less in rural areas. It would be really interesting to compare Osaifu Keitai usage rates with Apple Pay as I also suspect Apple Pay Japan usage rates likely leave Osaifu Keitai in the dust. As for the real reason why Chinese smartphones manufacturers are adding Mobile FeliCa support: the digital My Number ID card launching in 2022 requires it. One out of ten people living in Tokyo and other metropolitan areas is a Chinese national…do the math.

Digital My Number: First Summary Toward the Realization of Electronic Certificates for Smartphones

Delete me

The American bred internet cancel culture that started during the Obama years and went ballistic during the Trump years shows no signs of abating as battle lines are constantly redrawn to silence a somebody that somebody else wants silenced. And it has become an entrenched issue thanks to AI driven SNS content. As Tim Pool adroitly points out, and long term surveys confirm, the current American racial crisis didn’t happen until the Reddit and YouTube generation raised on endlessly looping AI driven police brutality video content came of age perceiving their virtual world as the real one. That’s the unfolding tragedy as perceptions based on virtual life replace real ones.

As bad as this is, evil players and big tech use virtual life to intimidate, blackmail and destroy real ones. That’s exactly what happened evidently when eBay’s supervisor of security operations decided to cancel the EcommerceBytes blog and carried out a cyberstalking campaign (including surveillance), against the husband and wife blogging team. Their astonishing story was published by the Boston Globe. It’s reads like the script of Michael Clayton (I prefer the Japanese title: The Fixer). eBay conducted an investigation, pushed out the CEO with a golden parachute and issued a statement that, of course, acknowledged the wrong but said ‘it’s okay now because the baddies are gone.’ Until next time, that is. eBay, of course, didn’t offer any compensation.


The Buddha’s face isn’t seen a fourth time

When the 3rd Tokyo State of Emergency (SOE) was announced, I predicted it would’t go well. Sure enough, infections started to rise before the end of SOE 3. Now we are in SOE 4 and infection rates are skyrocketing, well, skyrocketing compared to rates that were low to begin with. So life goes on as usual, the commuter time trains are crowded as usual, people go shopping as usual, there is nothing remotely panic-like despite media hysteria narratives of a ‘medical system breakdown.’

As always, it’s complicated. Few people are actually dying from COVID (and don’t forget that hospitals get a Japanese government subsidy when they report a COVID death, other deaths don’t pay). Influenza and pneumonia are much more real long term threats. Lockdowns and vaccination mandates will be impossible to implement as all the government tools to do so were locked away by the GHQ occupation and restructuring of Japan. Any attempt to invoke those kinds of centralized powers requires changing the American created Japanese constitution and nobody wants to do that (fun fact: the English language constitution of Japan is the official one, the Japanese language one a fake). Not that the situation is dire, a little context helps. And don’t forget the overall Japanese death rate dropped in 2020 YOY thanks to all that mask wearing and hand sanitizing.

Given the utter lack of useful long term planning demonstrated by Tokyo Governor Yuriko Koike, the most likely course of action will be: attempting real fines for restaurants, bars, etc. that don’t follow SOE requests. Good luck with that.

Instant digital issue apps for Apple Pay Edy, nanaco, WAON support?

A fun mockup of card options for direct iOS 14 Wallet issue for Edy, nanaco, WAON that will probably never happen. If they come at all they will be digital issue via apps.

Now that VISA JP finally signed with Apple Pay, what about the last holdouts: Edy, nanaco and WAON? These have been on Google Pay for some time but like all things Google Pay Japan, it is courtesy of Osaifu Keitai rather than native Google support. Apple was smart to go for Suica first, then PASMO (which has yet to appear on Google Pay) but it’s time to complete the Apple Pay Japan lineup.

Google Pay Japan has 2 basic categories for adding cards: EMV bank payment cards (AMEX, JCB, mastercard, VISA) and Japanese eMoney cards (Suica, Edy, nanaco, WAON, iD, QUICPay). In other words, Google Pay arranges cards by NFC flavor. This is because many Android devices sold outside of Japan don’t include FeliCa even though they have the hardware to do so. Google Pixel 5 for example has Mobile FeliCa installed on every single device it sells, but only activates it for Japanese models. Perhaps this will change with Pixel 6, we will see.

Apple Pay doesn’t make a distinction between NFC flavors, just one global NFC. No EMV or FeliCa bank payment cards, just payment cards, period. Apple also encourages Japanese bank card issuers to use the NFC switching and dual mode features of iOS and watchOS Wallet for seamless use on any payment reader in Japan or abroad. The same thing applies to Wallet transit cards. Wallet can have multiple Express Transit cards and juggle between FeliCa (Suica, Octopus, PASMO) MIFARE (SmarTrip, Clipper, TAP) and PBOC (China T-Union cards).

So what is the Wallet category for non-transit stored value prepaid payment cards? I have no idea but for this exercise I’ll use eMoney (電子マネー). Apple Pay has everything in place to flip the switch since 2016, what’s the holdup? There’s a big problem using the Suica add card Wallet process for eMoney cards. This problem is on full display with Google Pay WAON: the user has to create an WAON account in Google Pay to add it. Worse, if the user deletes the WAON card they loose the Google Pay created WAON ID and card balance.

I don’t think Apple wants this ‘create an account’ nightmare scenario in Apple Pay, that’s what apps are for. Fortunately we have a growing collection of ‘instant issue’ apps for adding cards to Wallet and digital issue only is quickly becoming standard for Apple Pay Japan debit/prepaid cards: kyash, Minna no Ginko, Toyota Wallet, etc.

The digital issue app model is perfect for Edy, nanaco and WAON who want to be collecting accounts instead of selling plastic prepaid cards. And they already have iOS apps. Leave the account creation and management drudgery in the app so users curse the app instead of Apple Pay. Once done the user taps ‘Add to Wallet’ and presto, instant WAON or nanaco all ready to go with direct Wallet recharge. Other bonuses: (1) instant issue apps eliminate ‘I wanna transfer my plastic card to Wallet’ overhead, (2) if anything goes wrong and the balance is lost, it’s the fault of the app, not Apple Pay. Keeping things simple and streamlined is key for a good Apple Pay user experience, one more Wallet reboot challenge for iOS 15.

UPDATE
WAON and nanaco for Apple Pay have been announced for later in 2021. AEON also updated their iAEON App for issuing Mobile WAON cards on Osaifu Keitai Android smartphones, almost certainly the scenario described above for Apple Pay support when it launches after the release of iOS 15.1.

The VISA JP Apple Pay announcement and digital banking wars

MacRumors Sami Fathi: Customers with Visa cards…will be able to add their card to their Wallet on iPhone and Apple Watch.

Me: I like MacRumors but the writer here has no idea what the story is or that users have been using these cards in Apple Pay all along for store purchases.

MacRumors Sami Fathi: Hey! Could you elaborate on what you mean? Visa cards issued by those banks now have Apple Pay, correct?

Sure Sami, here’s the elaborate story. Do you know FeliCa? It’s the Sony created NFC standard that has been around a long time, long before EMV grafted NFC into contactless credit cards. When mobile payments launched in Japan back in 2004, Mobile FeliCa was the only technology that worked. So mobile payments for all major credit cards and Suica were built on Mobile FeliCa, the contactless payments infrastructure in Japan grew from that.

Fast forward to 2016. Phil Schiller announced FeliCa for iPhone 7 at the keynote and the launch of Apple Pay in Japan. VISA Japan didn’t sign an agreement with Apple but it didn’t matter much because VISA JP cards were available for Apple Pay thanks to previous Mobile FeliCa agreements covering the iD and QUICPay networks for store payments. The other card companies (Mastercard JP, JCB, American Express JP) signed with Apple.

It was a big success. But the Mobile FeliCa agreements only covered store purchases, they didn’t cover things like in-app purchases. Even though many Japanese users added their VISA cards to Apple Pay they couldn’t use them to recharge Suica cards because in app purchases were not supported.

Fast forward to 2020. VISA JP is a major sponsor of the Tokyo Olympics showering sponsorship money to promote ‘VISA Touch’ EMV contactless cards. They want customers to use VISA Touch at stores, not iD and QUICPay because the margins are nicer and EMV contactless is a world standard except for places like Japan (FeliCa) and China (PBOC). Most of the POS equipment in Japanese stores is multi-protocol ready so the customer NFC flavor is a moot point. For whatever reason, let’s say marketshare, VISA JP finally signed on with Apple Pay. The first indication something was up occurred in November when VISA suddenly appeared, and disappeared in the Wallet add card lineup.

What changed for all those VISA JP cards already working in Apple Pay Wallet these past few years? A VISA logo, in-app payments, dual mode NFC and Payment card Express Transit:

Did you get that Sami? Hello, anybody there?

Digital Banking Wars
Seriously though, it’s sad when tech writers don’t understand the story in the stories they write. All major Apple sites ran the same wrong story, it should have been: Visa JP Cards now fully support Apple Pay. Journalists do everybody a great service when explaining complex stories and connecting the dots in easy to understand ways, unfortunately nobody cares about getting it right. Which is a shame because there were other major things going on behind the VISA JP Apple Pay announcement that even the Japanese tech media missed: the very same day, NTT Docomo and MUFG announced a joint digital banking venture.

Let’s take a closer look at that VISA JP Apple Pay announcement, specifically the issuer launch list: APLUS, Cedyna (SMBC Financial), SMBC, Docomo, MICARD, Saison, JACCS, Rakuten. Do you see MUFG? Nope. MUFG brand VISA cards will join at some point, probably, but as VISA has put all their eggs in the SMBC basket, the companies are not on the friendliest of terms.

NTT Docomo and SMBC/VISA group feuded for years and called a stalemate. It was only a matter of time before NTT Docomo kicked SMBC to the curb, which they did yesterday with the MUFG joint announcement. Docomo and MUFG are going to leverage dPoint into an economic zone to rival Rakuten and SMBC/VISA V Point. It’s as simple as that. And here you thought that VISA JP announcement was only about Apple Pay. Think again, the economic zone mobile digital banking wars are just getting started.

SMBC VISA cards are EMV/FeliCa dual mode in Apple Pay but single mode EMV in Google Pay

Japan’s new economic zone: Rakuten

The April 30 addition of iPhone 12 lineup to Rakuten Mobile marked the transformation of Rakuten Mobile into a first tier carrier on the same level of Docomo, KDDI au and SoftBank. Now that SoftBank is taking Rakuten to court over allegedly stolen SoftBank corporate secrets, I think we know who is feeling the pressure. It is the end of an era. SoftBank was the first carrier to launch iPhone in Japan back in 2007 when NTT Docomo refused and KDDI au could not (the Verizon iPhone problem). They cleverly used iPhone to leverage their position from an industry also-ran into a serious first tier carrier grabbing marketshare for the other majors.

Rakuten Mobile is now playing the hungry upstart with fresh ideas and aggressive plans: pay for what you actually use instead of paying for a monthly allotment just like the good old land line days…how original. Nevertheless SoftBank feels threatened not only by Rakuten Mobile but the total weight of the Rakuten Empire: Rakuten Pay which encompasses Rakuten Edy and Rakuten Suica, and most of all, Rakuten Point.

SoftBank has similar parts, PayPay and TPoint/TMoney, but they are not well integrated across the SoftBank empire and more importantly, they don’t have the synergy of Rakuten. That’s why people in their 20~40’s are sometimes referred to as living in the Rakuten economic zone, leveraging Rakuten Point as currency ‘plus’ to make their real money go much farther for all of their needs.

But there’s one more thing. Now that Rakuten Mobile has the full iPhone lineup, it’s only a matter of time before Rakuten Edy and Rakuten Suica join Apple Pay. That is SoftBank’s true nightmare.