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.

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Tokyo Cashless 2020: Are Apple Maps and Siri really Apple Pay level ready for the Tokyo Olympics?

1️⃣ Dear JR East, we need a new Suica Charge App
2️⃣ Consumption tax relief with the CASHLESS rebate program
3️⃣ >Are Apple Maps and Siri really Apple Pay level ready for the Tokyo Olympics?
4️⃣ Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

Tokyo Cashless 2020 is a series covering all things cashless as Japan gears up for the big event. If there is a topic that you’d like covered tweet me @Kanjo


iOS 13 is not a software release. It’s a mission statement of what Apple hopes to achieve by the end of the iOS 13 life cycle. iOS 13 will be peaking out just as the Tokyo Olympics take place between 24 July – 9 August 2020. There will be a huge influx of inbound smartphones using all kinds of apps for transit, navigation and payments. Apple has told Japanese journalists that Apple services will be ready. How will peak iOS 13 Apple Pay, Apple Maps and Siri stack up with the competition? How useful will they really be? Let’s find out, starting with the strongest contender.

Apple Pay
Apple has put a tremendous effort into creating a global NFC platform that incorporates all the key NFC technologies (EMV, FeliCa, MIFARE, etc.) into one seamless package sold worldwide. This is still unique and unmatched. Inbound visitors with iPhone have the option of adding Suica to Wallet and instantly gaining all the benefits of using Japan’s famous tap and go transit and making contactless payments nationwide.

Apple Pay with Suica makes iPhone a great transit and payment solution for the Tokyo Olympics and Apple Pay Suica will be the inbound star player for all things transit and payments. iPhone and Apple Watch are so perfectly matched for using contactless payments in Japan during the Olympics that I can only wonder if Apple has been planning for this opportunity all along. Make no mistake, Apple Pay is going for the gold.

In addition to Suica support, merchant support is growing for inbound Apple Pay cards as well

Apple Maps
Apple Maps Japan is one of those players with great unfulfilled potential that is never realized. Apple has vowed that Maps will be ready for the Tokyo Olympics. This means that Apple Maps 2.0 for Japan will be ready with new detailed maps, Look Around, and, one hopes, indoor maps that include stations, not just airports and shopping malls.

The biggest use case for Apple Maps during the Olympics is transit directions and local walking area navigation in station areas. Apple Maps is still a very ‘America centric’ app in that default map views and the UI are geared for driving, not transit and walking. iOS Google Maps has a more intelligent approach that layers transit over the current map view that eliminates the transit view/map view UI toggling of the chunky Apple Maps UI. Google Maps is a much more smoothly integrated collection of services.

Even with the addition of better map detail of Apple Maps 2.0 and Look Around however, Apple Maps must absolutely clean up and completely revamp its cluttered cartography and Point of Interest (POI) layers and remove the bolted on transit functions with improved integration to be a serious contender in the Tokyo Olympics Navigation contest. I don’t see that happening: there’s no way 7 years of bad habits and ‘Where’s Wally’ can be magically fixed in the 10 month run up to the Olympics.

Siri
Bringing up the rear, Siri is the ‘Cool Runnings’ contender in the wrong Olympics. With Google Maps you can ask Google Assistant “when’s the next train to Shinjuku” and Google Maps will give you a list of transit options. Google Maps Transit also gives you platform guidance, optimum car positions for the destination station, and ground truth yellow exit numbers:

Siri and Apple Maps offer none of this. In fact Siri is not even programmed at this point to provide transit information and politely declines all such requests (and when did Japanese Siri’s speaking rate speed become so SLOOOOOW?). Even a manual Apple Maps Transit search does not provide the same level of Google Transit information: no platform guidance, no car positions, no crowd conditions, etc. Meanwhile JR East just announced an agreement with Google to offer Google Assistant Shinkansen transit information. This isn’t even a contest.

Quick Summary and Tokyo Olympics iPhone Guidance
Given the current state of Apple Pay, Apple Maps and Siri, I offer the following suggestions.

  • For iPhone 8/Apple Watch Series 3 and later inbound visitors from countries with Apple Pay availability:
    • Add Suica to your iPhone and recharge it with your Apple Pay card from home
    • Use Google Maps and Google Assistant for navigation and transit
  • For iPhone 8/Apple Watch Series 3 and later inbound visitors from countries without Apple Pay availability:
    • Purchase a regular plastic Suica card from a JR East station kiosk and transfer it to your iPhone (Welcome Suica cards cannot be transferred), you cannot recharge it with a credit card but Apple Pay Suica can recharged with cash at any convenience store checkout register, any 7 Eleven ATM, or JR station smart kiosk. The advantage of Apple Pay Suica over plastic Suica is that you always know what the balance is and when it needs recharging. You can avoid long queues at station recharge kiosks.
    • Use Google Maps and Google Assistant for navigation and transit

Tokyo Cashless 2020: Consumption tax relief with the CASHLESS rebate program

1️⃣ Dear JR East, we need a new Suica Charge App
2️⃣ >Consumption tax relief with the CASHLESS rebate program
3️⃣ Are Apple Maps and Siri really Apple Pay level ready for the Tokyo Olympics?
4️⃣ Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

Tokyo Cashless 2020 is a series covering all things cashless as Japan gears up for the big event. If there is a topic that you’d like covered tweet me @Kanjo


Note: CASHLESS rebate program details are constantly updating, new information is consolidated here instead of separate posts, check for updates at bottom

Apple Pay Japan Cashless Rebate page

A reader asked if I knew of any comprehensive English guide for the various Japanese point systems: Rakuten, T Point, JRE POINT, etc. It’s a good question, and a timely one. Unfortunately the short answer is no, a guide like that does not exist.

It took me a year to put together a good Apple Pay Suica ecosystem guide (at least I think it’s good for covering the basics, if not let me know). It’s impossible to intelligently catalog the various Japanese card and payment app ecosystems into English for the CASHLESS rebate program in a short time.

Instead of a broad sloppy sweep, I updated the JRE POINT guide that covers the entire JR East ecosystem of Apple Pay Suica and how it works with the CASHLESS rebate program. The basic concepts apply to all CASHLESS rebate program qualified e-money cards. Hopefully this post and the JRE POINT guide will give you enough information to find the right setup for your card/app payment/point system of choice.

You may not have to do anything to get ready. As the rest of this post shows, credit card users don’t need to do anything more than use a Japanese issue credit card.

The JAPAN CASHLESS Rebate Program

The Japanese Government CASHLESS rebate program, CASH=LESS get it?

In tandem with the 10% consumption tax starting October 1, the Japanese government is launching a CASHLESS rebate program that offers a 5% or 2% rebate with cashless purchases at participating stores and online shopping sites like Amazon JP, Rakuten JP and Yahoo Japan Shopping. The idea is to ween Japanese society away from its infamous “cash addiction”.

The CASHLESS program is overseen by the Japanese Ministry of Economy, Trade and Industry (METI) and will be valid for certified cashless purchases from October 1, 2019 until June 30, 2020 at qualified participating stores. A METI outline of the CASHLESS program is available in PDF (Japanese only). The CASHLESS web site is informative and constantly updated, hopefully with English at some point.

It’s important to understand that from October 1 the consumption tax is 10%. The rebate program effectively reduces the tax rate until June 30 depending on the kind of purchase (food vs household items, etc.) and how it is paid for (cash vs cashless). After June 30 the consumption tax will be 10% across the board.

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

No matter what item you buy, or the tax rate, all items are eligible for CASHLESS rebates when purchased at stores displaying the 5% or 2% CASHLESS banner. How do you get the rebate? This part is easy: make purchases at any store displaying the 5% or 2% CASHLESS banner with:

  • Japanese issue credit/debit cards, either plastic or on Apple Pay (iD/QUICPay)/Google Pay.
  • Japanese e-money cards (Suica, nanaco, WAON, etc.) either plastic or Apple Pay Suica/Google Pay.
  • Japanese QR Code smartphone payment apps (PAYPAY, Origami Pay, Rakuten Pay, etc.).

2% instant CASHLESS rebate at convenience store checkout
When you make a cashless purchase with any of the certified methods (credit card, Suica, QR, etc.) at CASHLESS certified 2% rebate independently owned convenience store franchises for 7-Eleven, Lawson, FamilyMart, MiniStop, the 2% rebate is instantly calculated and deducted from the transaction, and shown on the store receipt. Only franchise locations are certified, large O&O locations are not eligible. Be sure to check for the CASHLESS banner on the store front.

Note: Any Apple Pay Suica card you add to iPhone/Apple Watch is considered “Japanese issue” and qualifies inbound Suica users for the 2% instant rebate at convenience stores. No signup or registration required. Just use Apple Pay Suica, it doesn’t care which country you come from.

2% or 5% post-transaction CASHLESS rebate
When you make a cashless purchase with any of the certified methods (credit card, Suica, QR, etc.) at CASHLESS certified 2% or 5% rebate stores, the rebate is calculated but not shown on the store receipt, then processed and refunded at the end of the month according to the type of card:

  • Credit (post pay): CASHLESS program rebate amount totals are calculated by the card company at billing and automatically deducted from your monthly credit card bill. Credit card CASHLESS rebates are not tied to point systems.
  • Debit (instant pay): CASHLESS program rebate amount totals are calculated by the card company at end of the month and automatically refunded to your bank account, or instantly deducted from the purchase amount at transaction. Debit card CASHLESS rebates are not tied to point systems.
  • Prepaid (stored value): CASHLESS program rebate amount totals calculated at the end of the month and refunded as points. The point system depends on the type of e-money prepaid card: JRE POINT for Suica, Rakuten point for Rakuten EDY, etc. The point rebate model also applies to QR Code systems like PayPay, however prepaid e-money rebates are tied to point systems while QR Codes are tied to app user accounts. Be sure to check the CASHLESS details of your QR Code payment system.

The CASHLESS web site maintains comprehensive lists of qualified credit/debit cards, and prepaid e-money cards/QR Code Apps. The site is constantly updated with direct links to all participating payment system CASHLESS rebate information pages. Search your payment system, and it will link you with the CASHLESS rebate information for your payment system. All pages are in Japanese language, there is no English.

Surprisingly Easy
The 2% instant convenience store rebate is a no-brainer. All anybody needs to do is use one of the certified cashless payments at certified convenience stores displaying the 2% CASHLESS banner, that’s it.

The 2% or 5% post-transaction rebate for all other rebate stores is easy too. All Japanese issue credit card users need to do is use their card at any store displaying the CASHLESS logo, that’s it.

Debit cards are also straight forward but users should check how the rebate is handled for their card account. QR Code systems sign up users with an account and should be automatic as well but be sure to check the rebate method.

Prepaid e-money card users need to register their prepaid e-money card with the appropriate point system to get 2% or 5% post-transaction CASHLESS rebates. For Apple Pay Suica users this is covered in the JRE POINT guide.

The nice thing about CASHLESS + Apple Pay Suica is that users are not chained to Green/Yellow logo JRE POINT locations to get JRE POINT CASHLESS rebates. Any store participating in the CASHLESS rebate program that offers Suica for payment is good to go. Check for stores displaying CASHLESS and Suica banner logos on the store front or at checkout.

CASHLESS + SUICA JRE POINT logos

JR East also has a bonus JRE POINT campaign for Suica purchases running concurrently with the CASHLESS rebate program. Keep your eye out for campaign logo marks and details in JR station retail areas and NewDays stores.


9/20 UPDATE: The CASHLESS iOS map app has been released. Download it and get ready to find stores around you offering rebates with cashless purchases. There is also a CASHLESS online map version to search and find rebate stores with filters.

10/28 UPDATE: After a weak start with bad data, the CASHLESS Map App has finally gotten its act together. The data is fixed and the v2 update adds filtering: search by store type, rebate type, cashless payment type, etc. The app is finally useful but still only supports Japanese language, handy nevertheless. Download it if you don’t already have it.

10/16 UPDATE: Finally solved the ‘some convenience stores have 2% discounts, some do not’ mystery: independent owner franchise stores are eligible in the CASHLESS rebate program, directly owned and operated locations are not. This explains situations such as why Kintetsu FamilyMart in-station locations don’t have rebates while FamilyMart stores near stations do.

10/9 UPDATE: the CASHLESS iOS map app and web site have been updated. The database seems fixed now. Some locations are still missing, like MiniStop, but listings now show the correct store payment information. The next Cashless store wave of 500,000 is due to join the program on October 10. At that point MiniStop should finally be listed.

10/7 UPDATE: Be careful, not all 7-Eleven, Lawson, FamilyMart, MiniStop convenience store locations are certified and offer instant 2% rebates. Always check for the CASHLESS banner on the store front or at checkout. I have yet to find an in-station convenience store that offers CASHLESS rebates such as Kintetsu Family Mart.

10/4 UPDATE: Apple Pay Japan launched a new web page promoting CASHLESS Rebates

10/3 UPDATE: The CASHLESS iOS map app and CASHLESS online map are not reliable. Japanese media news reports say that settlement companies uploaded the wrong data sets to the maps database. MiniStop convenience stores for example give the instant 2% rebate with cashless purchases, but are not listed yet. The most reliable way is to check for the CASHLESS banner on the store door or at checkout. Until CASHLESS maps are fixed forget the smartphone app and stick with the ground truth.

10/1 UPDATE: The CASHLESS rebate program has kicked off and the field experiences show: convenience stores offer instant 2% rebates deducted from the transaction.

9/30 UPDATE: The number of CASHLESS rebate stores for the October 1 start up is capped at 500,000. There are many more CASHLESS rebate stores to come, however in order not to overwhelm payment systems, stores will be added in waves: launch wave @ 500,000, wave 2@ 500,000, and so on every 10 days until all 2 million participating stores are up and running with the CASHLESS rebate program.

Perception and Reality

I like writing but am no writer, so I prescribe to the ‘if you’re not a sharpshooter shoot lots of bullets’ school of wannabes. When the Financial Times, “The painful path of curing Japan of its cash addiction” (paywalled) piece came out, I had 2 hours to kill before going on a business trip and decided to post something while my reaction was fresh, figuring nobody would read it. The piece has not gotten many hits, but a few western journalists based in Tokyo tweeted about it recently, defending the FT piece and the overall ‘Japan failed’ game over narrative.

Here’s the thing. The cashless payments market landscape in Japan is the most messy and exciting one in the world right now. Nowhere else can you find such a concentrated investment in contactless payment infrastructure and different technologies (EMV, FeliCa, QR Codes, smartphones, etc.) competing and playing out in the market.

Japan is also the world’s great guinea pig test market. What works here first is adapted and deployed in other markets, like mobile payments. My take, covered in countless messy posts over the span of 2 years, is actually quite simple. The market revolution of mobile payments and smartphones is just getting started. The hot messy exciting payments situation you see happening in Japan right now will play out, in some other form, in other markets later.

That’s the story I think western journalists are missing. The ‘game over’ Japan narrative has been a stock western journalist in Japan ploy since the end of the Japan bubble, almost 30 years ago. A lot of journalists stick with it because it still sells. It’s entertaining for some people, but it doesn’t convey reality or educate.

JR East getting NFC-F added to the NFC Forum certification process and getting Apple to add global FeliCa to every iPhone and Apple Watch, to me, is an interesting story. Google following Apple’s lead and adding that same capability to every Pixel 3 device (but only turning it on for the JP market), to me, is an interesting story. It tells us where Apple and Google are going.

Our smart devices are quickly evolving into ‘do everything’ devices that, unlike plastic, don’t care about any particular payment technology. They just work. That’s where the puck is going. If you sit around declaring that the game is over, you’re gonna miss the game. And the opportunity to tell people about it.

NFC Tag Apple Pay and Japanese Softcream

Summer is here and the increasing number of Apple Pay Suica inbound tweets are fun to read as always. I saw inbound in action recently at a local station NewDays, 2 Chinese women walked up to the checkout and asked in English “Can we pay here with this?” One was waving a Suica card, the other waving her iPhone. People really appreciate the ease and speed of Suica Express Transit.

However, there are still lots of times on the road when you come face to face with the so called ‘curse of Japanese cash addiction’, and the fact that, even though things have changed a great deal since Apple Pay arrived in Japan, there’s still a long way to go.

I had the that kind of experience recently coming back from Minobu on the Keio Highway Bus. That particular bus has a 10 minute rest break at Shakado Parking Area just outside of Kofu on the Chuo Expressway. There’s barely enough time to dash to the restroom and grab a drink for a long congested crawl to Shinjuku Bus Terminal.

Like many Japanese highway rest areas, Shakado offers delicious looking local specialties. Kofu is a well known for it’s delicious fruits, the Shakado cafeteria softcream fruit parfait looked too good to pass up. With 6 minutes to spare I hunted for the softcream button on the meal ticket machine, which was Suica compatible, but couldn’t find it. I asked one of the staff and they pointed to a separate smaller ticket machine that was just for softcream, a separate stall vendor, and not only was it cash only, it was coin only.

Where’s the softcream button?

Fortunately I had lots of coins that day, a rarity, but pitied another poor westerner wandering around obviously interested in that delicious looking softcream without a clue how to buy one, but I was out of time and dashed for the bus. With a softcream fruit parfait. It was delicious.

After 2 years of writing about cashless/contactless trends, I think I have finally hit on the perfect index for Japan: The Softcream Cashless Index (SCI). Nothing is more regional, seasonal, ubiquitous, cash only and delicious as the endlessly glorious variety of Japanese softcream. Sure, MiniStop has pretty good softcream and all the cashless options like Apple Pay Suica, but those parking area seasonal regionals like Yamagata Cherry softcream (to die for) are always cash cash.

On a scale of 1~10, I put the Japanese national SCI average at 2. Softcream stalls are the worst candidates for the usual cashless options: credit cards/FeliCa/QR etc., because they are mostly one person operations, or side stalls of larger retail operations. Nobody wants to invest in cashless terminals, or even cashless ticket machines, for such mundane, low priced, low margin softcream side business. If softcream can be made cashless, Japan will truly be a cashless nation.

The NFC Tag Apple Pay Option
The ideal cashless payment infrastructure investment for softcream operations is no investment at all. This is why meal ticket machines are so popular in Japan for food serving businesses: they eliminate the cash register all together, the staff can focus on serving customers instead of wasting valuable time babysitting customer payments.

A good cashless payment option in this case is NFC Tag Apple Pay that Jennifer Bailey previewed at her Transact Conference Keynote. A PaymentsSource article covering that keynote makes clear that NFC Tag Apple Pay is built on two iOS 13 technologies: enhanced NFC tag read/write support in Core NFC, and Sign in with Apple ID.

The process leverages “Core NFC,” enabling an iPhone to scan an NFC tag that launches an app or a website, so users can skip the step of downloading an app when accessing a new service, Bailey explained.

“There’s no app requirement and no requirement to pre-sign up,” Bailey said, describing how Bird is using the technology in a pilot, with Apple Pay’s “pay load” automatically working to establish the account information to set up a one-time purchase. “It’s so much easier for new users to get into these services very quickly,”

For NFC Tag Apple Pay to succeed in Japan, it has be offered through major payment providers like J-Mups or Recruit AirPay (who already provide regular terminal based Apple Pay), who can package it together with their cloud backend and an app. From the softcream vendor side, all they need to do is sign up for NFC tag payment service via the setup app and receive a free NFC tag and logo. And that’s it, they are in business.

The concept is similar to the SmartPlate demo only more streamlined. It has to remove all payment involvement from the softcream side, just like a meal ticket machine. The only thing they need to do is look at a screen to confirm payment.

In lieu of Google Pay offering a similar NFC tag payment scheme, the payment provider could conceivably offer an Android app to include that platform but this breaks the Jennifer Bailey rule: no app, no sign-up. This rule is what sets NFC Tag Apple Pay apart from QR Code pay services who want you to sign up in an app to get your personal data. This rule will be the reason for the success of NFC Tag Apple Pay.

Can it change the Softcream Cashless Index? If Apple and their Japanese payment partners can replicate the hands off, no cash register, no brainer experience of Japanese meal ticket machines with NFC Tag Apple Pay, definitely yes. There’s only a year to go until the hot summer Tokyo Olympics but if the SCI average can make it to a 5, or more, that would be a huge tasty success and invitation to eat your way across Japan without a wallet.