Instant issue for Apple Pay Edy, nanaco, WAON?

A fun mockup of Wallet add card options for Edy, nanaco, WAON that will probably never happen. If they come it 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. 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 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.

Japan mobile payment survey results

I gave the Twitter survey function a workout and asked 2 questions:

  • Which Japanese mobile payment do you use most?
  • Which Japanese reward points do you use most?

The results are not surprising but come with many caveats: the survey sampling was puny, in English and pretty much limited to a small group of Twitter followers, which means they are pretty much already invested in Mobile Suica. Also it is important to remember that mobile payment use profiles in Japan are highly regional, what’s convenient in Tokyo isn’t necessarily convenient in other areas. That said, there are some interesting and fun takeaways.

Japanese mobile payment takeaways and feedback

  • The 55% Suica/PASMO figure expresses the power of Apple Pay Express Transit (and similar for Osaifu Keitai) for store purchases in the COVID induced face mask era without the hassle of Face ID. It’s important to remember that the ballyhooed Unlock with Apple Watch Face ID feature introduced with iOS 14.5 is useless for Apple Pay authorization. Remember too that Mobile Suica has good support on wearables: Apple Watch, Garmin, fitbit, etc., the widest mobile payment platform in Japan.
  • Despite the heavy marketing VISA Touch from VISA Japan, the majority of users have been using Apple Pay and Osaifu Keitai for iD and QUICPay, etc. I suspect EMV ‘Touch’ (Visa, MC, AMEX, JCB) probably appeals more to plastic card users as VISA is pushing EMV only plastic cards vs. digital wallet dual mode Apple Pay.
  • QR Code payment apps (PayPay, dBarai, LinePay, etc.) are not as popular as you might think and are probably feeling the pain of recent bank account linking security problems, and the recent revelations of user transaction records being stored outside of Japan.

Changes quite a lot. Recently using EMV touch a lot because of SMCC 15% back campaign and Amex 20% at FamilyMart. Otherwise probably a little bit of everything just to get maximum reward. (Tokyo)

I don’t ride trains so I have no real use for Suica. Using it to pay in shops is too much of a PITA since you have to constantly recharge it. (Kagoshima, note that Suica Auto-charge only works in JR East transit region)

I do iD for the point rewards (none in JP CC recharge of Suica) otherwise Express Transit is perfect. (Tokyo)

Mostly Suica (via Garmin Pay), but I’ve been using au Pay (QR or barcode) a lot more recently. (Hiroshima)

Japanese reward point takeaway
Results are complicated. Twitter surveys are limited to 4 choices, I lumped the Japanese carrier reward point systems for docomo, au and SoftBank (dPoint, au•PONTA, T-POINT) into one category, the top choice at 43%. However if we break down the carrier number by carrier marketshare ratio we get the following:

  1. 21% JRE POINT
  2. 28% Rakuten POINT
  3. 19% dPOINT
  4. 14% au•PONTA POINT
  5. 10% T-POINT
  6. 8% V POINT

The key takeaway for reward points is the power of the Rakuten ‘Economic Zone’, i.e. where all the Rakuten pieces including shopping, banking/credit card/payments, transit (Rakuten Suica), mobile, stock trading, travel, etc., are glued together by Rakuten POINT and feed off each other. The Rakuten Economic Zone is the model that others will have to successfully emulate if they are going to be serious long term competitors. NTT docomo announced a tie-up with MUFG this month, the digital banking wars are just getting started.

Suica App 3D Secure authorization for all non-Apple Pay in-app purchases

More fallout from the VISA JP Apple Pay agreement: JR East announced they will implement 3D Secure in iOS Suica App, requiring authorization for all non-Apple Pay in-app purchases.

Suica App is convenient because it works hand in glove with Apple Pay and app registered Japanese issue credit cards, giving users the widest possible card coverage. Since 2016, Suica App was the only work around solution for using VISA JP cards for Apple Pay Suica recharge.

With the VISA JP Apple Pay deal however, we are seeing a bunch of credit card backend changes, like merchant code changes that eliminate Suica recharge 3x travel points for Chase Sapphire Reserve VISA holders. JR East is changing how Suica App works, 3D Secure authorization for all non-Apple Pay in-app purchases is part of that. For users this means doing Suica recharge and commute plan renewal in Wallet instead of Suica App to avoid 3D Secure login hassles. Wallet is the hands down easiest way to recharge Suica and renew commute plans.

We’ll see a Suica App v3.0.4 update when 3D Secure is in place, likely when the new Eki-Net launches June 26. PASMO App already uses 3D Secure for registering cards but not for in-app purchases.

With direct Wallet addition of Suica cards starting with iOS 13 coupled with last year’s migration of Shinkansen eTicket functionality to Eki-Net, and the addition of VISA JP Apple Pay in-app support, Suica App is less essential than ever. The only reason for using it now is new commute plan purchases, Auto-Charge setup (which remains the 3D Secure free way to recharge) and receiving Suica Pocket recharge rewards.

There are some VISA JP cards that still don’t support Apple Pay in-app, MUFG holders still have to recharge the old Suica App way. Whatever the reason, the across the board change will be likely be very unpopular with iOS Suica App and Android Mobile Suica users.

Any purchase in Suica App can be made with Apple Pay instead of the app registered card that bypasses 3D Secure, Suica App registered CC on the left, Apple Pay on the right

Mobile Suica foreign VISA card processing changes with the Apple Pay VISA JP agreement

Foreign issue VISA card holders using Apple Pay Suica beware, you might be in for a rude surprise when you get the monthly statement. A reader sent some very interesting information:

JR East started processing these Visa transactions differently on foreign cards. Previously, these were processed as ‘SUICA MOBILE PAYMENT’ and the merchant category was passenger railways (travel). Since around May 11 or 12, these are now processed as ‘MOBILE SUICA APPLE V’ and the merchant category is catalog merchants (shopping). This is an unfortunate change as the merchant category change from travel to shopping downgrades the points earning capability on several American cards (eg. from 3x points on the Chase Sapphire Reserve to 1x).

Chase Sapphire Reserve has been a popular choice for Apple Pay Suica recharge because of the 3x rewards. The VISA JP Apple Pay agreement has changed how foreign issue VISA brand card payments made with Apple Pay in Japan are processed obviously, but the merchant category change from railways/travel to catalog/online shopping is a mystery. JR East or VISA JP? On the surface JR East as they are the merchant but why this and why now? Another backend change: JR East is starting 3-D Secure credit card checks in iOS Suica App and Mobile Suica (Android) from May 26.

I do not know if Apple Pay PASMO is in the same boat but suspect so. Foreign issue VISA holders may want to consider using a different credit card for Suica recharge for the best reward points. There are too many reward point differences to make any definitive recommendation. The best long term strategy is to examine your spending patterns and select a JP issue card that fits your needs. Reward point empires to consider: JRE POINT (BIC CAMERA View), Rakuten POINT (Rakuten Card) and V POINT (SMBC Numberless Instant issue).

I will update this post as more information comes in, reader feedback is appreciated.

Update: Good news: a reader reports Apple Pay PASMO recharge still codes as travel for Chase Sapphire VISA 3x travel points. Reader and user comments:

I setup Pasmo in Apple Pay and ran a test transaction with my Chase Sapphire Reserve.  Good news, Pasmo is being processed differently and coding as passenger railways (travel).

I also noticed JRE’s category change for GooglePay Suica a few months ago.

With US credit cards, the Chase Sapphire Reserve (CSR) and the Chase Business Ink Preferred both had 3x points on Travel. If you had used them to charge your Suica via Apple Pay or Google Pay, the charge would show up as ‘travel’ or ‘jr east’. So you were effectively earning 3% cashback (technically more with the multiplier of 1.25 or 1.5 based on the card). The wonderful thing was that you could pay for almost everything in daily life with Google or Apple pay here in Japan. It does seem this has changed. I dropped my CSR a while ago – now it is time to let my Ink go too.

UWB Touchless Express Transit and Apple Pay for iOS 15?

A recent sudden surge of hits from Hong Kong accessing my December 2019 UWB Touchless Mobile FeliCa post seemed odd. I dug around and it appears that Hong Kong MTR, like JR East, is making noises about incorporating UWB technology in next generation transit gates.

iOS 14.5 added a new PassKit call for Bluetooth and the U1 chip integration since iPhone 11 and Apple Watch 6, coupled with global FeliCa support certainly puts Apple ahead of the game. I have no idea what WWDC21 will deliver but more UWB integration is a given.

Apple only mentioned UWB Touchless at WWDC20 in connection with digital car key without showing anything because the Car Connectivity Consortium Digital Key 3.0 spec was a work in progress. Now that the spec is in-place with BMW said to deliver car models incorporating UWB Touchless this year, will Apple show it in action? I think it’s highly likely, but since Car Key is a ‘Wallet Card’, and Wallet app Express Cards come is 3 types: Transit, Student ID, and Car Key, the more interesting question is…will Apple also show Touchless Transit and Student ID Express Cards? And what about Apple Pay?

People think Touchless is a completely new thing for ‘keep smartphone in pocket’ transactions, and they worry about security. You can’t blame them because marketers are selling the in-pocket payment experience. However, Touchless is simply long distance NFC without NFC. All UWB Touchless does is describe the frequency to use Bluetooth instead of NFC. The background stuff, secure element and so on, is exactly the same. This means user interaction is the same. For walking through transit gates and security doors, or unlocking your car, the convenience of Touchless is easy to understand: no more NFC tapping, just keep moving.

What about Express Card payments? The current Apple Pay Suica payment checkout experience: the user taps Suica on a touchscreen, or tells the clerk “Suica” then holds the device to the reader. The user has to give consent before the transaction is activated by checkout staff or the self checkout reader. For Apple Pay EMV transactions users have the extra step of confirming a transaction by Face ID/Touch ID to complete it.

Realistically however, in what situations does Touchless make store checkout more convenient and faster? Drive thru certainly, supermarkets…maybe, but most stores will probably not want to invest in Touchless without a good reason when the NFC readers they already have installed get the job done. There is one more interesting role that Apple has planned for UWB however, one that promises to improve the entire Apple Pay and Wallet experience: communicating with the reader before transaction to select the right Wallet card for the job, at a distance, for a truly smart Wallet app. With national ID cards, passports and more coming to Wallet at some point, UWB could be the Wallet reboot we really need.

And then there is EMVCo. The problems with UWB Touchless for EMVCo are that: (1) Touchless only works with devices with batteries, á la AirTag, and doesn’t work with the current plastic card model, (2) UWB + Bluetooth level the digital playing field with FeliCa and MIFARE, no more ‘real’ vs ‘who cares’ NFC hardware flavors to split hairs over. The plastic card NFC limitation is probably a bitter pill for everybody but especially for EMVCo members and issuers as plastic card issue is big business, and many customers are more comfortable with plastic cards. For those reasons I think EMVCo will be the last to support UWB Touchless, if they do at all. On the plus side Touchless does give digital wallet platforms an edge to create smart aware wallets, digital does NFC and Touchless, plastic only does NFC. We’ll find out about Apple’s UWB Touchless roadmap at WWDC21.