The Apple Pay Octopus Inbound Gouge

Good old William S. Burroughs hit the nail on the head explaining what the title of Naked Lunch really meant: that awkward frozen moment when everybody in the restaurant sees exactly what is on their fork. iOS developers staring at the thing stuck on the tip of the App Store fork don’t like what they see: an Apple platform that’s supposed to be a level playing field, where the reality is that Apple plays favorites and cuts side deals, a losing game of lowering standards.

People far smarter than me already editorialized Tim Cook’s opening statement at the Congressional antitrust hearing. I won’t go into it here except to say, what did they expect? The whole affair, on all sides, was a bad lip read parody, an awkward Handsome Anthony moment without the humor.

Octopus Cards Limited (OCL) released an iOS Octopus app for tourists last week that perfectly illustrates what’s at stake in Apple’s losing game of lowering standards. The long delayed Apple Pay Octopus launch in June was very successful but OCL shut inbound visitors out by limiting the Apple Pay Octopus service to Hong Kong issue bank payment cards.

This is something that Apple Pay Suica has never done. All Apple Pay cards and iPhone users from around the world are welcome to use Suica. This is why Suica remains the gold standard of what a transit card on mobile should be.

Instead of following the Suica example, OCL took the low road for inbound iPhone users. Octopus Tourist app adds an Octopus card to Apple Pay Wallet with a non-Hong Kong issue card. However the currency charged to the users Apple Pay cannot be in local HKD currency. OCL forces users to choose another currency as the default currency for the life of the card. This adds an invisible surcharge over local currency transactions, 4% or more on average, which is OCL taking their cut.

This is called forced Dynamic Currency Conversion (DCC) and is a credit card compliance violation. Visa, Mastercard and all stipulate that merchants cannot impose any requirements on the cardholder to use a non-local currency. Why OCL is so brazenly breaking these rules, and why Apple is allowing this level of gouging in a major app from a major Apple Pay payment provider is not good at all. As FeliCa Dude says, “Apple should swiftly rebuke this kind of grasping banditry lest it poison their platform.”

If Apple does nothing, I think we have the answer Tim Cook didn’t give at the Congressional hearings, and many more embarrassing awful Handsome Anthony moments to follow. Okaaaay?

T-POINT? We don’t need no stinkin’ T-POINT

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%
  • T-POINT: 14.4%
  • PONTA: 7.3%

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.

Japan Cashless X-Day

Anybody care to chart the Japanese cashless transformation?

Now that the CASHLESS Rebate program is over with transaction rates reportedly going back to ‘normal’ (an estimated 1% rise over rebate program rates), JP media outlets report that some smaller merchants might go back to cash to keep profit margins intact. Real transaction rates are always hush-hush but QR payment rates recently revealed in connection with the Japan QR (JPQR) unified code scheme give us an idea what goes on behind the curtain:

NTT Data already lowered basic CAFIS transaction rates in response to the stera payment co-venture from SMBC-Visa Japan-GMO. As the JPQR transaction rate chart makes clear, banks and payment players have plenty of transaction rate wiggle room. The Japanese government is pushing cashless. If necessary the push will become shove for lower rates and yet another cashless program but where do things stand right now?

July 2020 is the proverbial “X-Day” crossover point: Japan is cashless now, even though the transformation is uneven, ongoing and very messy. On the customer side cashless is the mindset and survival behavior for many Japanese, even for older folks who under normal circumstances would prefer using cash until they day they die.

Faced with the reality of handing money that carries the risk of infection, people are going cashless instead especially with contactless smartphone payments. Junya Suzuki was right all along: Apple Pay turned out to be “the black ship of payments” catalyst that finally nudged Japan from cash to cashless. That and COVID.

Market analysts will undoubtably demand chart data that clearly explains and quantifies the transformation before declaring a ‘winner’ but they have a long wait. That’s because the cashless transformation is sloppy with huge regional variations, all happening right before us. But all of this is an afterthought and our priorities are different now, getting accurate market survey information of any kind in the current environment is extremely difficult.

The Tokyo Olympics was supposed to be the event heralding the cashless era but the COVID crisis has forced much more change very quickly. Evidence is best found in the countless little rituals of daily life that have evolved and are not going back. Merchants who do go back to cash face the risk of fewer customers: when offered a choice people choose cashless.

This realization hit me yesterday when my partner complained about his Docomo dPAY points taking a hit because the Summit supermarket staffer tapped a wrong payment button on the new POS cashless menu options added on July 1. He wanted to pay with iD. A year ago he never used iD, dPAY or Apple Pay and never wanted to, but life changed.

These days I hear contactless reader sounds everywhere, FeliCa chirps and EMV beeps are common as clear plastic sheeting and foot position floor stickers at checkout. And just when posting this the Ministry of Land, Infrastructure, Transport and Tourism announced that Japanese Expressways will be going cashless only with ETC. If there’s anything that defines this sea change it is this: it’s not a ‘victory’ over cash that the media sometimes depicts, nor does it feel like progress. In the COVID era it merely feels like survival.

Another Japanese government cashless promotion gimmick: My Number Point (Updated)

Now that the CASHLESS Rebate program is over, we have a new Japanese government program promoting cashless use for points: My Number Point. And yes it comes with an app. There’s just one tiny gotcha: you have to have a plastic My Number card because as the campaign name makes clear, the whole enterprise is about motivating people to register for a one. The program runs July 1~March 30. Users can get the equivalent of up to ¥5,000 in points in exchange for ¥20,000 worth of cashless shopping.

The basic idea is that starting from July 1, you use the My Number Point app to read the NFC tag in your My Number card and register your cashless payment service of choice: Suica, PayPay, credit card, etc. The full list is here.

After you buy ¥20,000 worth of stuff by August with your registered cashless payment, you get points. We won’t know how bad the sign up process is until it goes live. At best it looks convoluted, and a lot of hoops for only ¥5,000 in points. COVID is already more than enough motivation for going cashless but payment players are dutifully offering extra points for registration.

As your dutiful field reporter, I volunteer to dive into the NFC tag registration process on July 1 and tell you all about it. Here’s the official list of compatible iPhone devices.


Suica/JRE POINT Registration
Okay, I did it. The registration process, like the app, looks and acts like a government bureaucracy product. It’s not pretty but gets the job done. But it’s a fun exercise using the My Number Card NFC tag for secure login. Here is a quick summary.

Before you start: you’ll need a My Number Card, and a JRE POINT account with your Mobile Suica registered.

(1) Have your My Number Card and 4 PIN login code ready and launch the app. The My Number Card NFC tag read with iPhone seems very allergic to any surrounding metal. Hold the card in your hand, it takes about 8 seconds for a successful read.
(2) Follow steps 1~6 shown here to login and get to payment system registration
(3) You need 3 pieces of info from your JRE POINT account: the JRE POINT exchange number, the registered katakana account name, the registered birth date. Tap the link to the JRE POINT page and login, copy the JRE POINT exchange number and paste it in the Payment Service ID, past the katakana name (no spaces) in Security Code 1, enter the registered birth date into Security Code 2. Enter the last 4 digits of your current iPhone number in the last field.

JRE POINT Info for My Number Card Point registration

(4) After entering and confirming your JRE POINT information you have to enter your My Number Card PIN and read NFC tag again. This completes the process, you should see a green confirmation checkmark.

From here all you need to do is purchase ¥20,000 worth of goods or recharges with Mobile Suica by August 31. The timing and details of the My Number Point bonus into your JRE POINT account should be coming soon. Check the My Number Point page for details.

Sayonara Cashless Rebate Program, we hardly knew you

The CASHLESS Rebate program ends June 30. After that date we have 8% consumption tax for takeout, 10% for eat in, and 10% for everything else. In the long ago world of October 2019 the CASHLESS Rebate program looked like the perfect run up to an economic boost courtesy of the Tokyo Olympics with lots of inbound cashless using visitors.

Now the program is ending. Inbound business has collapsed. And a Japanese economy in retreat needs relief, especially the 5% family business rebate sector. There has been talk of extending some tax relief for family owned ryokans, hotels and the like, but no action has been taken.

It’s impossible now to analyze how much cashless transaction growth the program drove because COVID pushed cashless use into hyperdrive. Nobody wants to handle anybody else’s anything, especially cash.

The real value of the program was that it helped smaller businesses get onboard with cashless payments. The little Colorado Cafe near the office added cashless with the start of the program in October. At the end of the program 50% of the transactions are cashless. That’s not bad considering that most of the clientele is retirement age. In another era we might call this success. In this age, it’s survival.