Recharge your recharge, the winner/loser debate doesn’t mean shit in the post-Apple Pay Japanese payments market

I love articles like this one. It’s fun examining how the writer, freelancer Meiko Homma, takes old news bits, worn-out arguments and weaves them into a ‘new’ narrative with a titillatingly hot title: “QR Code payments won the cashless race, Suica utterly defeated.”

Her article trots out some QR Code payment usage data from somewhere, the PASPY transit card death saga that illustrates the increasingly difficult challenge of keeping region limited transit IC cards going, the fact that Suica only covers 840 stations out of a total of 1630, all while conveniently ignoring recent important developments like the Suica 2 in 1 Regional Affiliate program, and big updates coming in early 2023: Cloud Suica extensions and the Mobile ICOCA launch.

It has the classic feel of ‘here’s a headline, now write the article’ hack piece passing as industry analysis we have too much of these days. The Yahoo Japan portal site picked it up and the comments section was soon full of wicked fun posts picking apart the weak arguments.

I’ve said it before and say it again: the winner/loser debate doesn’t mean shit in the post-Apple Pay Japanese payments market. PayPay for example, started out as a code payment app but has added FeliCA QUICPay and EMV contactless support along with their PayPay card offering. Just like I predicted, these companies don’t care about payment technology, they just want people to use their services. My partner and I actually see less PayPay use at checkout these days and more Mobile Suica. Why?

The great thing about prepaid eMoney ‘truth in the card’ Suica, PASMO, WAON, Edy, nanaco, is they are like micro bank accounts coupled with the backend recharge flexibility of mobile wallets (Apple Pay, Google Pay, Suica App, etc.). PayPay, au Pay, Line Pay and similar Toyota Wallet knock-off payment apps with Apple Pay Wallet cards, are deployed as mobile recharge conduits that smart users leverage to put money into different eMoney micro bank accounts and get the points or instant cashback rebates they want to get at any given campaign moment. This is where the action is.

And so we have recharge acrobats like Twitter user #1: step 1 recharge PayPay account from Seven Bank account, step 2 move recharge amount from PayPay Money to PayPay Bank, step 3 move recharge from PayPay Bank to Line Pay, in Wallet app recharge Suica with Line Pay card. Or like recharge acrobat Twitter user #2: Sony Bank Wallet to Kyash to Toyota Wallet to Suica.

Phew…none of this involves transfer fees so it’s up to user creativity to come up with the recharge scenario that works best for them. Does it count as PayPay use or Line Pay use or Mobile Suica use? Does it matter?

It’s not about winners or losers, it’s about moving money around. Mobile Suica is extremely useful because of it’s recharge backend flexibility, thanks to Apple Pay and Google Pay (which does not support PASMO yet). This is the case for US citizens working in Japan who get a great return of their Suica or PASMO recharge right now using US issue credit cards because of the exchange rate. This is something visitors to Hong Kong cannot do with Apple Pay Octopus as the OCL recharge backend is far more restrictive than JR East. The biggest gripe users have with Suica is ¥20,000 balance limit.

In the weeks to come we’ll be sure to see hand wringing articles debating the future of Suica, open-loop, etc.,etc., because let’s face it, IT media journalists need something to write about in these challenging times where everything has to be sold as winner/loser, black/white, 0 or 10, and nothing in-between, to get any traction at all. As for me, I think it’s far more interesting, and real, to observe how users are using all these nifty mobile payment tools.

UPDATE 2022-07-04: Thoughts on the KDDI network outage
That was fast. No sooner had the “QR Codes won the mobile payments race” article appeared when major Japanese carrier KDDI experienced a nationwide mobile network meltdown on July 2 JST, lasted a full day with a very slow, still in progress, recovery affecting more than 40 million customers. Suddenly social media channels were full of people complaining that QR Code payments didn’t work, assuming that Mobile Suica and other NFC mobile payments stopped too. Which was not the case though a few fake posts claimed, or just ‘assumed’ people were stranded inside stations. Fortunately there were numerous online articles setting the record straight.

It’s a lesson that people soon forget in our attention span challenged social media era. We saw plenty of QR Code payment downsides in the 2018 Hokkaido Eastern Iburi earthquake that knocked out power and mobile service across Hokkaido. At the time some fake Chinese social media posts claimed AliPay and WeChat pay ‘still worked’ in Hokkaido at the time, of course they did not.

Mobile payment disruptions happen with every natural disaster and war. Good and safe practices don’t come easy when smartphone apps lure us down the easy path without spelling out the risks. It’s a lesson we have to learn again and again, that while network dependent code payment apps have some benefits, they also have limits and security risks. One size does not fit all, NFC and code payments each have their place and role to play in the expanding mobile payments universe. The key is understanding their strengths and weaknesses.

A great reality check

I was pleasantly surprised to find some hits coming from a website called limitless possibility, followed the link and discovered a great podcast by Luc-Olivier Dumais-Blais and Yanik Magnan on Japanese transit IC cards, Suica 2 in 1, the new features of FeliCa Standard SD2, Ultra Wideband Touchless and more…things I’ve been writing about for a while that never get any traffic.

Yanik does a much better job of summarizing the transit technology landscape than my messy collection of posts. I wholeheartedly agree that UWB Touchless is the perfect opportunity for Japanese Transit IC members to put aside political differences and merge, or at least ‘harmonize’ their data formats for a real all in one Super Suica. We shall see. There are things coming down the pike such as multi-secure element domain/multi-protocol Mobile FeliCa that might have transit implications. And I thank Yanik for his constructive criticism of my ‘Super Suica’ coverage. It’s very helpful and rare that anybody takes the time these days.

Extra bonus: their discussion of the Japan QR Code payment mess and a sendup of PayPay ‘gamification’ campaigns using the Canadian Tim Hortons roll up the rim thing is hilarious and spot on.

LINE Pay for Apple Pay (Updated)

LINE Pay said years ago they would add NFC/FeliCa support if customers wanted it. Now that Apple Pay is gaining QR Code Payment support in iOS 14, LINE Pay announced Apple Pay support ‘in 2020‘ at the online LINE DAY 2020 (2:34:00 mark) media event today. The announcement has special meaning as LINE is the first QR Code payment player to announce Apple Pay support and did so before AliPay.

The timing makes sense now that iOS 14 is nearing official release, but Apple has not officially announced Apple Pay Code Payments yet though they may reveal something at the online September 15 Apple Event. Things will be damn awkward if they don’t.

There are lots of questions: will LINE Pay Apple Pay be a NFC/FeliCa + QR Code Payment in one Wallet ‘card’, or will it be the Apple Pay flavor of the Line Pay JCB prepaid card already on Google Pay that works on the FeliCa QUICPay network.

LINE Pay implied the intention of leveraging both NFC and Apple Pay QR Code Payments but there isn’t much to go by at this point, except that LINE said Apple Pay will ‘complete the LINE PAY contactless payment platform.’ Whatever that means.

Now that LINE has made their Apple Pay move, PayPay is sure to follow at some point. The trend to offer flexible NFC + QR payment solutions started with Toyota Wallet and will gain momentum with iOS 14 Apple Pay, especially with App Clips.

UPDATE 12/22/2020
Line Pay and SMBC announced the VISA Prepaid Line Pay card for Google Pay and Apple Pay. It’s basically a replacement for the JCB Prepaid card that will be phased out along with plastic issue cards sold in convenience stores. The instant issue VISA Prepaid Line Pay card works on iD and EMV contactless payments networks with Google Pay but is limited to iD on Apple Pay due to the long running Apple/VISA Japan feud that may, or may not be, thawing soon. Nobu Ringo has posted his usual into video.