Debit Cards Finally Arrive on Apple Pay Japan Wallet…Virtually

The Mizuho Suica Apple Pay card released just a year ago was an odd product. It was a Mizuho branded virtual Suica card linked to a Mizuho Bank account created in the iOS Mizuho Wallet App, a card that lived exclusively in Apple Pay Wallet without a plastic counterpart. Android users did not get Mizuho Suica, they got the JCB Smart Debit card instead and that remained an Android exclusive…until today.

The Mizuho JCB Smart Debit card joined Mizuho Suica in Apple Pay Wallet today without any fanfare or press release. The JCB Smart, as in smartphone only, Debit card works on the QUICPay+ payment network. Just like Mizuho Suica, users create the JCB Smart Debit card in Mizuho Wallet which adds it to Apple Pay Wallet. Apple Pay compatible Japanese issue plastic debit cards are still missing, but the virtual Mizuho JCB Smart Debit card is an indication that they should be arriving soon. Hopefully it also means that other major Japanese payment cards missing from Apple Pay, such as WAON, nanaco, Rakuten Edy, will join soon Apple Pay with the upcoming iOS 13 release.

Japanese Twitter users are scratching their heads about the stealth update, and Android users are apparently not getting Mizuho Suica in the bargain. Mizuho and is holding a press conference shortly, hopefully it will clear up the questions. I’ll update any details that come out of it to this post.

And the details…

  • JCB Smart Debit is FeliCa/EMV dual mode for use with FeliCa QUICPay in Japan and EMV JCB Contactless/JCB Speedy internationally. Readers report that JCB Contactless also works where the Apple Pay Discover is accepted for payment.
  • Startup campaign: 20% cashback and Mizuho Suica recharge cashback, entry required via the Mizuho Wallet app, running 8/29~12/15

Value Capture and the Ecosystem of Transit Platforms

AppleInsider Daniel Eran Dilger’s very long editorial Apple Services and the ecosystem of value capture has an interesting bit at the beginning:

The term Value Capture applies to rail and transit operators that are given the rights to develop the land around their stations. America’s intercontinental train routes were developed by railroads that were deeded land along their planned rail lines. These plots were then sold off or developed, capturing some of the value added by the fact that that land was adjacent to the transportation service the railroad had built and was operating.

Today, while most of America’s current transit systems (from Amtrak to BART) are now on the brink of failure and are often in worse shape than what you find in third world countries—despite the high tax subsidies paid to sustain them—there are many examples around the world of public and private transit operators performing extremely well simply because they were given the rights to develop the land around their stations, leading to extremely lucrative revenue sources that sustain their operations and growth while they provide efficient transportation services to the public.

Dilger goes on to explain value capture in the App Store ecosystem but misses important transit connections with Apple Pay:

The most successful value capture transit model in the world is the Suica Transit Platform business model on full display at  Tokyo Station. The shopping experience both inside and outside the transit gate is mind-boggling (the Drip Mania coffee softcream is to die for if you can find it) as is the cash flow. If JR East offered business tours in English the waiting lines would look like the lines at Tokyo Comic Con. It’s very strange that other transit agencies around the world, ahem in the west, ignore studying the Suica Transit Platform business model.

Tokyo Station is the Suica card epicenter for transit (regular trains, Shinkansen, buses), shopping, and other services like vending machines and coin lockers. You can buy Shinkansen tickets on the go on your smartphone. Every single store register has a Suica reader and the payment choice is either cash or plastic credit cards but contactless payment is strictly Suica. That is not a problem because Inbound Apple Pay users can join the Suica fun.

There has been a lot of overblown media hand wringing that Japanese cashless payments usage rates are far below what they are in China and Korea, and the Japanese government hopes to raise contactless payment usage rates to 40% by 2025 over the current 20% rate. This “problem” is remarkably easy to fix: create an open shared mobile transit cloud infrastructure that follows the Japanese Transit IC Card Interoperability model. Get the big Japanese transit cards on mobile. This unlocks the commuter pass and loyalty point goodies associated with the plastic IC cards, and the problem is solved. It’s that simple.

If that cannot be accomplished the Japanese government could talk JR East into hosting everybody else’s transit card on the Mobile Suica cloud with agreeable terms for big and small players. A concept just like the recently released Apple Pay Mizuho Suica. With all the important transit cards on mobile wallet platforms, contactless payment usage rates in Japan would quickly skyrocket beyond 40%. I guarantee it.

Apple Pay Mizuho Suica and Mizuho Wallet for iOS

Mizuho Wallet iOS App

Mizuho Bank and JR East announced and released Mizuho Suica for Apple Pay along with a new 2.0 version of the Mizuho Wallet iOS App this morning in Tokyo. Mizuho Wallet v2 allows Mizuho Bank account holders to create a virtual Suica for Apple Pay and recharge Mizuho Suica directly from their linked account in Mizuho Wallet. Users can also recharge Mizuho Suica with any Apple Pay credit card or with cash and use it just like any Apple Pay Suica for transit and purchases.

The Mizuho Wallet App splash screens illustrate setup and use. Mizuho Wallet is unique in that it is the first 3rd party iOS app that Apple and JR East has allowed to create ‘virtual’ Suica. Up until now only Suica App could do that. Unfortunately both apps are still only in Japanese language. There are other limitations: only Mizuho Bank account holders can create a virtual Mizuho Suica and Mizuho Suica can’t be used in Suica App for commuter plan, Shinkansen e-ticket and Green ticket purchases. The press release implies Suica App compatibility will be coming later.

The Mizuho Bank group has been making a lot of noise recently about creating a cashless Japan by the 2020 Tokyo Olympics with QR Codes getting most of their attention. Today’s Mizuho Wallet App and Mizuho Suica release proves that transit is the golden uptake for contactless payments and QR Codes have no part in that in Japan. Another interesting point is that Mizuho Suica is only on Apple Pay.

Japanese reactions on Twitter are a hoot: “this is great, now I don’t have to go to the trouble of applying for a Mizuho Debit Card,” “This looks like Mizuho is just skimming cream off of JR East,” “Does this mean the Mizuho JCB QUICPay debit card is dead or what?” “Argh! I want a green Apple Pay Suica but don’t have a credit card so have to do with a blue Apple Pay Mizuho Suica.” “No auto-charge? Forget it.”

Seriously though this kind of Suica branding for Apple Pay has interesting possibilities with far more important implications than today’s announcement: PASMO Suica, ICOCA Suica, TOICA Suica. A neat solution for getting all the other plastic only Japanese IC transit cards onto Apple Pay. One interesting detail from today’s announcement backs up that possibility: DNP provides the technology back end of the Mizuho Wallet App. Print giants DNP and TOPPAN have deep connections to smartcard and credit card manufacturing and supply most of the Japanese issue IC cards. It makes sense for DNP and TOPPAN to provide app backends for Japanese transit companies who don’t have the means to roll their own apps. More details here.