The overheated Japanese payments market kicked into consolidation mode with the Line Pay Pay Pay merger announcement last November. The next consolidation was announced today with the Origami Pay startup folding into the the merpay startup. The deal is expected to close by February 25. Now that a market shakeup is in full swing I think we can expect mergers for other smaller players like kyash before the Tokyo Olympics.
It will be interesting to see what comes out of the merger of the QR Code Origami and NFC Apple Pay merpay. Perhaps we might end up with a flexible frontend solution like the recently released Toyota Wallet which combines both approaches. I just hope the backend is flexible too and not chained to a single banking empire. We shall see.
Changing the iPhone region to add Apple Pay Suica confuses a lot of users. Many are not familiar with region settings and what they do, and it’s far too easy to think that a Japan region setting is a requirement to use Apple Pay Suica, which is not the case. When it comes to iOS 13 Apple Pay and NFC switching, the region is a simple filter so that user only sees Apple Pay card options for a given region, not the whole Apple Pay world. In this situation region setting becomes a stumbling block, most inbound iPhone users are probably not even aware that they can add and use a deeply useful Japanese contactless digital transit card with a few finger flicks.
This is a problem because the current iOS Region preference setting mixes 2 different job functions. Twitter user Zetton neatly explained the issue: the iOS Region setting defines the cultural space the user lives in and how iPhone treats some data, but Apple Pay uses regions in a different way to show available location options. It is this user cultural space vs current location option dichotomy force fitted into a single region setting, that confuses users. This is why JR East created the one time use SuicaEng app that completely dispenses with region settings for adding Suica to Apple Pay. iOS 13 rolled direct Suica card creation into Wallet, look ma no apps, but the ‘change region setting to Japan’ to add Suica downside was still there. Until now.
There are signs that Apple is working around the region problem by presenting location aware ‘add Suica’ Wallet notifications. It’s not universal and impossible to test if you already have Suica, but it seems the separate ‘add Suica’ option also appears in Wallet based on user location in Japan, regardless of region setting.
Visa offers dual mode plastic cards that have EMV and FeliCa support in one convenient chip package that work in Japan and abroad. However these new plastic and Google Pay cards are limited to the Visa Touch payment network which is slowly growing in Japan but still full of holes. The most useful payment method for these cards will be the reliable old contact one.
Visa Japan’s long term strategy here is to gradually pull out of the FeliCa based iD and QUICPay contactless payment networks and eventually issue everything on their own Visa Touch payment network. Apple Pay FeliCa support will never sit well with Visa Japan, but now with the Google Pay move we know what Apple Pay has to do to host new Visa card products.
Unfortunately Visa has focused on big marketing pushes like the Tokyo Olympics instead of a consistent and focused drive to build contactless payment support and customer awareness that benefits all players. In a payment market already flooded with payment network logos and acceptance marks, Visa Touch is just one more logo that adds to customer confusion. Visa could have been a leader, instead they gave QR Code players a nice big opportunity, a gift that keeps on giving.
Hacker News and Reddit have very different user audiences but each have their share of ‘my experience is the world’ navel gazers. This is a plus: the comments are fascinating to read. The Andreessen Horowitz site posted a piece by Avery Segal, Remember QR Codes? They’re More Powerful Than You Think. Somebody posted it to Hacker and somebody else posted a link to my Transit Gate Evolution piece in the comments. I think it’s hilarious and insightful that somebody can look at the same QR code transit video in the piece and write, “The QR code video shows a ton of people going through the turnstiles quite fast.” A ton? Fast? I guess the commentator never experienced rush hour Shinjuku station gates.
Segal’s piece is a simple Mainland China travelog highlighting all the things people can do with a WeChat/Alipay account and WeChat Pay/Alipay integrated QR Code smartphone apps there. There is very little analysis and the opening paragraph reads more like PR, which it probably is. After all, Andreessen Horowitz is a venture capital firm though I can’t figure out if Segal is trying to sell WeChat/Alipay or QR.
Companies in the US have been slow to adopt QR codes, but those who dismiss them as having “been around forever but never taken off” underestimate their wide-ranging potential. Camera-based solutions like QR codes (or facial recognition, for that matter) can make traditionally clunky user experiences seamless and intuitive. QR codes connect our online identity to the offline world, allowing users to essentially log in to physical locations—and bring their data with them. This delivers a number of benefits: brands learn user preferences, while customers gain a more tailored and social experience, as well as perks like automatic loyalty programs built into every transaction.
The Hacker News crowd discusses the pros and cons of QR vs NFC, but I think that they along with Segal completely miss the point: it’s not the technology, it’s the service layers built on top of it and how well they integrate that really matters. Actually it’s the only thing that matters.
The Suica example. FeliCa is great NFC technology but nothing great by itself: the Suica card format built with FeliCa, the nationwide Transit IC card inter-compatibility built around the Suica card format, the Transit IC eMoney standard built on top of that, Mobile Suica, Apple Pay…each new service layer builds on the previous layers and adds value to the whole. The value is the quality of integration, a sum greater than the total of parts.
China is a very different country and transit infrastructure isn’t a business. I’m sure that Alipay and WeChat Pay were allowed on host their QR code services on ‘public infrastructure’ because it also benefits the Chinese Communist Party in some way and helps the CCP steer society where it thinks it should go.
There is another important aspect that Segal and the Hacker crowd fail to see or discuss: central processing vs. local processing. The whole point of Transit Gate Evolution was explaining the Apple Pay Suica secret: a great local processing front-end (FeliCa/NFC-F/Suica) integrated with a great central processing back-end (Mobile Suica + Apple Pay EMV credit/debit cards). Segal assumes that central processing is everything and that the internet, mobile networks and cloud services are always going to work everywhere 100% of the time. They don’t.
Now eMarketer is saying the same thing: “Apple Pay has benefited from the spread of new point-of-sale (POS) systems that work with the NFC signals Apple Pay runs on.” That work with the NFC signals Apple Pay runs on?! It sounds like eMarketer isn’t exactly sure what NFC is. Why not just say Apple Pay has benefited from the spread of new point of sale (POS) systems that work, yes, actually work now dammit! No more “you’re holding wrong” nonsense.
Duh. Is it just me or does the entire Apple tech news scene fail to see how poorly written and shoddy both eMarketer reports are? They are clickbait disguised as market research, nothing more.