Remember QR Codes? Well they’re the future…again

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.

There are multiple layers in Apple Pay Suica but they all work as one.

The Transport for London Oyster card by comparison is not compatible with other UK transit cards. Oyster can be used for transit in the London pay as you go area (but reaching its limit) but does not integrate with anything else. TfL has put effort into EMV contactless bank cards for transit instead of developing new services and growing Oyster, but it’s interesting to ponder what the UK could have built by following a Suica-like transit platform business model.

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.

Nobody talks about the implications of NFC tag Apple Pay that Apple is already field testing either. These topics would make for a great discussion. Unfortunately nobody seems up to the challenge.

Advertisements

Of Course Apple Pay is Bigger Than In-App Payments! Now that NFC POS systems actually work…in America

It was just a year ago that eMarketer made a big splash on Apple tech news sites with their Starbucks app is bigger than Apple Pay report:

Retailers are increasingly creating their own payment apps, which allow them to capture valuable data about their users. They can also build in rewards and perks to boost customer loyalty,

Starbucks App Leads Mobile Payment Competitors eMarketer.com

This turned out to be bullshit marketing nonsense because as I discovered using Apple Pay in America just when that report hit, the average Apple Pay store checkout experience sucked.

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.

The Future of Cashless Payments is Now

Some people look at Japan and see a crazy mess of cashless payment options: credit cards, iD, QUICPay, Suica, QR Code players like PayPay and Line Pay, all vying for customer wallet space. ‘It’s a shame,’ they say, ‘In our country we have it all worked out with EMV contactless bank cards that do everything.’

I’ve got news for those people, the mess they are seeing in Japan is the future, it just hasn’t come to their country yet. It’s the revolution of payments on smartphones that started with digital wallets like Apple Pay, Google Pay, etc. but it’s sure not ending there, the number of payment options is only going to grow. Get used to it.

The one size fits all thinking of the plastic card era is dead. Some people think it still lives on in digital wallets, but it’s dead. The future belongs to nimble players who mix and match the best payment technologies for the job at hand and offer customers better services along with it.

The so called ‘FeliCa failure’ curse is actually a kind of blessing: the market payment technology fragmentation gave new players a footing to try different payment methods. Diversity isn’t a weakness, it’s a strength. The diversity of Japanese cashless payment options is the result of its longer history of mobile payments.

That is what smart devices, digital wallets and payment apps do: they erode the old ways and bring fragmentation along with new opportunities. There will be cycles of expansion and consolidation but one size fits all will never come back. Call it cutting edge or call it stupid, like it or not, the cashless mess is coming your way.

Tokyo Cashless 2020: Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

1️⃣ Dear JR East, we need a new Suica Charge App
2️⃣ Consumption tax relief with the CASHLESS rebate program
3️⃣ Are Apple Maps and Siri really Apple Pay level ready for the Tokyo Olympics?
4️⃣ > Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

Tokyo Cashless 2020 is a series covering all things cashless as Japan gears up for the big event. If there is a topic that you’d like covered tweet me @Kanjo


Japanese journalist Akio Iwata just published a piece explaining why VISA has not signed with Apple Pay in Japan. It is paywalled and I have not read it, but Japanese readers noticed similar points in my earlier piece Why Visa refuses to join Apple Pay Japan and tweeted about it. The subject is timely and worth visiting again after the events of the past year.

Some western business journalists and industry pundits look at the Japanese payments market and write about failure: the failure of FeliCa to be universally accepted, the failure of Japanese society to use cashless payments instead of hard cash. It’s a kind of cut and paste narrative construct journalism that you see too much of these days, like the recent Financial Times piece, or worse the NFC TIMES. The narrative is persuasive enough to blind some Japanese journalists as well.

This kind of reporting plays to the expectations of a certain readership, but it completely fails to capture or explain the massive changes happening in Japan right now, set in motion by the arrival of Apple Pay in late 2016. The bulk of the cut and paste argument is that FeliCa failed to take off in Japan and because Japan failed to switch to the EMV ‘world standard’, that’s why we have the current messy situation. End of story. I don’t buy this argument at all.

FeliCa was around long before the EMVCo consortium got it’s NFC act together in the early 2000s. NFC-A is Philips, NFC-B is Motorola, NFC-F is Sony. The ISO/IEC 14443 standard was supposed to include NFC-F but the ISO ultimately decided not to include it. EMVCo created the EMV contactless standard on ISO/IEC 14443 NFC A/B.

With lots of help from JR East, NFC-F was added to the ISO/IEC 10373-6 and GSMA/GCF (Global Certification Forum) TS. 26, TS. 27 specifications. From April 2017 GCF certification for all NFC mobile devices requires NFC-A, NFC-B and NFC-F support.

It is this later development, and especially the fruit of that development, Apple Pay Suica, that I believe is unacceptable to VISA and by extension EMVCo. VISA cooperates with Apple Pay in other countries because it promotes EMV, VISA refuses to cooperate with Apple Pay in Japan because it promotes FeliCa. Instead of promoting bank card use and new services VISA is promoting technology.

I have long suspected that VISA simply does not want anything to do with Apple’s support of the Global NFC standard put in place by the NFC Forum and GSMA/GCF in 2017. It’s not only Apple…VISA refuses to support dual mode (EMV/FeliCa) Docomo iD/NFC for Android Osaifu Keitai users abroad which Mastercard, American Express and JCB do. VISA simply wants to bide time until NFC Pay/EMV contactless support in Japan is everywhere and then simply ignore FeliCa (NFC-F) all together…

Unfortunately this strategy has only accomplished one thing: it provided an opening for QR Code payment system players…

Why Visa refuses to join Apple Pay Japan

My argument is simple. The VISA and EMVCo mindset is stuck in the one size fits all single mode plastic card era. This is easy to understand as the plastic card issuing business is a very lucrative one.

But like all things there is a downside: instead of embracing the full promise of global NFC digital wallets that can match the best NFC technology for the job with multiple mode cards that do everything and ‘just work’ everywhere, we have the contactless payment turf wars which are really just plastic era fighting moved to a digital arena.

Instead of pursuing the advantages of digital wallets that merge the best of native transit cards on the front end with the best of bank cards on the back end, where they perfectly complement each other, we have bank cards fighting to be everything, which they are not and will never be. This is why Apple markets Apple Card as ‘a new kind of credit card, created by Apple, not a bank.’ It’s the reason why Apple Card is Mastercard brand, not VISA.

In Japan specifically we have VISA refusing to join Apple Pay Japan and for the most part Google Pay, and VISA Japan key player Sumitomo Mitsui fighting on and off with Mobile FeliCa key player Docomo. And the result? None of this nonsense helped strengthen VISA Japan’s market position one bit. On the other hand VISA’s arrogance pulled all the other card companies down with it and provided a huge opening for the Japanese QR Code players like PayPay.

When I wrote Why Visa refuses to join Apple Pay Japan the frenzy of Japanese QR Code payments was just getting underway. Over a year later I think this conclusion is stronger than ever and the only one that explains the reality of the current market. VISA may like to think that the Tokyo Olympics is the last great opportunity to finally kill FeliCa. That’s not going to happen.

Only by setting aside the past and embracing the multimode digital future with forward looking cooperation, can VISA (and by extension EMVCo) help bring order to the payments chaos of the Japanese market. Only cooperation can deliver the promise of cashless payments to Japan, and strengthen the long term market opportunities for all players.

Reviews are in and it’s official: CASHLESS Rebate maps suck

Japan App Store reviews are fun to read because the Japanese write wonderfully scathing reviews. Never ‘this sucks’, but a numbing dry, oh so super dry analysis of everything wrong. Every last detail. It’s the ultimate put down kiss off because, while Japanese are endlessly forgiving of honest mistakes, they have zero tolerance for professional ‘I know better than you’ fools who make mistakes.

So they are, rightfully, ripping the CASHLESS iOS/Google Play Rebate Map app for being useless with a parade of one star reviews. Too bad the App Store doesn’t come with a zero review star. I have used the iOS app these past few days and it suffers the same problem of Apple Maps Japan Point of Interest mess: unreliable data, poorly managed, seldom updated.

Case in point, the Cafe Colorado in Ikegami is listed in the CASHLESS map for credit cards only, but the store owner got AirPay just for the CASHLESS program and proudly displays the full range of cashless options next to the register with the CASHLESS 2% rebate logo. He has assured me that all options are good for the rebate.

But the receipts do not show any sign of a rebate. This might be normal for a post-transaction rebate via JRE POINT, it might not. It might be a AirPay problem. I called the CASHLESS Rebate program customer support line and was instantly connected to a person with no voice machine option nonsense. The support person was nice and quickly said the map data is not current, the best course of action is asking the store. I called again and talked with another nice support person who basically gave me the same answer. Neither answer was the one I was looking for. A mystery to be solved another day.

A Japanese friend complained about the CASHLESS rebate program so far, “How does the Japanese government expect people to use cashless when it’s serving up so much stupid with it.” Very well put, the once mighty Ministry of Economy, Trade and Industry (METI) tripped and fell on a stupid stick gouging out their collective brain. Let’s hope they find it and start serving up some common sense. Until then, forget the CASHLESS smartphone map and stick with the ground truth.

UPDATE: According to Japanese media news reports the maps mess is not a METI mistake, many settlement companies input wrong data sets into the maps database and now it has to be sorted out. Hopefully sooner than later.