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 Pay Pay

Disclaimer 1: As many regular readers know, I am not a QR Code fan. It’s not the technology so much as the assumption that the central processing model and constant network connections solve everything. When I went to Starbucks today I tried paying with the Starbucks app bar code and got a nice little rude reminder that when one link fails, the whole QR/bar code chain crashes. The WiFi at that particular Starbucks store is not robust and ends up jamming the smartphone 4G pipe because the device thinks there is a good WiFi connection. After 2 attempts without getting a bar code load, the staffer said, “turn off the WiFi.” I gave up and used Apple Pay Suica instead. Done.

Disclaimer 2: As many regular readers may not know, I am not a SoftBank fan. This goes back to the time when SoftBank bought Ziff Davis of which the Seybold Report was part of. SoftBank quickly destroyed the Ziff Davis business by sucking it dry and selling off the zombie for a good price before anyone realized it was dead. I wrote for the Seybold Report at the time. What had been a tightly run ship collapsed into chaos because the parent company starved the subsidiary groups and people didn’t get paid. Later on when I wrote reports for Off The Record Research, I regularly visited a Yahoo Japan source who complained that they could not create good iPhone apps because SoftBank constantly sucked the budgets dry. Later on he quietly told me he could not complain anymore because all the conference rooms were wired and everything was recorded. SoftBank is that kind of company. To me all they ever really do is play one big never ending shell game.


There are lots of people excited by the Line Pay/Yahoo Japan merger. IT reporter Junya Suzuki says it’s about creating a ‘Super App’ platform. Bloomberg says it’s about creating a super ‘big data’ platform that sucks up everybody’s everything (and of course nobody discusses where the big data will be stored and processed: will it stay in Japan or be sent to notoriously security lax Korean data centers).

There will be lots of news and discussion in the weeks to follow but it’s important to remember a few essential points.

One: Line Pay and PayPay operations are running in the red, some people estimate PayPay could never turn a profit with its current business model.

Two: neither SoftBank/Yahoo Japan nor NAVER/Line Pay own a real bank. At some point in the cashless payments process, real cash has to change hands. Payment processors without real bank operations have to live with real bank transaction rules and fees, real banks will always have the upper hand. Having a real bank for example, puts Rakuten in a much stronger position than SoftBank. Yahoo Japan does own half of Japan Net Bank but this is a co-venture and Yahoo Japan only runs the internet service side, the other half, the real bank transaction half is owned and run by SMBC. In this arrangement SMBC is calling the shots.

As for me, I have been hanging out on the Girls Channel where Japanese women let down their hair and diss. Japanese women make, or break, products in Japan, especially everything Keitai, not men. Comments on the Line Pay and PayPay merger are very interesting and cutting. They range from “Mercari Pay is disappearing next” to “Hello Rakuten, goodbye Hagebank,” (a diss of bald Masayoshi Son, but also a double entendre for the highly leveraged SoftBank going bust). Day after day it reads like the bloom is off the Line Pay Pay Pay rose and Japanese women who created the first Keitai boom and have money now, are ready to move on. They are in it for the campaigns but not really in it. I’m going to keep hanging out with the girls. It’s a lot more fun and informative than reading the news, and faster too.

AWS outage takes down PayPay

The Amazon Web Service outage that started around 1pm August 23 local Japan time took down some PayPay service along with it. Japanese users tweeted about payment and recharge not working. AWS service was completely restored by 8pm Japan time. Engadget JP’s Takahiro Koguchi posted a complete rundown.

Since QR Code payment systems depend on centralized processing, a cloud outage can easily bring down the system for all transactions. While this is a minor annoyance for paying at a convenience store where you can always pay on the spot using something else, it’s not the case when QR is used for transit where large numbers of people can suddenly be stranded. This is exactly what happened in Chengdu last April. It’s a risk of using QR Codes for transit.

Locally processed transactions like Suica are resilient because it was designed to avoid the trap of central processing, the stored balance is held on the card and not on the cloud. When things do go wrong with cloud services like Mobile Suica or Apple Pay, damage is limited to the credit card recharge side. Cash recharge at the convenience store, the station, the ATM is always there as a backup because it only deals with the card, not the cloud.

iWork Pages Celebrates International Haiku Day with Vertical Writing

Today is International Haiku Day and Apple Education is celebrating it in Japan with the new version of iWork Pages that finally supports vertical text layout. In honor of International Haiku Day and vertical text support in Pages, I tried writing a haiku in vertical text using the new version of Pages. This is how it went…

Let’s see, I want to rotate the roman characters to stand vertical like they do in traditional ‘Tate-Chu-Yoko‘ Japanese layout.
Oh wait, Pages vertical rotation only works in groups 2~3 characters. Anything less or more does’t work. How about if I split them up.
Okay this isn’t working, but I have an idea…
I’ll just use egword Universal 2 instead. Problem solved with the Tate-Chu-Yoko setting.

Update: Japanese reactions to the Apple Education ad (top screen shot) now running on Twitter are fun and sarcastic: “Are you serious? Way too late,” “Good thing I didn’t wait and installed egword,” “10 years too late,” “Oh, Pages is finally useable,” etc.