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.

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The JAPAN CASHLESS Rebate Week 1: MiniStop Reports 6% Cashless Payment Use Increase in First Week

This is what we were waiting for. After all that hassle of getting ready for the CASHLESS rebate program, how many people were actually going to go cashless to get the rebates? NHK reports that the MiniStop convenience store chain saw a 6% rise in cashless payments use rates in the first week of the rebate program, rising from 24% to 30%. MiniStop president Akihiro Fujimoto said he was surprised at the quick uptake. I’m not.

30% was the informal Apple Pay Suica use rate I found in station areas in 2017. The MiniStop number is just one data point from one store chain, so it will be interesting to see how cashless use rate averages pan out over time. Convenience stores chains offer 2% rebates with cashless purchases, calculated and deducted from the customer bill at checkout. Smaller store 2%~5% rebates are post-transaction refunds. Despite the small data sample size, I think we are already seeing the beginnings of a tipping point here.

The JAPAN CASHLESS Rebate Inflection Point

On the eve of the CASHLESS Rebate program launch I wrote:

Regardless of whether the CASHLESS rebate is ‘a success’ or not, it will be a tipping point. Already I notice a shift in public perception: if a store is cash only, it definitely looks behind the times in the minds of customers. I think that’s the whole point.

Consumption tax, Cashless rebates and Coffee shops

It really doesn’t matter if the CASHLESS Rebate program is a success or a dud. It’s an inflection point tick mark in the mind of Japanese society, the ship of Japan is making a tiny course correction that will veer the vessel off in a very different direction over time. We already have the big changes that the Apple Pay Suica ‘black ship’ brought to Japan since 2016, and that was just the start.

Junya Suzuki, Japan’s top journalist for all thing cashless, posted a new article: The Real Reason for the Cashless Rebate Program. Suzuki san makes the same argument: the Cashless Rebate Program is an inflection point, but with much more detail and depth. It’s a great read and worth a look even just for the pictures and captions.

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.

The JAPAN CASHLESS Rebate Day 1: convenience stores

It was a fun day. I tried out some local CASHLESS rebate stores and it was…boring. I paid with Apple Pay Suica like I always do. A close examination of the receipt showed that the 2% rebate was instantly deducted from the transaction amount. I didn’t have to say anything or do anything but wave iPhone to the reader.

That was not clear from the CASHLESS web site: When you make a cashless purchase with any of the certified methods (credit card, Suica, QR, etc.) at a convenience store, the consumption tax is automatically calculated at 8% or 10% depending on item (food vs. household items). The 2% rebate is instantly implemented in the transaction as a discount from the sub-total (items plus tax). For people who don’t want to bother with JRE POINT, paying with Apple Pay Suica at convenience stores is a JAPAN CASHLESS no brainer.

I am still digging but the instant 2% tax discount appears to be the case only for convenience store transactions. Other stores (without the fancy POS systems) calculate the transaction with tax but the CASHLESS rebate is refunded later as outlined.

It will be interesting to see how many stores end up being classified as ‘convenience stores’ for the CASHLESS program as supermarkets are explicitly left out of the the equation. All the major convenience store chains will be onboard, but will AEON ‘My Basket’ stores be classified as a convenience store or a supermarket? It’s a squishy line.

Some quick impressions:

  • everything happens automatically on the backend, there is nothing the customer or merchant needs to do, just follow the usual routine
  • if you pay cash at convenience stores you are throwing away money
  • I can’t wait for the CASHLESS program to expand to DOUTOR so I can kiss Starbucks goodbye for the duration of the program
  • Ditto for MiniStop, 7 Eleven ice coffee sucks and they don’t have those cheesy dog things

UPDATE: MiniStop is on the CASHLESS map now: