The Japanese contactless payments landscape has changed considerably since the 2016 launch of Apple Pay. It certainly was the Black Ship arrival turning point that Junya Suzuki predicted, contactless payments, especially mobile contactless payments, continue to evolve in fascinating ways.
The latest Mobile Marketing Data Labo (MMD) mobile payments survey ranking for NFC payments had an interesting twist: Mobile Suica was the top NFC payment choice at 22% beating out NTT docomo iD at 21%.
That doesn’t sound like much but this survey is asking specifically about store purchases made with a mobile device, not transit use. Mobile Suica beat iD despite a number of heavy marketed iD related dPoint rebates and bonus point campaigns. What’s even more interesting is that users said they are really interesting using Rakuten Edy, with Mobile Suica running a close 2nd place, and iD way down in 6th place. Why? 2 reasons I think, the convenience of Express Mode for purchasing things on the run keeping face mask in place, and points. Don’t underestimate the last one.
Tossing the local teiki for Mobile Suica
The survey got some notice in the Japanese tech media but nobody analyzed the surprising strength of Mobile Suica despite the ongoing COVID impact on Suica transit use, perhaps it didn’t make sense to them. Mobile Suica topping the ranking doesn’t make sense by itself as suddenly gaining users in the traditional greater Tokyo Suica transit use region…but it does make sense when you add people who don’t need a local region teiki/commuter card for work because of COVID and have switched to Mobile Suica for their occasional transit needs, also using it for purchases. Instead of a plastic ICOCA, Sugoca, manaca, TOICA, etc, those users use Mobile Suica. Not everybody is switching of course, but it does put Mobile Suica use on a larger national footing than ever before, and that adds up. This, I believe, is what the MMD survey ranking is showing.
And there is JRE POINT. JRE POINT only got started when Apple Pay Japan did in 2016, but it didn’t become a serious thing until Suica Point Club was merged into JRE POINT in 2017. It has steadily grown from there and the last missing puzzle piece was added when Eki-Net Point was finally merged into JRE POINT in June 2021. JRE POINT has finally achieved synergy gluing together the far flung JR East online service pieces (Mobile Suica, JRE POINT, Eki-Net) and JR East will be aggressively marketing point campaigns and eTicket discounts that encourage users to go all in with mobile.
The survey also shows at something else: dPoint isn’t very compelling despite all the campaign rebate noise. I’ve heard from iD•dBarai (dPay Code Payments) users, ‘dPoint doesn’t travel well’, the NTT docomo dPoint economic zone lock-in isn’t very compelling from the inside. This is confirmed by MMD’s code payment app satisfaction survey that ranks dBarai at 4th place, far below Rakuten Pay at #1 and PayPay at #2. From my own experience I use dPoint when upgrading to a new iPhone and nothing else. The SoftBank economic zone (Z Holdings et all) was clever in that they made ubiquitous availability and cash rebates, instead of points, the service lock-in.
And then there is Rakuten POINT economic zone. The survey interest ranking is measuring Rakuten POINT interest not Rakuten Edy. The ability to earn and use Rakuten POINT across online shopping, stock trading, travel reservations and more is big. The gist of it all is that Japanese users care more about points than the contactless payment type. Long term I think the most successful payment economic zone players will follow the Toyota Wallet model, a wallet app offering flexible multiple payment options (QR, NFC, etc.). Apple and Rakuten need to hurry up with Apple Pay Edy, the very last eMoney holdout.