2022 Japan mobile payments survey results: Mobile Suica tops the bunch

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.

UPDATE
Forgot to include the corporate travel angle driving Mobile Suica use.

Instant digital issue apps for Apple Pay Edy, nanaco, WAON support?

A fun mockup of card options for direct iOS 14 Wallet issue for Edy, nanaco, WAON that will probably never happen. If they come at all they will be digital issue via apps.

Now that VISA JP finally signed with Apple Pay, what about the last holdouts: Edy, nanaco and WAON? These have been on Google Pay for some time but like all things Google Pay Japan, it is courtesy of Osaifu Keitai rather than native Google support. Apple was smart to go for Suica first, then PASMO (which has yet to appear on Google Pay) but it’s time to complete the Apple Pay Japan lineup.

Google Pay Japan has 2 basic categories for adding cards: EMV bank payment cards (AMEX, JCB, mastercard, VISA) and Japanese eMoney cards (Suica, Edy, nanaco, WAON, iD, QUICPay). In other words, Google Pay arranges cards by NFC flavor. This is because many Android devices sold outside of Japan don’t include FeliCa even though they have the hardware to do so. Google Pixel 5 for example has Mobile FeliCa installed on every single device it sells, but only activates it for Japanese models. Perhaps this will change with Pixel 6, we will see.

Apple Pay doesn’t make a distinction between NFC flavors, just one global NFC. No EMV or FeliCa bank payment cards, just payment cards, period. Apple also encourages Japanese bank card issuers to use the NFC switching and dual mode features of iOS and watchOS Wallet for seamless use on any payment reader in Japan or abroad. The same thing applies to Wallet transit cards. Wallet can have multiple Express Transit cards and juggle between FeliCa (Suica, Octopus, PASMO) MIFARE (SmarTrip, Clipper, TAP) and PBOC (China T-Union cards).

So what is the Wallet category for non-transit stored value prepaid payment cards? I have no idea but for this exercise I’ll use eMoney (電子マネー). Apple Pay has everything in place to flip the switch since 2016, what’s the holdup? There’s a big problem using the Suica add card Wallet process for eMoney cards. This problem is on full display with Google Pay WAON: the user has to create an WAON account in Google Pay to add it. Worse, if the user deletes the WAON card they loose the Google Pay created WAON ID and card balance.

I don’t think Apple wants this ‘create an account’ nightmare scenario in Apple Pay, that’s what apps are for. Fortunately we have a growing collection of ‘instant issue’ apps for adding cards to Wallet and digital issue only is quickly becoming standard for Apple Pay Japan debit/prepaid cards: kyash, Minna no Ginko, Toyota Wallet, etc.

The digital issue app model is perfect for Edy, nanaco and WAON who want to be collecting accounts instead of selling plastic prepaid cards. And they already have iOS apps. Leave the account creation and management drudgery in the app so users curse the app instead of Apple Pay. Once done the user taps ‘Add to Wallet’ and presto, instant WAON or nanaco all ready to go with direct Wallet recharge. Other bonuses: (1) instant issue apps eliminate ‘I wanna transfer my plastic card to Wallet’ overhead, (2) if anything goes wrong and the balance is lost, it’s the fault of the app, not Apple Pay. Keeping things simple and streamlined is key for a good Apple Pay user experience, one more Wallet reboot challenge for iOS 15.

UPDATE
WAON and nanaco for Apple Pay have been announced for later in 2021. AEON also updated their iAEON App for issuing Mobile WAON cards on Osaifu Keitai Android smartphones, almost certainly the scenario described above for Apple Pay support when it launches after the release of iOS 15.1.

Japan’s new economic zone: Rakuten

The April 30 addition of iPhone 12 lineup to Rakuten Mobile marked the transformation of Rakuten Mobile into a first tier carrier on the same level of Docomo, KDDI au and SoftBank. Now that SoftBank is taking Rakuten to court over allegedly stolen SoftBank corporate secrets, I think we know who is feeling the pressure. It is the end of an era. SoftBank was the first carrier to launch iPhone in Japan back in 2007 when NTT Docomo refused and KDDI au could not (the Verizon iPhone problem). They cleverly used iPhone to leverage their position from an industry also-ran into a serious first tier carrier grabbing marketshare for the other majors.

Rakuten Mobile is now playing the hungry upstart with fresh ideas and aggressive plans: pay for what you actually use instead of paying for a monthly allotment just like the good old land line days…how original. Nevertheless SoftBank feels threatened not only by Rakuten Mobile but the total weight of the Rakuten Empire: Rakuten Pay which encompasses Rakuten Edy and Rakuten Suica, and most of all, Rakuten Point.

SoftBank has similar parts, PayPay and TPoint/TMoney (the latter is living on borrowed time), but they are not well integrated across the SoftBank empire and more importantly, they don’t have the synergy of Rakuten. The Rakuten Point synergy works across online shopping, online travel booking and online trading…and now mobile. That’s why people in their 20~40’s are sometimes referred to as living in the Rakuten economic zone, leveraging Rakuten Point as currency ‘plus’ to make their real money go much farther for all of their needs.

But there’s one more thing. Now that Rakuten Mobile has the full iPhone lineup, it’s only a matter of time before Rakuten Edy and Rakuten Suica join Apple Pay. That is SoftBank’s true nightmare.