Japan mobile payment survey results

I gave the Twitter survey function a workout and asked 2 questions:

  • Which Japanese mobile payment do you use most?
  • Which Japanese reward points do you use most?

The results are not surprising but come with many caveats: the survey sampling was puny, in English and pretty much limited to a small group of Twitter followers, which means they are pretty much already invested in Mobile Suica. Also it is important to remember that mobile payment use profiles in Japan are highly regional, what’s convenient in Tokyo isn’t necessarily convenient in other areas. That said, there are some interesting and fun takeaways.

Japanese mobile payment takeaways and feedback

  • The 55% Suica/PASMO figure expresses the power of Apple Pay Express Transit (and similar for Osaifu Keitai) for store purchases in the COVID induced face mask era without the hassle of Face ID. It’s important to remember that the ballyhooed Unlock with Apple Watch Face ID feature introduced with iOS 14.5 is useless for Apple Pay authorization. Remember too that Mobile Suica has good support on wearables: Apple Watch, Garmin, fitbit, etc., the widest mobile payment platform in Japan.
  • Despite the heavy marketing VISA Touch from VISA Japan, the majority of users have been using Apple Pay and Osaifu Keitai for iD and QUICPay, etc. I suspect EMV ‘Touch’ (Visa, MC, AMEX, JCB) probably appeals more to plastic card users as VISA is pushing EMV only plastic cards vs. digital wallet dual mode Apple Pay.
  • QR Code payment apps (PayPay, dBarai, LinePay, etc.) are not as popular as you might think and are probably feeling the pain of recent bank account linking security problems, and the recent revelations of user transaction records being stored outside of Japan.

Changes quite a lot. Recently using EMV touch a lot because of SMCC 15% back campaign and Amex 20% at FamilyMart. Otherwise probably a little bit of everything just to get maximum reward. (Tokyo)

I don’t ride trains so I have no real use for Suica. Using it to pay in shops is too much of a PITA since you have to constantly recharge it. (Kagoshima, note that Suica Auto-charge only works in JR East transit region)

I do iD for the point rewards (none in JP CC recharge of Suica) otherwise Express Transit is perfect. (Tokyo)

Mostly Suica (via Garmin Pay), but I’ve been using au Pay (QR or barcode) a lot more recently. (Hiroshima)

Japanese reward point takeaway
Results are complicated. Twitter surveys are limited to 4 choices, I lumped the Japanese carrier reward point systems for docomo, au and SoftBank (dPoint, au•PONTA, T-POINT) into one category, the top choice at 43%. However if we break down the carrier number by carrier marketshare ratio we get the following:

  1. 21% JRE POINT
  2. 28% Rakuten POINT
  3. 19% dPOINT
  4. 14% au•PONTA POINT
  5. 10% T-POINT
  6. 8% V POINT

The key takeaway for reward points is the power of the Rakuten ‘Economic Zone’, i.e. where all the Rakuten pieces including shopping, banking/credit card/payments, transit (Rakuten Suica), mobile, stock trading, travel, etc., are glued together by Rakuten POINT and feed off each other. The Rakuten Economic Zone is the model that others will have to successfully emulate if they are going to be serious long term competitors. NTT docomo announced a tie-up with MUFG this month, the digital banking wars are just getting started.

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, but they are not well integrated across the SoftBank empire and more importantly, they don’t have the synergy of Rakuten. 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.

T-POINT? We don’t need no stinkin’ T-POINT

In the ephemeral COVID era we live in assurance don’t come easy, especially with JP cashless market data. Half the fun is taking the crumbs you find, a 1000 person web survey here and there, and seeing what trends you can tease out of it.

First of all the usual disclaimer: cashless use is highly regional, depending on transit use and many other factors like age group, shopping habits, and reward points. It’s this last item that makes the CreditCard no Yomimono survey so interesting.

Reward points are the dangling carrot all Japanese cashless players use to drive card use. New comers like PayPay use them shamelessly to capture customers and build their platform. Japanese customers love to play the ‘what combo gets me the most points’ game but they are also notoriously cold shoulder when they feel gypped. And once they drop something, they never come back.

The survey skips over regional point systems like JRE POINT (though I think that’s debatable considering Mobile Suica on Apple Pay/Google Pay/Osaifu Keitai), and examines ‘national’ point systems: d POINT, T-POINT, Rakuten POINT and PONTA with a simple question. Which one do you use? 2,271 people said:

  • Rakuten POINT: 59.9%
  • d POINT: 18.4%
  • T-POINT: 14.4%
  • PONTA: 7.3%

It’s clear to see why JR East cut that special deal for Rakuten Pay Suica: the different online Rakuten businesses for shopping, travel, etc. mesh well and there are a lot of people invested in Rakuten POINT. The deal puts Super Suica in a good 2021 launch position for new local transit partners, MaaS NFC Tag Suica and more as the platform grows.

It’s a bittersweet deal however for JRE POINT. It’s a real shame and missed opportunity that the major IC transit cards (Suica, ICOCA, TOICA, etc.) are compatible for transit and eMoney, but not for points. Even if they all kept their own point branding and simply offered 1=1 point exchanges, people would use them more.

The decline of T-POINT is not surprising, dropping from 60% in a 2015 survey. Culture Convenience Club (CCC) and SoftBank ran T-POINT into the ground and it’s not coming back. It’s only a matter of time before SoftBank kisses T-POINT (and CCC) goodbye and unveils PayPay POINT.

PONTA is another major that has not gained much traction so far but this might change with the recent LAWSON Bank PONTA Plus branded credit card push. All of the point systems need to add Apple VAS and Google SmartPay support and drive acceptance on the merchant POS level. The less we have to deal with separate plastic point cards, all the better.

Rakuten Pay Suica

One year after the tie-up was announced, the Rakuten Pay Android app was updated yesterday and now supports adding a Rakuten branded Suica card and recharging that earns Rakuten Points, all done within Rakuten Pay. Each ¥200 of a recharge earns 1 Rakuten Point.

Outside of the Rakuten Pay app is confusing: red Rakuten Suica is only seen in Rakuten Pay but everywhere else it looks and acts like a regular green Suica (in Google Wallet, Mobile Suica, Osaifu Keitai app). But the Rakuten Point earning recharge is limited to Rakuten Pay app recharge which only sees the red Rakuten Suica and nothing else. Whew. Details are outlined clear as mud in the Rakuten Suica English press release.

Plugging Suica into the Rakuten Point empire is the whole point of the JR East/Rakuten tie-up but the current implementation is still missing an important point: free Suica recharges with Rakuten Points. This is promised in a future update. Up until now JR East has kept free Suica recharge exclusively for their own JRE POINT system where registered users earn JRE POINT with Suica then use points for free Suica recharge and Green Seat upgrades. The advantage for JR East is that Rakuten Point users outside of JR East’s transit region now have an incentive to use Suica for purchases and local transit as part of the Rakuten Payment experience.

There is no reason why Rakuten Suica couldn’t also work on Apple Pay but Rakuten probably wants to keep their branded Suica in their own app which is not allowed by Apple. Rakuten Suica would have to reside in Wallet just like the Mizuho Suica that recharges via its own app or Apple Pay. If Rakuten can live with that, Rakuten Suica has an Apple Pay future. For now, iOS users can earn Rakuten Points when recharging Suica with a Rakuten credit card but the sign-up process is convoluted and only good for 30 days before you have to sign up again.