Tag: VISA

The VISA open loop squeeze: VISA’s Apple Pay Suica recharge block one year later

It has been a year since the VISA payment network in Japan stopped accepting foreign issue VISA cards for Apple Pay In-App use with Suica and PASMO Wallet cards (and the recently launched Apple Pay ICOCA card too).

With no explanation or reason, one little VISA payment system configuration change by the merchant acquirer eliminated the default go-to transit and payment card any visitor to Japan with iPhone and a VISA Wallet card Apple could add and use nationwide. Plastic Suica cards were the only option for inbound visitors with iPhone who only have VISA cards, and now the plastic card option is severely limited.

That very same month, VISA’s Nick Mackie, Vice President, Visa Acceptance Solutions, Head of Urban Mobility & Government gave an exclusive interview to Nikkei Business magazine in an article that announced VISA Touch sponsored open loop transit initiatives in Japan were going mainstream. Mackie explained that VISA Touch would ‘co-exist’ with Suica on Japanese transit gates, of course he didn’t mention that VISA in Japan has had a very rocky relationship with Apple Pay.

Wait a minute, what about Suica on store readers? Suica is a payment network, not a transit card. People forget that. Inbound visitors and Japanese open loop media advocates make the mistake of comparing Suica to London’s OYSTER, or Sydney’s OPAL but neither of those systems are payment networks that work outside of transit gate. The only relevant comparison is Hong Kong Octopus which, like Suica, is also a payment network, one that is central to the MRT business model, as Suica is to JR East.

Are we talking open here or global payment cartel economic neocolonialism?
People have this strange idea that EMV card companies are an open standard because everybody uses them. They are not. They are incumbent payment ecosystems with static global marketshare, in other words payment cartels, whose main revenue stream are interchange processing fees from processing different kinds of payments while selling value added services, i.e. your analyzed transaction data to customers. They are lucrative businesses because of their tremendous scale. EMV open loop transit is simply another effort to increase the volume of processing fees by capturing fare gate transactions, and selling the transit use transaction data analysis as a value added service to their business customers.

And because they are ecosystems there are many moving parts: EMV licensing fees, EMV compliance device certification fees, transaction processing networks. This means it is very difficult for new services to emerge and compete with a giant multi-arm consortium or recreate its vertical integration. They have to play with the EMV payment cartel if they are going to play at all.

In Japan mobile apps have provided an opening to link bank accounts with QR Code payment systems. QR Code App are popular for many reasons, the main one being that they offer ways to circumnavigate the EMV payment cartel. a mobile debit card scheme without the card or the EMV payment network as QR Codes circumnavigate the hammer lock of pre-installed EMV on smartphone secure embedded elements (eSE).

As I have written about many times, global NFC and Suica support on Android has been stymied by the lack of pre-installed Mobile FeliCa that works everywhere. Mobile FeliCa is the only real payment NFC protocol that can compete with EMV on payments. Calypso could but is transit only. The pre-install problem is why Navigo on Android had no choice but to develop the lower performance Calypso HCE, it was the only way for Île-de-France Mobilités (IDFM) to work around the lack of getting Android smartphone manufacturers to post-install Calypso eSE applets even thought the hardware fully supports Calypso NFC-B.

This is why the EU pressure to ‘open’ the iPhone NFC chip is so false to me. The current plan would only serve to increase the EMV payment cartel grip on mobile payments. If the EU really wanted to foster payment competition they would force manufacturers to pre-install Mobile FeliCa, and Calypso along with EMV and MIFARE. Nobody gets this except for a select few. I’d argue that Apple Pay actually levels the playing field by pre-installing and integrating all the necessary pieces, giving non-bank payment providers equal opportunity to bring non-EMV solutions to the mobile platform. Established players don’t like that. Western countries will continue to abide with the EMV payment cartel instead of enhancing payment competition, witness the proposed Credit Card Competition Act of 2022~2023 going nowhere in the American Congress.

The ramen shop arcade business model
Japan is lucky to already have alternative home grown payment networks even as the EMV cartel tightens its grip here. Unlike the western monopolistic ‘winner take all’, ‘one size fits all’ business culture, the nature of traditional Japanese business culture is akin to a ramen shop arcade. One successful ramen shop is okay but many together in the same area are better because more choice brings in more customers. More customers is more business that raises all boats. That’s why Japanese customers like having payment options, and are adept at juggling them for the points they want. Westerns say they like having options, but when they visit Japan complain they complain about having too many options.

VISA and their main Japanese partner SMBC group are investing heavily to market contactless payments under the banner of ‘Visa Touch’ along with the SMBC stera payment system to shift payments to EMV contactless and away from FeliCa based payment players such as iD (NTT Docomo) and QUICPay (JCB). Open loop stera transit is part of this investment.

What IT media in Japan and abroad never write about is the FeliCa ecosystem and how much of the technology licensing, payment processing, and other fees stay in Japan versus how much leaves Japan for Europe and America if that basic ecosystem is completely replaced with EMV. In other words what the long term price of removing the native payment system and replacing it with payment system neocolonialism? If you carefully examine what China has done, they have carefully cloned the basic EMV spec for transit, China T-Union PBOC 2.0/3.0, which neatly circumvents EMV licensing while maintaining compatibility, similar to what GhostScript did back in the PostScript era: PostScript compatibility without expensive Adobe licensing.

Stay in your lane: open loop reality in Japan
I see the VISA block of Mobile Suica, PASMO, and ICOCA as part of that VISA/SMBC effort. What better way to put pressure on domestic transit operators to add open loop by denying inbound visitors the ability to add and use Suica, PASMO, and ICOCA in Apple Pay Wallet? In any other age this kind of market abuse would come under anti-monopolistic regulatory scrutiny but here we are living in an age where regulators focus on Apple for the wrong reasons.

JR East and JR West will likely never add open loop as doing so dilutes their core business, Suica and ICOCA are central to their business strategy of extending those payments platforms into service platforms. The reality is that despite all the VISA and SMBC efforts, VISA Touch open loop transit will be just another ramen shop in the arcade, a thin client bolted on to the existing transit IC system, an EMV and QR Code reader bolted onto the current transit IC gate.

It will be at some stations and some transit operators, but it will not be everywhere. It can’t do reserve seating Shinkansen, Express Train fares, Green Seat Tickets, etc., those can only be accomplished with closed loop. The reality of open loop will be an extension of what we have now, separate gates and lanes for slower more error prone open loop, while the rest use transit IC gates because when you ride JR East, JR West and JR Central, the only choice will be closed loop Transit IC, and (eventually) QR.

And there will be no Express Mode for open loop. If there is one lesson we have learned from all open loop installations in the world to date it is this: smartphones do not support multiple Express Transit modes on the same system. As Suica, PASMO and ICOCA already have Express Mode, open loop with smartphones will always be just like the store reader payment authentication process.

The EMV payment cartel may want to be the only ramen shop in the arcade but I hope the lively variety of payment choices that flourish in Japan continue to flourish and provide new opportunities. I don’t have anything against EMV open loop, just as long as the EMV consortium partners play fare fair with all domestic transit payment players. May all boats rise together.

VISA is actually creating more security and fraud problems by blocking Suica recharge.
People assume open loop and credit cards can do everything, but they cannot handle large complex interconnected transit and options, that’s what closed loop does best.
The VISA payment network in Japan is also limiting the amount of money user can add to Mobile Suica with Japanese issue cards. Online complaints of ¥2,000~¥3,000 weekly recharge limits are commonplace.

VISA blocking foreign issue cards for select Japanese in-app and online payments

Notice: latest VISA situation update here

SoftBank Payments network chart

When foreign issue VISA cards in Wallet stopped working for Apple Pay In-App Suica and PASMO recharge on August 5, the first people to howl in pain were Apple Pay PASMO users who suddenly couldn’t recharge with their Chase Sapphire VISA cards. Chase Sapphire users earned 3x travel points with a PASMO recharge, long time resident Suica users migrated to PASMO when JR East and VISA shut down 3x travel points in May 2021 when VISA finally signed with Apple Pay in Japan.

After confirming that my Wells Fargo Signature VISA stopped working for Apple Pay Suica recharge, I contacted Mobile Suica support. The official line: “There should be no problem with foreign issue cards, contact the card issuer.” My next stop was Wells Fargo card services support, official line: “There should be no problem with your VISA, contact the merchant.” Entirely expected of course but Wells Fargo confirm that Mobile Suica transaction attempts were not even showing on the Wells Fago system. They said it seems to be a ‘communications issue’ which meant something is not right on the VISA payment network merchant transaction authorization side. Everything was stopping there.

An Android Suica user confirmed the same non-JP VISA problem with Google Pay Suica recharge so it was larger issue than just Apple Pay. I contacted IT journalist Junya Suzuki who focuses on mobile payments. His first thought was something was going on with the VISA Japan payment network merchant acquirer side. For reference, the merchant acquirer handles transaction authorization from the merchant side, ‘this transaction is clear to send to the card issuer.’ The issuer then clears the transaction with the customer account, ‘this customer is good to pay for this charge.’

Merchant acquirer relations are very secretive, nobody knows who is the merchant acquirer is for Mobile Suica, Mobile PASMO and Mobile ICOCA though everybody is pretty sure it is the SMBC Group who are the banking group for all things VISA in Japan. Maybe they were tightening online transaction security…or something else. Suzuki san checked his sources and had this to say:

An acquirer made the decision stopping handling cards issued in other countries…In addition, that means JRE doesn’t know what’s happening on this problem.

In a his Japanese article he described JR East as a ‘victim’ of a situation forced by VISA, their hands are clearly tied. VISA payment network and their merchant acquirer are highly selective. For example: foreign issue VISA works fine for Apple Pay in-app purchases with the Starsbucks app, but not in-app purchase with JR East for Suica recharge. If foreign VISA cards were insecure, VISA would be stopping all In-App and online transactions, but they are not. This means the ‘security concerns’ excuse doesn’t wash, it’s a ruse for something else.

Security and Apple Pay Enhanced Fraud Prevention
It’s helpful to examine the impact of phishing and other security attacks targeting NTT Docomo, Line Pay, PayPay and other QR code mobile payment service users in late 2020, and JR East online service users (Mobile Suica, JRE POINT, Eki-Net and VIEW card) in early 2022. Security responses were varied and vague. Companies like to say they value customer security but hardly provide details of what they’re doing about it. Security details hashed out between the card brands, merchant acquirers and merchants are secret non-disclosure territory.

Japanese credit card issuers responded by upgrading to EMV 3-D Secure v2 (3-D stands for three domains: the merchant acquirer domain, the issuer domain, and the interoperability domain), for non-digital wallet browser and mobile app payments. EMV 3-D Secure is the EMV e-commerce browser and app authentication tokenization specification with the card brands using their own naming and implementing merchant support in their respective payment networks.

In addition to adding 3-D Secure v2 in their Mobile Suica and Eki-Net apps, JR East has beefed up security to fight Mobile Suica phishing attacks with tighter monitoring of Suica App recharge with the app registered credit card…not Wallet In-App recharge. It’s important to understand this key point:

  • 3-D Secure has nothing to do with Apple Pay and Google Pay, they and all other digital wallets like Samsung Pay, Huawei Pay, etc., do not use it. They have their own tokenization scheme. This is a common online misconception. Japanese issue VISA (and everything else), foreign issue Mastercard and Amex cards work for Apple Pay Suica • PASMO • ICOCA recharge without problems, without 3-D Secure.

Domestic security issues do not apply to inbound visitors adding and using Suica cards in Apple Wallet. They do not use Suica App or have a Mobile Suica account. And yet VISA seems to be using domestic security problems to block foreign issue cards for Apple Pay In-App recharge.

JR East is fighting phishing attacks with stricter Suica App registered credit card use monitoring. Suspicious can lead to Suica being locked by JR East for credit card recharge but cash recharge is always available.

The tokenization that Apple Pay, Google Pay, Samsung Pay and similar digital wallets use is highly secure, some say more secure than EMV 3-D Secure tokenization. Despite this, Apple has been making some changes to Apple Pay to enhance security for online and in-app purchases, at the behest of VISA. Apple Pay quietly launched Enhanced Fraud Protection in April 2022 when Apple Cash switched from Discover to VISA. The updated Apple Pay and Privacy text added a new section:

For cards with certain enhanced fraud prevention, when you attempt an online or in-app transaction, your device will evaluate information about your Apple ID, device, and location if you have enabled Location Services for Wallet, in order to develop on-device fraud prevention assessments. The output of the on-device fraud prevention assessments, but not the underlying data, will be sent to Apple and combined with information Apple knows about your device and account to develop Apple Pay transaction fraud prevention assessments. These transaction fraud prevention assessments may be shared with your payment network, together with a shipping address identifier and IP address if available, in order to prevent fraud at the time of transaction. The shipping address identifier differs per payment network and may be used to confirm whether shipping addresses for different transactions using a particular card on your device are the same in a way that does not reveal the underlying address. You can check whether a card has this enhanced fraud prevention at any time by going to the back of your payment credential in Wallet. To prevent the sharing of fraud prevention assessments with your payment network, you can select another card.

Apple Pay & Privacy

This means that Apple Pay ‘might’ share iPhone/Apple Watch location information when making online or in-app purchases. So far VISA cards are the only ones that have Enhanced Fraud Protection but it doesn’t seem to apply to all VISA issue cards and it’s hard to tell which VISA cards use it.

Does enhanced fraud prevention have anything to do with Apple Pay Suica and PASMO recharge not working for foreign issue VISA? The short answer is no, but it’s a background development to be aware of because: 1) it’s limited to online and in-app purchases, 2) VISA is pushing for ‘fraud prevention assessments’ so they could obtain device location information and more. Only after VISA started pushing this agenda did we start having recharge issues with Apple Pay In-App payments.

The VISA open loop power play
So we circle back to foreign issue VISA use in Japan again. Why are cards cleared for Apple Pay, cards that worked fine up until August, not working? The timing is perfect when you also consider that VISA is heavily promoting ‘VISA Touch’ EMV contactless and open loop transit in Japan as a challenge to the home grown FeliCa based Transit IC card system. It’s very convenient for VISA Touch open loop marketing purposes when Apple Pay Suica and PASMO are kneecapped as easy payment and transit options for inbound visitors.

VISA has a history of not playing nice with Japanese stored value cards on mobile and not playing nice with Apple Pay. Japanese issue VISA cards didn’t work for Apple Pay in-app purchases and Suica recharge until May 2021, VISA waited 5 years to ‘resolve’ that issue. VISA cards still do not work with Mobile WAON and Mobile nanaco on Android and Apple Pay, they likely never will. My take is that VISA is not happy with people using VISA cards like an ATM to move money into stored value prepaid cards for making payments, earning points, etc., that are not VISA.

VISA has played hardball with Apple Pay in the Japanese market before, they are doing so again. Perhaps they refuse to be an ATM-like recharge backend for Japanese e-money cards…unless they also get ATM-like lending rate transaction fees. They certainly will use the opportunity to promote open loop VISA Touch and Stera Transit at the expense of Mobile Suica market and mindshare. The real question: is VISA making their own market opportunity here? I say they are not playing fair, as monopolies often do.

Examining VISA’s moves in the Japanese market proves one thing: payment network issues are never simple or solved quickly because they often come down to market politics. VISA has never played nice with Apple Pay in Japan since the very beginning, they continue to do so. At the very least we can mark this down as another skirmish in the ongoing digital payment turf wars.

This post was originally posted 2022-08-08 and has been updated to reflect a changing situation. The post date reflects the latest major update.

Non-JP VISA cards cannot be used for select Apple Pay In-App payments for Mobile Suica, Mobile PASMO, Mobile ICOCA and Apple Pay online payments for Universal Studio Japan advance tickets.

The Apple Pay EMV Express Mode Security Trade-off

The Practical EMV Relay Protection paper authored by Andreea-Ina Radu, Tom Chothia, Christopher J.P. Newton, Ioana Boureanu and Liqun Chen, outlines a potential weakness with VISA cards when used with Apple Pay Express Transit. The BBC reported the issue which was then widely reported on Apple news sites. The authors and the BBC both frame the security issue as known by Apple, who say it’s a VISA system problem, and VISA who say the hack is only a lab project, not a real world problem. Ionut Ilascu on BleepingComputer had a concise summary:

The tests were successful only with iPhone and Visa cards. With Mastercard, a check is performed to make sure that a locked iPhone accepts transactions only from card readers with a transit merchant code.

Trying the method with Samsung Pay, the researchers found that transactions are always possible with locked Samsung devices. However, the value is always zero and transport providers charge for tickets based on data associated with these transactions.

The findings of this research have been sent to both Apple and Visa in October 2020 and May 2021, respectively, but neither fixed the problem.

Apple Pay with VISA lets hackers force payments on locked iPhones, BleepingComputer

Apple Pay uses a GlobalPlatform licensed secure element while Samsung Pay Knox technology uses a Trusted Execution Environment (TEE), it’s a flimsy apple vs orange comparison. A meaningful comparison should have compared iPhone with another secure element device, like Pixel using VISA. Because of the limited scope, it feels like an attention grabbing ploy as it involves iPhone, rather than meaningful security research.

The security paper authors concluded: “While either Visa or Apple implement a fix for the problem, we recommend users to not use Visa as a transport card in Apple Pay. If your iPhone is lost or stolen, activate the Lost Mode on your iPhone, and call your bank to block your card.” In other words, turn off the Express Transit Card option for VISA cards.

There was an interesting post on the TechRepublic site that sheds more light on the EMV for transit weakness and why VISA is the weak link. It boils down to offline data authentication (ODA) and how some card networks like VISA basically ignore it. Card companies run their payment networks how they like.

Yunusov said a lack of offline data authentication allows this exploit, even though there are EMVCo specifications covering these transactions. 

“The only problem is that now big companies like MasterCard, Visa and AMEX don’t need to follow these standards when we talk about NFC payments – these companies diverged in the early 2010s, and everyone is now doing what they want here,” he said.

Apple Pay, Google Pay and Samsung Pay apps are all vulnerable to this threat. There does seem to be a difference if a person is using a Visa card for payment instead of a Mastercard or American Express, according to Yunusov. 

“MasterCard decided that ODA is an important part of their security mechanisms and will stick to it,” he said. “Therefore, all terminals across the globe that accept MC cards should carry out the ODA, and if it fails, the NFC transaction should be declined.

Visa does not use this ODA verification at all point of sale terminals, according to Yunusov, which creates the vulnerability.

Security researcher: Flaw in Apple Pay, Samsung Pay and Google Pay makes fraud easy for thieves

This is not Apple’s problem to fix but Apple set themselves up for it.

Steve Jobs said it best: designing anything is about choices and trade-offs. The Apple Pay that launched in 2014 was designed for credit cards with bio-authentication to authorize payment transactions. This changed in 2016 with the arrival of Suica, the first transit card on Apple Pay, and Express Transit. Express Transit and Express Mode emulate the way that transit cards and student ID are designed to work. The FeliCa and MIFARE protocols used for these cards are very secure and have a long history of safe prepaid smartcard use.

For a time, the Apple Pay security protocol design was clearly defined: EMV bank payment cards required bio-authorization for transactions while transit cards, ID cards and digital keys worked in Express mode without it. All was good until iOS 12.3 and the arrival of EMV Express Mode that changed the rules so that credit cards could act like express mode transit cards too. No more Touch ID or Face ID authentication for using Apple Pay bank cards on Transport for London (TfL) and New York OMNY transit gates. It sounded like a good idea but Apple decided to promote these services by making EMV Express Transit ‘on by default’ when adding a credit/debit card to Wallet.

As any careful watcher of the OMNY rollout will tell you, there have been plenty of Express Transit problems, especially for MetroCard users. Most of whom have no idea Express Transit was a default on option. Express Transit issues continue to crop up as they did for Apple Card users recently with problems on the Mastercard network and Goldman Sachs side. Open loop transit comes with more downsides than promoters like to admit.

When Apple activated EMV Express Transit and make it a default on, presumably to promote all kinds of Apple Pay cards for transit…cards that were never designed for it, it made Apple Pay Express Transit Mode susceptible to bank card network security issues and glitches. Instead of Apple service quality or secure dedicated transit cards, the user ends up with bank card company service level quality at the transit gate. In other words, EMV Express Transit quality is up to banks, not Apple nor the transit agency. It’s their card, they call the shots. That’s the trade-off that won’t go away.

VISA Japan finally signs on with Apple Pay (Updated)

UPDATE 5/11/21
Visa JP finally officially joined Apple Pay

Japanese credit card otaku tweeted late last night that the Apple Pay Wallet animation started displaying VISA, which it never did until now. Sure enough, VISA displays in the add card animation for the Apple Pay Japan region on iPhone, Apple Watch and iPad. Wallet only displays supported card brands for the selected Apple Pay region so the change indicates VISA JP is officially on board.

The trouble is we don’t know what that means without a press release from VISA Japan, Apple, or Japanese card issuers. So far we don’t have one. All we have are 2 questions that will hopefully be answered later today or the next few days.

Does it mean current iD/QUICPay VISA cards in Wallet fully support Apple Pay features?
A quick check adding a digital Kyash VISA prepaid card to my Wallet did not show anything new, just the same limitations: no VISA logo, no In App (Suica recharge) or web purchase support, no EMV/FeliCa dual mode. That doesn’t mean anything by itself: virtual Kyash VISA still has the limitations but it may be different for major VISA issuers like SMBC and MUFJ.

Does it mean that Apple Pay is simply matching the EMV only VISA Touch cards already on Google Pay from Sony Bank and others?
This seems more likely but also flies in the face of Apple Pay Japan encouraging ‘it just works anywhere’ dual mode EMV/FeliCa support for Wallet issue. If we don’t get announcements from VISA Japan or Apple, it could be a slow dribble of VISA Touch announcements from VISA JP card issuers, not much fun.

What I really want to know is: did VISA Japan blink, or Apple?

VISA Touch issuers currently on Google Pay

UPDATE 11/24
Somebody in Cupertino uploaded a new JSON payload to Apple Pay servers too soon. After showing in Wallet for almost 24 hours, VISA disappeared from the add card animation lineup around 6 pm JST. With a gaff this long at least we know VISA support is coming to Apple Pay Japan soon and likely with the Line Pay Apple Pay card announced in September for launch ‘later this year’.

Tokyo Cashless 2020: Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

1️⃣ Dear JR East, we need a new Suica Charge App
2️⃣ Consumption tax relief with the CASHLESS rebate program
3️⃣ Are Apple Maps and Siri really Apple Pay level ready for the Tokyo Olympics?
4️⃣ > Blame the Japan Cashless Payments mess on VISA and EMVCo, not FeliCa

Tokyo Cashless 2020 is a series covering all things cashless as Japan gears up for the big event. If there is a topic that you’d like covered tweet me @Kanjo

Japanese journalist Akio Iwata just published a piece explaining why VISA has not signed with Apple Pay in Japan. It is paywalled and I have not read it, but Japanese readers noticed similar points in my earlier piece Why Visa refuses to join Apple Pay Japan and tweeted about it. The subject is timely and worth visiting again after the events of the past year.

Some western business journalists and industry pundits look at the Japanese payments market and write about failure: the failure of FeliCa to be universally accepted, the failure of Japanese society to use cashless payments instead of hard cash. It’s a kind of cut and paste narrative construct journalism that you see too much of these days, like the recent Financial Times piece, or worse the NFC TIMES. The narrative is persuasive enough to blind some Japanese journalists as well.

This kind of reporting plays to the expectations of a certain readership, but it completely fails to capture or explain the massive changes happening in Japan right now, set in motion by the arrival of Apple Pay in late 2016. The bulk of the cut and paste argument is that FeliCa failed to take off in Japan and because Japan failed to switch to the EMV ‘world standard’, that’s why we have the current messy situation. End of story. I don’t buy this argument at all.

FeliCa was around long before the EMVCo consortium got it’s NFC act together in the early 2000s. NFC-A is Philips, NFC-B is Motorola, NFC-F is Sony. The ISO/IEC 14443 standard was supposed to include NFC-F but the ISO ultimately decided not to include it. EMVCo created the EMV contactless standard on ISO/IEC 14443 NFC A/B.

With lots of help from JR East, NFC-F was added to the ISO/IEC 10373-6 and GSMA/GCF (Global Certification Forum) TS. 26, TS. 27 specifications. From April 2017 GCF certification for all NFC mobile devices requires NFC-A, NFC-B and NFC-F support.

It is this later development, and especially the fruit of that development, Apple Pay Suica, that I believe is unacceptable to VISA and by extension EMVCo. VISA cooperates with Apple Pay in other countries because it promotes EMV, VISA refuses to cooperate with Apple Pay in Japan because it promotes FeliCa. Instead of promoting bank card use and new services VISA is promoting technology.

I have long suspected that VISA simply does not want anything to do with Apple’s support of the Global NFC standard put in place by the NFC Forum and GSMA/GCF in 2017. It’s not only Apple…VISA refuses to support dual mode (EMV/FeliCa) Docomo iD/NFC for Android Osaifu Keitai users abroad which Mastercard, American Express and JCB do. VISA simply wants to bide time until NFC Pay/EMV contactless support in Japan is everywhere and then simply ignore FeliCa (NFC-F) all together…

Unfortunately this strategy has only accomplished one thing: it provided an opening for QR Code payment system players…

Why Visa refuses to join Apple Pay Japan

My argument is simple. The VISA and EMVCo mindset is stuck in the one size fits all single mode plastic card era. This is easy to understand as the plastic card issuing business is a very lucrative one.

But like all things there is a downside: instead of embracing the full promise of global NFC digital wallets that can match the best NFC technology for the job with multiple mode cards that do everything and ‘just work’ everywhere, we have the contactless payment turf wars which are really just plastic era fighting moved to a digital arena.

Instead of pursuing the advantages of digital wallets that merge the best of native transit cards on the front end with the best of bank cards on the back end, where they perfectly complement each other, we have bank cards fighting to be everything, which they are not and will never be. This is why Apple markets Apple Card as ‘a new kind of credit card, created by Apple, not a bank.’ It’s the reason why Apple Card is Mastercard brand, not VISA.

In Japan specifically we have VISA refusing to join Apple Pay Japan and for the most part Google Pay, and VISA Japan key player Sumitomo Mitsui fighting on and off with Mobile FeliCa key player Docomo. And the result? None of this nonsense helped strengthen VISA Japan’s market position one bit. On the other hand VISA’s arrogance pulled all the other card companies down with it and provided a huge opening for the Japanese QR Code players like PayPay.

When I wrote Why Visa refuses to join Apple Pay Japan the frenzy of Japanese QR Code payments was just getting underway. Over a year later I think this conclusion is stronger than ever and the only one that explains the reality of the current market. VISA may like to think that the Tokyo Olympics is the last great opportunity to finally kill FeliCa. That’s not going to happen.

Only by setting aside the past and embracing the multimode digital future with forward looking cooperation, can VISA (and by extension EMVCo) help bring order to the payments chaos of the Japanese market. Only cooperation can deliver the promise of cashless payments to Japan, and strengthen the long term market opportunities for all players.