Written by Contactless e-Money in Japan (FeliCa chips)
| Operator | Scheme | Cards | Monthly Transactions |
POS Terminals |
| bitWallet | Edy | 52.2 | 26 | 175,000 |
| JR East | Suica | 28.4 | 28.5 | 80,800 |
| PASMO | PASMO | 14.2 | 12.3 | 68,000 |
| Seven & i (7-11) | nanaco | 9.5 | 32 | 27,700 |
| Aeon | WAON | 13 | 32.9 | 47,000 |
| JR West | ICOCA | 5.1 | 1.27 | 68,000 |
| Cards and monthly transactions are in millions. Card figures include applications on contactless mobile phones. Transactions for Suica, PASMO and ICOCA do not include fare collection. Contactless credit services, such as iD and QUICPay, are not included. Source: Sony Corp., Nikkei (1/10). |
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I also looked up the latest consumer responses on “What Japan Thinks” and found that (2/10) some 58% of Japanese consumers carry at least one of these cards and that their three main reasons for using them are:
- Speed, as you might imagine.
- Points! It turns out that many of the e-purse schemes offer rewards, presumably funded by the float and/or cash displacement at the retailer POS.
- Coin replacement, because consumers don’t want pockets full of small change.
As to where they use these products, the top two usage points are transit and convenience stores, just as you might expect. Hopefully, in a couple of years’ time, this will be the same in London. One thing that did strike me as off the curve was that only a quarter of consumers reported using their e-purses at vending machines. I would have expected this to be higher, but perhaps that’s reflecting my own spending patterns: maybe other people don’t buy as many chocolate bars and Cokes on the Underground as I do. What do all of these numbers mean? Well, if you exclude transit, they mean that usage is still low.
The Japanese market is often cited as a success story by proponents of contactless and mobile contactless solutions, where consumers are estimated to make 1.8 contactless retail transactions per month per contactless device, and 4.7 customers make a contactless transaction on each contactless point of sale (POS) per day.
[From Finextra: Gartner takes a swipe at Citi mobile trial data]
Two transactions per consumer per month on average? They’re not going to replace cash any time soon with that kind of penetration. What’s the problem? Well, the POS terminals are expensive (we’ll come back to that below) and, more of a barrier I think, there’s no equivalent of “Square”, so you can’t use e-purses to pay each other. We can learn from this and do better in other markets that are moving to contactless, I’m sure.
The other interesting figures from Japan (via Forum friend Chris Skinner from the FS Club last week) are that nearly three-quarters of all handsets now have the proximity interface, that ten million of those handsets have active “iD” applications
NTT DoCoMo has already been through all this, and spent a fortune getting payments off the ground when the Japanese regulator insist that it open its services to rival operators in Japan. Deprived of its unique edge NTT could no longer use this as a way to capture more market share, and made significant losses on the service introduction. This is why it has introduced the DMCX card service in order to differentiate its payment systems from other cellcos.
[From NTT DoCoMo hits 10m mobile wallet accounts – Rethink Wireless]
This isn’t just about e-purse. The DoCoMo mobile wallet product “iD” can contain many different products and services. The payment product referred to here, DCMX, is a credit product and the wallet also stores the kind of coupons and loyalty applications that we hear about at most NFC conferences.
“For shopping, I use it everywhere I can … and I also use coupons such as Gourmet Navigator Touch wherever possible,” Tada said, citing services at some restaurants that offer coupons and free gifts when customers wave their phones at reader terminals. NTT DoCoMo began the so-called “wallet phone” service in 2004 and rivals KDDI Corp and Softbank Corp have followed suit.
[From Cellphone shopping makes wallets redundant in Japan – USATODAY.com]
The proximity interface, by the way, is the Sony Felica contactless interface. I understand that there are some suggestions that some players are unhappy with this particular NFC approach and want to switch to the more generic NFC approach. This is partly to develop interoperability with international services but partly because they view the Sony product as expensive and inflexible. Having said that, the Sony chips are still being built into all sorts of devices, my favourite being (as I’ve noted before) the TV.
The announced KDL-series full HD LCD models on show, ranging from 32″ to 52″ and approx. $1,500 to $4,500 respectively, will be shipping this April with the Felica RFID reader/writer embedded in the remote control. Soon we will see Japanese handsets enabling transactions through the TV!
[From Sony Bravia TV Adds Felica NFC Function by Wireless Watch Japan]
So what are the key lessons for the moment? The role of transit is surely the key point, but the success of the DCMX product is also important: it appears that people are happy to use a line of credit that appears to come from a telco and, what’s more, is a line of credit attached to mobile handset-based identification (in fact, the DoCoMo scheme is called “iD” and DCMX is the name of their own-brand credit product: iD is open to other organisations, subject to commercial agreements, obviously).
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]
