In almost any busy retail space, a harmony of blips, beeps and hums can be heard as customers slide cards and mobile phones across the colorful pads of smart-card readers to pay for transactions. Although primarily used for transportation in other countries — Hong Kong’s Octopus card and London’s Oyster cards are well-known examples — here in Japan, the automated chip technology goes even further, starting with FeliCa-enabled mobile phones in 2004.
Since then, a whole slew of smart card networks have been born, giving consumers the option of making speedy one-touch purchases. Popular because they’re convenient — no fumbling with change, no signing receipts — and can be charged with either cash or credit card at a kiosk or at home, their use has become so utterly normal in major metropolitan areas that even children carry them.
According to a Nikkei Trendy Net survey, of 15,092 people, 72% use some sort of smart card, although this seems to be mostly for transportation. The next most likely place for someone to use a card is the convenience store, with 56.5% of card carriers swiping to purchase small items such as bottled beverages, gum and newspapers. However, less than 11% of users said they pay with electric money at department stores and restaurants, a sign that the cashless trend is not as prolific as it is at first glance.
But one city is hoping to change this. In March 2007, the city of Nagoya took a major leap toward becoming a cashless society when it installed the QUICPay electronic money system in over 1000 stores and restaurants in the shopping areas around Nagoya Station. This would be a fruitless feat if it wasn’t for one of the city’s major tenants, Toyota. The auto maker, which is stationed in the city’s Midtown Square complex, equipped all employee ID cards with the QUICPay chip and began encouraging their employees to swipe for all purchases before, during and after work.
Smart Card UsersConvenience stores see the highest volume of smart card users.
While a future of gazing past cash registers with not a bill or coin in sight sounds fantastic, there are several problems with the system. One underlying issue, made all the more real with recent bankruptcies of once infallible financial institutions, is the lack of insurance or guarantee in the event that a company managing users’ money goes under.
A larger, more apparent problem is the sheer volume and variety of cards available and their lack of compatibility. Although the above-mentioned survey covers over 10 cards, and transportation mainstays Suica and PASMO have become almost interchangeable, the rest offer little in terms of compatibility. PiTaPa, iD, QUICKPay, Smartplus; a tongue-twister list of names makes for a colorful wallet as shoppers must take out a Nanaco for 7-Eleven and a WAON to shop at Jusco. Well-known smart-card giant Edy is by far the most popular, with 41 million Edy-enabled cards accepted at over 75,000 locations. But this does not come close to making the system universal, and it lacks the most essential function — use on trains.
Seeing this problem, the Japanese Automatic Merchandising Association (JAMA) has begun to cut a path through this smart-card jungle. Teaming up with a company called MP Solutions, NEC, Ito-en and other vending machine manufacturers, JAMA has started to develop a smart card reader that accepts up to eight different types of cards and plans to install them on 500,000 machines by 2010. While this is undoubtedly a leap in the right direction, consumers are left to wonder what took so long and why the technology will not be more widespread, as their wallets stretch to accommodate even more plastic.
© Japan Inc
10 Comments
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dijapan
Why not just let us use our bank cards? Back home I swipe/scan my bank card at gas stations, department stores, restaurants, supermarkets, etc.
Ah, Japan. Advanced yes, but so far behind....
Ultradude
With these Japanese pre-paid cards, anyone can use them: tourists, young children, homeless, etc; you don't need a bank account. Also, if you lose them, only the money on the card is gone, generally a small amount. Losing a bank card is slightly more serious. However, I see you your point, you should be able to use credit/debit cards anywhere, too. Let the consumer decide the convienience vs risk.
Kawasaki
I have a better solution for myself - I just use cash. Works every time...
electric2004
JAMA: A perfect name for an organization which stands in the way.
Snolygoster
dijapan, I couldn't agree more.
In the states, I've been able to use a credit card or my bank debit card to pay for just about everything for a long time. They're accepted almost everywhere now, from small convenience stores to fast food restaurants to car dealerships and everywhere in between.
It's hard to take a retailer seriously if they don't have a credit/debit card processing machine. It's made more convenient for the retailer because they both use the same network now (debit cards that carry Visa/MC logos use those networks to process transactions, cutting down on overhead for the business).
Ultradude- Because transactions are more reliable and easier for their clearinghouses to process, banks love them. They encourage the cards' use by making customers completely non-liable for unauthorized use in the event of theft or loss of the card.
I seriously don't understand why Japan, the country with the fastest data connections in the world, is still so reliant on paper money.
jonobugs
I can understand some of the hesitations. In Canada there were rampant problems with fraud, especially with people using bank cards. Using a special code didn't help much either because thieves found ways to counter that. Small readers would be substituted for the real reader and would steal the password as well as the electronic signature which would allow the thieves access to that persons bank account without them ever knowing. So, until that problem is solved, it's safer NOT to use magnetic cards.
tripank
A wonderful idea new see your own money let the banks and the government handle everything. The governments and the banks are doing such a good as it is why not give them your children too.
tripank
It is a "brave new world" "1984" is
Smythe
I take it this is the "pre-paid credit card" thing that did not go over well in Canada & was soon dropped for the normal Visa or Master-Card, to shop cards OR the "bank debit card" that Cdns went strong over & arill strongly used.
We have a safety think going on for those filling up with fuel stations in the Province of B.C. Cdn. One has to pay in ADVANCE for the fuel they think they will use AND then the fuel pump is good for the amount paid for.
If one made an error of paying for to much fuel, & the tank is filled up, the fuel station will hand back the amount not used in CASH.
All because a 21 yr old fuel station attendent tried to stop some one from driving off without paying, & so the death of the fuel station attendent. So the changes in how we pay in advance for the fuel we feel we will need.
MANDUDE
dijapan, you got it. bought a plane ticket home last month (almost 200,000) and they would only accept cash- or their own company credit card. I use credit cards for as many things as possible since I get between 1% and 2% cash back which is nice on big purchases. I tried to apply for their credit card to get free hotel stays and flights... then they asked what my "Japanese passport" number was- are you kidding me?