Apple Inc.’s proud announcement that its new iPhone could be used to buy goods in a single swipe left customers nonplussed in Japan, where mobile payments have been normal fare for a decade.
A type of Near Field Communication chip, known in Japan as FeliCa, was introduced to the Japanese mobile market in June 2004 and has been implanted in almost all phones sold here since.
The iPhone has been one of the few chipless exceptions, something that will change when the latest models hit Japanese shelves on Friday.
Ten years ago, the charismatic Takeshi Natsuno, who was then multimedia services director of mobile phone operator NTT Docomo, extolled the benefits of swapping cash for cellphones.”When I leave my house in the morning all I take with me is my phone, which lets me do everything — pay, take public transport — simply by swiping a special reader in shops, stations or airports,” he said at the time.
FeliCa was conceived by Sony way back in 1989 and first used in the Hong Kong underground railway system in 1997, in a card known as Octopus, inspiring cities around the world to use similar technology in their own contactless transport cards.
Japan adopted an electronic payment system for trains in 2001, starting with the network of East Japan Railway (JR East), which serves the Tokyo region.
The success of the cards led to the integration of contactless chips with Japanese mobile phones and lifestyles with the creation of a group of apps known as the “mobile wallet” by NTT Docomo in 2004. Thousands of readers are can be seen in convenience stores, vending machines, office buildings and stations and airports across the nation.
Contactless payments are a normal part of everyday life for many Japanese, said Michael Au, president of the South Asia and Japan branch of digital security firm Gemalto.
“Japan has the most developed contactless infrastructure in the world and customers are already familiar with using their mobiles for contactless services,” he said.
Sony Corp., which said it has delivered more than 530 million FeliCa chips for cards and 245 million for mobile phones, is now responsible for making around 100 various services based on the technology compatible with each other.
NFC was approved as a standard in 2003, as the fruit of cooperation between Sony and Dutch company Philips Semiconductors, now known as NXP Semiconductors.
“NFC has not reached the level of popularity or integration into current systems that FeliCa has in Japan. FeliCa paints a picture of NFC’s goal and how to get there,” says a site providing information about NFC.
That the huge success at home hasn’t translated into sales abroad is a common theme in Japan, where companies tend to focus on the large home market and its particularly fussy consumers.
This has led to a phenomenon dubbed the Galapagos syndrome. Like the distinct evolution Charles Darwin cataloged on the remote Galapagos Islands, technology in Japan has a tendency to develop independently from the rest of the planet and is thus incompatible with foreign standards.
The most well-known example of this is the mobile phone, where Japan was initially far ahead and had full-color flip-top models in the late 1990s. These units were Internet-capable as far back as 1999. But the technology ossified as the market saturated, turning Japan into a relative latecomer to the smartphone market.
This “Galapagos-ization” has also been witnessed in the video game, car and audio markets, with products such as the MiniDisc, compact cars and manga-inspired games all failing to make the same headway overseas as in Japan.
Natsuno, now a professor at Keio University in Tokyo, says Japan should have looked into overseas expansion of its cutting-edge contactless payments system much sooner. The fact that “we didn’t extend this concept to the rest of the world” means that now Japan “can’t do anything” about Apple’s bragging over their innovative iPhone 6 with an NFC chip, he said.