Why a Japanese public transport giant wants to return to credit cards

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If you are traveling in Tokyo, you will use the excellently developed local transport system consisting of buses, trains and subways of numerous companies and some streetcar lines. The king of the very diverse public transport payment systems there is Suica, an NFC card introduced by the region's largest rail company, JR East, almost 25 years ago. It has been continuously expanded, the FeliCa technology from Sony on which it is based has been extended to the whole country and the systems are compatible with each other. Since 2016, it has also been possible to add Suica and two other compatible systems (PASMO and ICOCA) to Apple Wallet on the iPhone, and Suica is now also supported by Google Pay, albeit not on all Western cell phones. And yet some Tokyo railroad companies believe that the region needs to move away from the isolated solution. Their idea: a credit card with an NFC chip or a smartphone with a stored NFC credit card should be enough. So will it soon be bye-bye, Suica?

Touch in and touch out by credit card

A visit to the Tokyu Corporation in the Shibuya district should provide clarity. The soon-to-be 115-year-old private railroad operates eight lines in the Tokyo area alone, connecting Yokohama with Shibuya, among other places. It is also a major property owner in the central district and has a stake in the famous Shibuya Scramble Square tower, which houses the Shibuya Sky observation deck. "We are a private railroad company that mainly operates in the area from Tokyo to Kanagawa, but in addition to the transportation business, we are also heavily involved in urban development – and I think this is a major difference to JR East," says Tsukasa Sekine, responsible for the Customer Experience division. This means that Tokyu can think further ahead than JR East, which emerged from the state-owned national railroad company JNR.

The new payment model that Tokyu is planning is similar to what is known in the West. London, for example, has shown the way in Europe: In addition to paper tickets with magnetic strips and the NFC-based Oystercard, tap-to-go (aka tap-to-ride or tap-to-pay) has become established there, which is simply called "contactless" in the British capital. You simply have to hold your existing NFC-enabled credit card (or an NFC-enabled smartphone with Apple Pay or Google Pay and a stored credit card) up to the platform barrier (touch in) and use the same card to open it again at your destination (touch out). Suica follows exactly the same pattern, with the difference that it is a proprietary card system that has not caught on in the West. Tap-to-go, on the other hand, seems to be gaining ground worldwide: after London, New York has now also adopted this system.

Credit cards offer economic incentives

The platform barriers (fare gates) in Tokyo and many Japanese cities are already extremely unusual. In addition to Suica, they also accept magnetic cards from ticket machines, which are often required for long-distance trains such as the Shinkansen, and, depending on the rail company, QR code readers designed for app tickets –, a technology that was invented in Japan. This is exactly where the regular tap-to-go card reader comes in. This creates real monster machines (see picture), as Sekine admits. "The frequency signals for FeliCa and Tap-to-Go are different. It was therefore not possible to use the same contactless payment system, which meant that our machines looked – not very compact." This is unlikely to change any time soon, as Tokyu also wants to offer more than just one system. "We are not thinking of switching from Suica to tap-to-go at all. The IC cards [generic term for FeliCa, editor's note] have their good points, so we want to offer both IC cards and the new tap-to-go services."

The reasons for Tap-to-Go are nevertheless attractive. According to Sekine, there is a demand among Japanese customers to have to handle fewer cards (or apps). "The second reason is that we wanted to be able to satisfy the wishes of tourists visiting Japan. It's not that our train lines are particularly used by foreign visitors, but the entire Kanto region [where Tokyo is located] benefits from this." In fact, there have already been positive experiences in other areas flooded with tourists, such as Kansai, where Kyoto is located. Finally, Tokyu also offers its own credit card, which comes with its own loyalty program. It would therefore be possible for the company to also offer this for train journeys –, something that JR East has long been doing with Suica ("JRE Point"). And, of course, the company is also interested in the data that customers generate with the payment cards.

A look at the West

Tokyu Corporation is not the only company interested in tap-to-go. Since last year, other companies in the Tokyo area have also started a large-scale trial and equipped 36 stations with the technology. These included the important station at Haneda Airport operated by Keikyu Electric Railway and a total of 26 stations on the Oedo and Asakusa lines operated by the Tokyo metro company Toei Subway. The major competitor Tokyo Metro – will provide more information on this interesting company, which also operates in Europe, in a later article – plans to accept contactless credit cards from March. The railroad company Keio is also interested. The Tokyo Metropolitan Bureau of Transportation is also of the opinion that the introduction of Tap-to-Go would make it easier for foreign tourists who do not have IC cards to use public transport. The aim is to introduce this function at all Toei subway stations in the future after they have proven themselves in an operational trial, the company told Japanese broadcaster NHK.

While Japan was one of the world's leading countries in Suica with the introduction of electronic (fare) money, it is still lagging behind with tap-to-go. According to Sekine, they have therefore looked at their introduction in the UK, i.e. London, and Singapore. "We have learned a lot from these countries." They see themselves in a key position to ensure that Tap-to-Go really works throughout the region. "It wouldn't be good if we were the only company offering the service in the Kanto region."

Creative chaos at the fare gate

At the moment, as mentioned, there is a kind of creative chaos at the Fare Gate. The platform barriers have become huge devices in order to cover all possible systems. "The more services that are offered, the more complex the system becomes and the more it costs to deal with. Our platform barriers are an example of this," admits Sekine. However, this also means that customers who understand the system and use it correctly have a wide choice. So there is competition in the public transport payment methods –, something that is unheard of in Western countries. Incidentally, Tokyu Corporation itself is not entirely uninvolved in the complexity of the system. It has its own web app called QSKIP, which can be used to buy tourist tickets (for a Japanese target group) or entire network maps, which are simply not available for Suica or Tap-to-Go. The ticket is validated using a QR code reader.

But who knows whether the system will remain the same. The powerful Suica parent company JR East would like to overhaul the entire system and get rid of the fare gates altogether. As part of the ten-year "Suica Renaissance" plan, the company would like to use GPS positioning to calculate the route. Then no one will need to take an IC card or a cell phone out of their pocket. In addition, the plan is to make Suica a universal means of payment and, for example, finally increase the maximum amount that can be topped up from just 20,000 yen (just under 127 euros).

(nie)