Mon, Sep 15, 2014 - Page 13 News List

Apple lags far behind Japan on mobile payments

‘GALAPAGOS-IZATION’:Japan has had NFC payment-enabled devices in use for 10 years, but has a tendency to innovate products only intended for its own market

AFP, TOKYO

A model holds Sony’s prototype model of the new smart card with an NFC chip, right, which has an LCD display enabling users to check their account balance, electronic coupon and other electronic information and a wrist-watch shaped device in Tokyo, on July 17.

Photo: AFP

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 contactless payments have been normal fare for a decade.

A type of Near Field Communication (NFC) chip, known in Japan as Felica, was introduced to the Japanese mobile market in June 2004 and has been been implanted in almost all phones sold in the country since.

The iPhone has been one of the few chipless exceptions — something that will change with the new models to hit Japanese shelves on Sept. 19.

Ten years ago the charismatic Takeshi Natsuno, who was then multimedia services director of Japanese mobile operator NTT Docomo Inc, 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 Corp 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 JR East network, which serves the Tokyo region.

The transport cards’ success led to the integration of contactless chips into 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 now installed in convenience stores, on vending machines, in office buildings, and at stations and airports in Japan.

Contactless payments are a normal part of everyday life for many Japanese people, 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, which said it has delivered more than 530 million Felica chips for cards and 245 million for mobile phones, is now responsible for making about 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, which is now known as NXP Semiconductors NV.

The huge success at home that has not translated into sales abroad is a common theme in Japan, where companies have tended to focus on the large home market and its particularly fussy consumers.

This has led to a phenomenon dubbed the “Galapagos Syndrome.” Technology in Japan has a tendency to develop without reference to other parts of the planet — similar to animals found on the remote Galapagos Islands — and is then incompatible with foreign market standards.

The most well-known example of this is the mobile phone, where Japan was initially streets ahead and had polyphonal, full-color flip-top mobile phones in the late 1990s.

These units were Internet-capable as far back as 1999.

However, the technology ossified and Japan was a relative latecomer to the smartphone market.

This “Galapagos-ization” has also been remarked 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.

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