SUICA and e-money for transport

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Almost all Tokyo people pay train trips with SUICA near-field payment cards, often embedded into mobile phones. This report explains technical details, market size and gives a comprehensive overview of the market dynamics of mobile payments end e-payments for transport.
Version 12 of July 9, 2009
approx. 169 pages, 3 Figures, 60 Photographs, 12 Tables, pdf-format, 7 Mbyte

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SUICA and e-money for transport

  1. 1. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 20141 SUICA AND E-MONEY FORTRANSPORT By Gerhard Fasol PhD ! Version 13 of May 12, 2014 free version with selected pages. purchase full report here: http://www.eurotechnology.com/store/suica/ ! (c) 2007-2014 Eurotechnology Japan KK.All rights reserved
  2. 2. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUMMARY: SUICA AND E- MONEY FORTRANSPORT • SUICA is a IC-card system developed and owned by Japan’s JR-East railway company, and based on SONY’s FELICA wireless non-contact multi-application IC-card technology. • SUICA was developed primarily to replace mechanical ticket gates (which have many moving parts and are expensive to maintain) which are reaching their end of life and to reduce cash handling costs. • JR East is one of the world’s largest passenger railway companies withYEN 2635 Billion (US$ 27.7 Billion) in sales, of which 67.5% (YEN 1778 Billion, US$ 18.7 billion) is for railway transportation.Therefore the SUICA system in the mid to long term targets an annual transaction volume of US$ 18 billion within JR-East plus e-commerce transactions plus usage by other railway companies as a “white label” contactless ticketing platform and e-commerce platform. • SUICA and related contactless payment system, including mobile phone based variants are on the way to become one of the world’s largest contactless payment system 2
  3. 3. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 VERSION HISTORY 3 Subscribe to this report, and we will regularly send you the latest versions. ! subscription, monthly payment, you can end the subscription any time (no refunds): ! subscription, annual payment, you can end the subscription any time (no refunds): Version Date Notes 1 2 3 4 5 6 7 8 9 June 8, 2007 10 March 12, 2009
  4. 4. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 VERSION HISTORY 4 Subscribe to this report, and we will regularly send you the latest versions. ! subscription, monthly payment, you can end the subscription any time (no refunds): ! subscription, annual payment, you can end the subscription any time (no refunds): Version Date Notes 11 12 July 9, 2009 13 May 12, 2014 updates, reformat, corrections 14 15 16 17 18 19 20
  5. 5. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 LICENSE 5 • Thank you for purchasing licenses to our reports, and for your cooperation with our licensing conditions. • Only through your purchases can we continue to produce high-quality market reports from Japan • INTHE CASE OF SINGLE LICENSE: If you have purchased a single copy license of this report, you are not permitted to copy this report except for a single back-up copy • INTHE CASE OF CORPORATE LICENSE: in the case that your company has purchased a corporate license, you may distribute this report inside your company including protected corporate information servers locked to the outside, but you cannot distribute this report outside your company • ANNUAL SUBSCRIPTION: we offer annual subscriptions for a particular report, and also for all our reports in one single transaction at a great discount - please contact us for details. Corporations subscribing will receive all updates at the time of publication, so that you can be sure to have the latest up-to-date information • This research report comes without any warranty of any kind.The authors and Eurotechnology Japan K. K. do not warrant that the information in this report is without error, nor that the information serves any particular purpose. For legal advice please consult properly licensed legal professionals, for investment advice please consult properly licensed financial advisors.Trademarks mentioned are the property of their owners.
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  6. 6. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 AGENDA • What is the meaning of SUICA? • Competitive landscape of Japan’s emerging electronic cash and electronic payment industry • What is SUICA and why. • SUICA business models • Suica statistics, history and time line • SUICA and PASMO • Major electronic payment systems for transport: • PASMO • Icoca • Pitapa • Toica • The SUICA platform • SUICA e-tickets and mobile e-tickets for First ClassTravel e-Tickets • SUICA as prepaid electronic cash • Case study: SUICA for luggage lockers and parcel services • Mobile SUICA - SUICA for mobile phones • “ExpressYoyaku” and “ExpressYoyaku IC service” for Shinkansen express trains • Case study: mobile phone payments and reservations for regional lines - Odakyu-Romance car • What are wallet phones and why • Felica Networks • SUICA’s technology:The FELICA platform • FELICA and Mifare • Summary 6
  7. 7. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 WHAT ISTHE MEANING OF “SUICA”? • SUICA is one of the foundations for JR-East’s business (JR-East’s main business are of course railway operations) • JR-East says that SUICA stands for: • Super • Urban • Intelligent • Card • In Japanese language “suisui” is an adverb meaning: smoothly, unhindered, therefore “sui” in “SUICA” reminds of moving smoothly • (In Japanese language “suica” means “water melon”, Japanese people are fond of eating cooled water melons “suica” during the hot summer season) 7
  8. 8. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 COMPETITIVE LANDSCAPE OF JAPAN’S EMERGING ELECTRONIC CASH AND ELECTRONICS PAYMENT INDUSTRY 8
  9. 9. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 WHAT IS SUICA AND WHY 14
  10. 10. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 PROMOTING SUICATO REPLACE CASH • JR-EAST heavily promotes SUICA cards for payments beyond rail travel to expand JR-EAST business into new areas, such as retail • This kiosk insideTokyo’s Ueno Station is decorated to promote SUICA payments • Characters are often used in marketing in Japan to bind consumers emotionally to abstract products such as SUICA. SUICA uses a penguin character 15
  11. 11. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA =THIRD GENERATION FARE COLLECTION 19 Generation Period Technology 1st Generation Before 1970s Paper tickets, cash, collection by hand, visual inspection 2nd Generation 1970s-201x Magnetic tickets 3rd Generation From 2004 Multi-application wireless non-contact IC cards
  12. 12. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA BUSINESS MODEL 22
  13. 13. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 JR EAST –THE WORLD’S BIGGEST RAILWAY COMPANY • JR East is a private railway company with net profit margins around 5%. • SUICA is one of the most important components of JR East’s business plan for increased profitability 23
  14. 14. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 JR-EAST 24 JR-East JR East is one of the largest passenger railway companies in the world Founded April 1, 1987 as a consequence of privatization of Japan’s former National Railways JNR Railway track length Shinkansen (high speed): 1052.9km Total track: 7526.8km Headquarters Tokyo-Shinjuku Stock Exchange TokyoTSE 9020 Number of employees 61,900 (April 1, 2008) Major share holders JapanTrustee Services Bank (6.61%) MasterTrust Bank of Japan (4.93%) Bank ofTokyo Mitsubishi UFJ (3.13%) Sumitomo Mitsui Banking Corp (2.63%) Mizuho Corporate Bank (2.50%) Mizuho Bank (2.50%) JR East Employee Shareholding Assoc. (2.46%) Nippon Life (2.00%) Dai-Ichi Life (1.78%)
  15. 15. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 JR-EAST 25 JR-East Financials (projection for FY2010, ending March 2010) Consolidated Sales Transportation: YEN 1778 Billion (US$ 18.7 billion) (67.5%) Station space usage YEN 416 Billion (US$ 4.4 billion) (15.8%) Shopping Centers: YEN 232 Billion (US$ 2.4 billion) (8.8%) Other: YEN 209 Billion (US$ 2.2 billion) (7.9%) Total YEN 2635 Billion (US$ 27.7 Billion) (target FY ending March 2010) Ordinary income YEN 246 Billion (US$ 2.6 Billion) Ordinary profit margin = 9.3% Net income YEN 134 Billion (US$ 1.4 Billion) Net profit margin = 5.1%
  16. 16. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 QUANTITATIVE DATA AND TIME LINE 29
  17. 17. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 “TOUCH AND GO” • During the testing and planning of the SUICA system, one question was how the payment transaction should be planned. • Should the reader/writer act at a distance, i.e. when a person walks with the SUICA card in his/ her pocket or in his/her bag, should the reader/writer respond • Should it be sufficient to move the SUICA card at a distance from the reader/writer • Should it be necessary to press the SUICA card onto the reader/writer surface? • During the testing it was found the the best method was “touch and go”, i.e. the user touches the reader/writer surface with the SUICA card (which may be inside the wallet or a card holder) to allow sufficient time for reliable data communication between IC-card and the gate.The ticket gate is shaped to enable reliable communication. • Thus “Touch and go” was selected also as a marketing slogan for SUICA 36
  18. 18. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 PASMO 37
  19. 19. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 MARKETING PASMO: PASMO-ROBOT CHARACTER • Marketing in Japan often uses characters associated with products or services • SUICA uses a penguin • Pasmo uses the “Pasmo robot character” • The Pasmo robot character has the following characteristics: • And antenna on the head to catch the latest information • A PASMO card in his right hand • A pocket on his chest to stow away his PASMO-card • And tires on his shoes, which can take him anywhere • Characters are aimed to create emotional links to abstract products such as SUICA and PASMO 44
  20. 20. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 REGIONAL SYSTEMS 45
  21. 21. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 THE ICOCA SYSTEM 46
  22. 22. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 THE PITAPA SYSTEM 50
  23. 23. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 PITAPA REMOTE PASSENGER MONITORING SERVICE 54
  24. 24. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 FROM AUGUST 1, 2006: JOINT USE 
 OF SUICA, ICOCA AND PITAPA 56
  25. 25. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 TOICA INTHE CHUBU/ NAGOYA AREA 59
  26. 26. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 THETOICA CARD SYSTEM • Technology: FeliCa (SONY) • Operator: JR-Central (= JR-Tokai) Railway company in the Nagoya area • Functions are almost the same as the SUICA card in the Tokyo/Yokohama/Chiba + Sendai areas and Icoca in Kansai • Introduction: 2006 60
  27. 27. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 JAL CARD SUICA:
 COMBINING SUICA WITH 
 THE JAPAN AIRLINES MILEAGEBANK 61
  28. 28. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 THE SUICA PLATFORM 64
  29. 29. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA FOR FIRST-CLASS TRAVEL E-TICKETS 71
  30. 30. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA FOR FIRST-CLASS E-TICKETS 74
  31. 31. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA AS ELECTRONIC CASH 75
  32. 32. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA AND PASMO 
 AS A SECURE ID IN COMBINATION WITH PAYMENT
 
 CASE STUDIES:
 SERVICE UNITS FOR LEFT LUGGAGE AND POSTING OF PARCELS 89
  33. 33. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUIPO = SUICA POSTER
 AN OPT-IN INTERACTIVE ADVERTISING SYSTEM 93
  34. 34. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 EZ-FELICA
 KDDI’S WALLET PHONE • for more about KDDI:
 http://www.eurotechnology.com/store/kddi/ 108
  35. 35. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 KDDI’S WALLET PHONE: EZFELICA • EZ FeliCa for train barriers 110 • W32H wallet phone by Hitachi
  36. 36. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 JR-TOKAI’S EXPRESSCARD AND EX-IC SERVICE
 
 CONTACTLESS IC-CARDS AND WALLET PHONES FOR THETOKYO-OSAKATOKAIDO-SHINKANSEN 111
  37. 37. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 ODAKYU ROMANCE CAR @CLUB
 AS ANOTHER EXAMPLE OFTICKETS BY MOBILE PHONE • RailTicket Purchase By Mobile Phone • TypicalTransaction by Mobile Phone: US$ 5 126
  38. 38. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 ODAKYU ROMANCE CAR @CLUB • The Odakyu Railway line is one of many commuter railway line networks in the west ofTokyo an extends out into the Hakone resort areas. • The Odakyu Railway operators reservation-only “Romance Car” trains (shown on the left) which are much more comfortable then the usual almost standing-room only commuter trains.“Romance car” trains are used by commuters in the evening to return home more comfortably, for shopping trips, for short-distance business trips (e.g. to the high-tech R&D labs in Atsugi) and to visit the Hakone resort area. • Odakyu is using a self-service reservation system for customers to book an purchase seats on the reservation-only Romance-Cars via mobile phone. • Although we did not find figures released by Odakyu, we estimate that 10%-20% of seats are sold mobile phone. 127
  39. 39. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 MOBILE SUICATECHNOLOGY: FELICA BASED WALLET PHONES 132
  40. 40. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUICA’STECHNOLOGY:
 THE FELICA PLATFORM 138
  41. 41. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SECURITY AND PRIVACY 147
  42. 42. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 FELICA FOR TRANSPORTATION:
 OCTOPUS, SUICA, ICOCA… 151
  43. 43. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 FELICA BASEDTRAVEL CARDS 155 Octopus-card (Hong Kong) Travel Card (New Delhi, India) Metro (Bangkok)ez-link card (Singapore)
  44. 44. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 FELICA BASEDTRANSPORTTICKETS IN JAPAN • JR-East is the leader in introducing FeliCa based ticketing in Japan.The first railway operator to introduce FeliCa in Japan under the SUICA brand. JR-East is developing SUICA into a platform for multiple applications: prepaid electronic cash, commuter monthly passes, prepaid train travel, link with JR-East’sVIEW credit card, payment for SHINKANSEN Super Express train travel • Recently JR-East is also winning other smaller rail operators to join the SUICA platform • Other rail operators in Japan create their own FeliCa based payment platform, such asTokyu-Railways (the Seta-Maru travel ticket for theTokyu-Setagaya-line is shown in Orange below - now discontinued and superseded by the PASMO card) 156
  45. 45. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 FELICA BASEDTRANSPORTTICKETS, 
 STUDENT-IDS,AND OTHER CHIP-CARDS IN JAPAN 157
  46. 46. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 FELICA & MIFARE 160
  47. 47. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUMMARY 165
  48. 48. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 SUMMARY: SUICA, PASMO AND RELATED SMART-CARDS • SUICA is a IC-card system developed and owned by Japan’s JR-East railway company since the 1980s, and today based on SONY’s FELICA wireless non-contact multi-application IC-card technology. • SUICA was developed primarily to replace mechanical ticket gates (which have many moving parts and are expensive to maintain) which are reaching their end of life and to reduce cash handling costs. • JR East is the world’s largest passenger railway company withYEN 2635 Billion (US$ 27.7 Billion) in sales, of which 67.5% (YEN 1778 Billion, US$ 18.7 billion) is for railway transportation.Therefore the SUICA system in the mid to long term targets an annual transaction volume of US$ 18 billion within JR-East plus e-commerce transactions plus usage by other railway companies as a “white label” contactless ticketing solution. • SUICA and related contactless payment system, including mobile phone based variants are on the way to become the world’s largest contactless payment system • Today the majority of transportation companies in Japan use Felica based smart cards for contactless ticketing and many are directly compatible with JR-East’s SUICA, which is the dominating player in this field 166
  49. 49. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 MORE INFORMATION 167 • reports:http://www.eurotechnology.com/store/ • twitter: http://twitter.com/gfasol/ • website: http://www.eurotechnology.com/ • personal site: http://fasol.com
  50. 50. (c) 2014 Eurotechnology Japan KK www.eurotechnology.com SUICA and e-money for transport (13th Edition) May 12, 2014 CONTACT 168 • Eurotechnology Japan KK,Tokyo, Japan. • http://www.eurotechnology.com/ • CEO: Gerhard Fasol • Mobile +81-90-8594-6291 • Email: fasol@eurotechnology.com and gfasol@gmail.com

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