- Hey, guys.
This is why Apple Pay is all that Ken talks about
every day at the office.
- It's the future. - Oh my,
- It's so easy.
- You have to share my pain, though.
- What do you mean?
(beep)
I think it's genuinely the best thing
that Apple's doing right now.
- Whoa.
- Like, low key. - Whoa.
- Like, very low key.
One of the main reasons as to why I like Apple Pay
is because I legitimately use it on a daily basis,
especially now that more and more places are accepting it.
This means carrying around less credit cards
and, well, taking around more receipts and stamp cards.
Not only are more and more businesses taking Apple Pay,
but as of late, point of sale NFC readers
are getting faster and more consistent.
I'm finding myself fumbling with my phones less and less
since it just works super well now,
especially for more mundane transactions, like transit,
the dream of leaving your wallet at home
is coming closer and closer to reality.
- So, when we thought about Apple Pay,
we really thought broadly about wanting to do services
that replace the wallet.
- [Ken] This is Jennifer Bailey,
a VP at Apple that oversees Apple Pay,
chatting about it at a conference talk in 2018.
- It seems like the big opportunity here
is to disrupt the credit card industry.
- We don't sit around and think about,
oh, what industry should we disrupt,
we think about what great customer experiences
can we develop?
(record scratches)
- [Ken] Wait, Apple doesn't want to disrupt
the credit card industry?
- We're introducing a brand new service, Apple Card.
(audience applauds and cheers)
- [Ken] Okay, there might be some conflicting
PR speech going on here, but I think what Bailey says
in this chat has some merit on the business end
that anyone can understand.
- It's all actually about making people love their iPhones.
That is what, why we are doing what we do.
- So like, what do you think about all this,
because I think both of us use Apple Pay a lot.
- If you can leave your wallet at home
and have everything on one device,
you know, granted it's safe and you know that the downsides
are pretty minimal, it's a pretty interesting proposition
and I think, I mean, Apple more than anyone else
is all about just that one device life, right?
And that one thing that can do everything.
Regardless of whether Apple is trying to disrupt
the credit card industry or not,
both the Apple Card and, specifically, Apple Pay
are at the very least, the companies answer
to improving how we pay.
And that's important because at the end of the day,
killer software and services, like Apple Pay,
are what make that sweet, sweet money.
(jazz music)
Nothing else has shown me
how much easier Apple Pay makes things
more than being here in Japan and using this.
Suica is a prepaid transit tap card
that people use here in Tokyo to get around the city.
And when Apple added it to its list of compatible cards
on Apple Pay almost three years ago,
it was low key a really big deal.
To understand why, it's important to look at the scope
of Suica's importance.
- (speaking in Japanese)
- Suica is universally accepted
across all major rail networks in Tokyo,
but is primarily overseen by JR East,
a major rail company that operates some of Tokyo's
busiest rail lines.
The company's most recent report
states that there's 75.8 million physical and virtual
Suica cards in circulation.
Whoa.
Considering the population of Greater Tokyo
is estimated to be at around 39 million people,
it can be inferred that Suica is a vital part
of daily life in Tokyo since a majority
of the population commutes.
- Are we gonna just acknowledge that this is all
just a ploy because you wanna shout out, your This Is
episode all about trains in Japan?
- I mean, the boss-man isn't wrong.
Because Japan, urban commuting is a huge part of daily life.
It's hardly surprising that trains, countrywide,
average about 16 million rides a day,
or 6 billion rides a year.
And with certain stations, such as Shinjuku,
that's behind me, servicing as much as 3.5 million
passengers daily, and some of the city's
other major hubs numbering relatively close,
Suica is the key to preventing bottlenecks
of commuters at the station gates,
in that it's the fastest transit tap card in the world.
Physical Suica cards are one thing,
but putting it in phones is a whole other.
Let me explain.
So far in the story, we have Apple Pay
that aims to eliminate your wallet from existence,
and Suica, a transit tap card on steroids
that's used by a majority of Tokyo's commuters.
But there's actually one more integral piece to the story,
and that is Felica, a special flavor of NFC
developed by Sony, and is the tech that makes up
the backbone of Suica.
- [Narrator] And data reading and writing
can be carried out in only 0.1 seconds.
- Physical Felica smart cards are one thing,
but putting it on phones is a whole other.
Now, the Japanese have been doing contactless payments
on mobile phones as far back as 2006,
but in typical Sony fashion, putting Felica functionality
on a phone involves a proprietary chip,
emphasis on proprietary,
as well as software that the company codeveloped
with Japanese cellular carrier, NTT Docomo.
So this not only means that ordinary NFC
on most phones here in the west won't fully work with Suica,
but say if I decided to be a phone manufacturer tomorrow
and wanted to add Suica compatibility,
I'd have to write Sony and friends
a big fat licensing check.
The catch 22 here is that while it is
a great selling point for consumers,
adding Felica to phones generally alienates products
to the Japanese market.
Let's put it this way.
If a global manufacturer produces phones
outside of Japan, why sell a feature
that makes a phone more expensive to produce
if it's not going to be used a lot?
It's effort, resources spent, and a dig to the profit margin
if you put features that only appease
a relatively small bucket of your potential customers.
It is precisely for this reason, too,
that Google sells exclusive SKUs of the Pixel 3 and 3a
to Japan, just to include its Japanese region-specific
version of Google Pay that supports Felica.
- [Commercial Voice] Google Pay Day.
- But that is how Apple sees an opportunity.
On an international scale, starting with
the iPhone 8 and iPhone X, and the Apple Watch Series 3,
the company put forward the effort and resources
to include a universal NFC chip,
and developed the software from the ground up
that allows for Felica functionality,
in addition to the NFC stuff we're already used to.
As far as mobile payment platforms go,
this arguably positions Apple Pay
as the most global universal mobile wallet yet,
and possibly for the foreseeable future.
Of course, all of this backstory and context
means jack without actual, practical experience
to show for it.
As a foreigner, adding Suica to your iPhone
or Apple Watch is a serious life hack
considering how easy it is to do.
In fact, you don't even have to be in Japan to make one.
Within Apple Pay, Suica is denoted as
a transit card and when you put it in the settings
as your express transit card, you don't even have to
unlock or wake your Apple Watch or iPhone,
you can just go into the station gates
and tap and go, you don't have to worry about any of that.
Additionally, a huge reason as to why Suica is so useful
is not only because it gets you to your train quicker,
but also, because you can use it for other things.
Tokyo is an oasis filled with vending machines,
convenience stores, and fast food joints
to satisfy your simple needs and keep you going.
And many of them take Suica, which is especially handy
if you're in the mood to simply
get in, get out, and go home.
It's even great for not so every day purchases.
Here's me using it at the Pokemon Center
to buy stuff for Mystery Tech,
and even playing games at the arcade.
And this is not even mentioning
that refilling the value on Apple Pay Suica is super easy.
You can just do it within the interface
using a credit card that's already in your Apple Pay wallet.
This is way easier than the old fashioned way
of dealing with refill kiosks and cash at the train station.
All this to say that Apple Pay Suica
is incredibly lucrative because
all of the small impulse purchases it thrives on
are ones that can also surprisingly add up.
So you might be wondering how all of this talk
about one Japanese card system
is relevant to the rest of the world,
apart from it being really, really, cool.
No, I'm not implying that the Apple Card
should be like Suica, or that I think Suica
even has a future outside of Japan,
as cool as that sounds.
While I can't speak for how much Suica is doing
for Apple Pay itself, I see the pairing
playing toward a grander vision for Apple Pay
and Apple as a whole.
If the name of the game is to prop up hardware businesses
with software and services, pouring resources
into mobile payment is a no-brainer,
by virtue of it encouraging
the moving and spending of money,
which is something, again, that people do on a daily basis.
This is exactly why the Apple Card exists.
And while it might seem like more of a heavy handed move
to propel Apple Pay's growth here in the US market,
I mostly see it as a pawn, of sorts,
in this game of payment chess.
Sure, it could end up a big success,
but it actually feels more like a wake-up call
for credit card companies and banks
to compete and innovate their own offerings.
In this regard, at least, the benefits seem
to outweigh the downsides.
Let's put it this way.
No matter where I am in the world,
it shouldn't be difficult to take my money,
especially if I wanna spend it.
Just take my money.
And the reality is that Apple Pay continues
to make that easier and easier.
The only thing Apple has to do now
is convince the public to experience this for themselves.
And if they have their way, Apple Pay will be
their secret weapon to selling even more
iPhones and Apple Watches.