NFC Country Profile: Japan

 

Japan has long been at the heart of contactless innovation. However, its macro environment has been in the doldrums for much of the time that contactless momentum has been building. Although it remains a major economic power, with a GDP per capita of US$34,300 in 2011, it experienced a significant slowdown in the 1990s from which it has taken years to recover. Last year it was further rocked by the strongest ever earthquake and tsunami to hit the nation. This caused major devastation in the north-east of Honshu, Japan’s main island, with a massive loss of life and severe damage to its economy and energy infrastructure which in turn temporarily crippled its supply chains.

Japan’s population has a relatively high median age of 44.8 years compared with Turkey’s youthful 28. But age isn’t a factor in this technology-hungry nation, and it’s certainly not hindering the rollout of some of the latest mobile- based technologies. Its tech-savvy population boasts close to 100 million internet users out of a total of almost 130 million, with 40.419 million land lines in 2009 and 121 million cell connections in 2010.

It has gained a reputation for playing host to a series of ‘firsts’ that have made it the country to watch for mobile services. Among the roll call of successes has been the launch by its number one mobile network operator (MNO) NTT DOCOMO of the i-mode mobile internet service in 1999 and the world’s first 3G service in 2001. In 2004, it was the location for the first nationwide rollout of contactless wallets using proprietary technology based on Sony’s contactless FeliCa. In fact, contactless is big in Japan,with more than 60 million contactless-enabled phones currently in use as well as 500,000-plus NFC mobile payment terminals. This is backed up by research from Informa, which reveals that of the total global value of transactions from mobile NFC payments of US$2.4 billion in 2011, more than 90% was generated in the Asia Pacific region, particularly in Japan and South Korea.

Unsurprisingly for a country that is famous for its innovative MNOs, many of 2011’s developments revolved around its leading cell operators, NTT DOCOMO, KDDI and SoftBank Mobile.

Mobile wallets and payment

Among the rollouts of mobile wallets and mobile payments was a trial from SoftBank Mobile involving credit card issuers Orient Corporation and Credit Saison. The pilot – based on Gemalto’s N-Flex-SIM device in an HTC Android phone – was claimed to be the first in Asia to enable secure mobile NFC transactions from a choice of credit card accounts. It saw users making contactless payments at around 300 PayPass terminals in convenience stores, fast food restaurants and theaters.

The operator also rolled out passive stickers for mobile wallets in conjunction with Aeon, bitWallet and nanaco.

Google continued its move into the contactless marketplace with its trial in Japan’s capital city Tokyo of Google Places for mobile wallets based on FeliCa chips. This enabled users to get information from the service by tapping their phones on readers installed at merchants in the Roppongi district.

Other applications

Ticketing has also taken major steps forward in 2011. Tokyo-based ticketing solutions provider Boardwalk announced it would begin NFC research and development for ticket-related applications based on its Osaifu-Keitai mobile wallet technology. Once the service is introduced in Japan, the firm says it plans to ensure the necessary NFC compatibility to enable it to sell its technology into overseas markets.

Tech giant Asahi Kasei proved that contactless is about a lot more than payments or transport by developing a 3x3cm token that operates on the FeliCa system and enables paramedics and ER doctors to access a patient’s entire medical history.

Fit for market

Several product developments targeted specifically at the Japanese market were announced during the year. For example, Sharp created the RW-T107 Gingerbread tablet incorporating built-in NFC and contactless smart card readers. These are aimed at the commercial market and the firm is producing around 5,000 tablets per month.

Powermat developed an NFC-enabled antenna for cell phones that supports contactless applications such as tap and pay and which will be available nationwide.

AuthenTec announced that the AES850 smart fingerprint sensor had been integrated into Fujitsu’s REGZA Phone T-01D, which is available from NTT DOCOMO, enabling users to securely access applications such as NFC-enabled payments using their fingerprint.

Business tie-ups

Toppan Forms and Hewlett-Packard Japan partnered to improve the country’s contactless payments infrastructure. Toppan Forms is supplying its system equipment development technology for contactless smart cards while HP Japan is providing its IC Chip Access Server for FeliCa. The project will see the creation of a cloud service that will enable businesses to introduce contactless payments without having to make heavy upfront investments.

On the business front Japanese firms agreed some significant linkups with overseas counterparts. Cross-border projects by it and South Korea’s major MNOs were among the highlights. For example, NTT DOCOMO teamed up with South Korea’s KT Corporation to develop NFC specifications for mobile payments, transit ticketing, couponing and smart posters that can be used by customers traveling between the two countries.

Its three leading MNOs also established the Japan Mobile NFC Consortium, to coordinate the adoption of NFC based on hybrid phones capable of supporting both Sony FeliCa and standard NFC technology.

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