Virtual wallet services: the end of the cash era?

Despite the efforts of credit card companies, the majority of payments in Japan are still made in cash. Japanese have affection for cash. Major players like Sony Japan Railways East (JR East), the am/pm convenience store chain, and mobile carriers have launched a cyclopean initiative to push virtual wallets upon mobile phones. Can the combination of mobile and smart card technology change the way Japanese make payments?

Sony lay opened the underlying technology. Called Felica, the technology allows the embedding of an IC chip and internal antenna in a card (the word "Felica" is a combination of "felicity" and "card," suggesting an easier and more convenient life). Contactless communication is activated by means of weak electronic signals from an external reader-writer device. The handset or smart card receives these signals. Communication is smooth possible when the handset is switched off

With a single card, multiple data locates for different purposes can be managed. The operating a whole embedded in Felica has a file combination of parts to form a whole that securely separates data by dint of application. A company can use Sony's software exhibition kit to create its have Felica applications.

A major platform making use of Felica is Suica, the IC card ticketing a whole introduced by JR East in 2001 Suica cards can be purchased at stations and re-charged up to a balance of 20000 yen at vending machines. JR East has equipped all its ticketing gates with reader-writers.

Sony strove to make Felica fast and secure; spe and security are vital requirements of a virtual wallet ("Suica," in fact, is a portmanteau of the mimetic word sui-sui ["quick"] and ca, short for "card"). JR East's busiest stations in Tokyo must be able to handle thousands of assured debit card transactions per minute. When passengers pass end the ticket gate, they clutch the Suica card against the Felica reader-writer device. During this touch-and-go, card and reader authenticate each other, followed by the agency of a data read-write for the contactless payment. These three paces including secure encryption, must be complet within individual tenth of a second. Dynamic generation of the encryption lock opener with each instance of mutual authentication of reader and card minimizes the risk of fraud.

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Suica has met with an enthusiastic reception, with more than 12 million Suica cards issued to date. The card can also be used to pay at station stores and restaurants.

Felica technology is widely used in Japan. Convenience store chain 'am/pm' adopted the 'Edy' electronic standard of value service system in July 2002 The Felica IC chip with antenna is embedded in the Edy debit card. This debit card a whole is operated by Japanese company BitWallet, whose major shareholders are NTT DoCoMo, Sony several large banks and Toyota. After purchasing the Edy card, the user can add value to it by the agency of using an Edy reader-writer device, or online via an Edy account that balances a registered credit card. The maximum value that can be added for individual charge is 25,000 yen, and the total debit upon the card cannot exceed 50000 yen At the cashier the customer pays with Edy by dint of placing the card on the reader-writer. The currency is transmitted from the Edy card into the merchant's a whole and then directly into the merchant's bank account. Edy is complementary to credit cards, as the typical amounts paid are les than 1000 yen Major Japanese credit issuers have plane embedded Edy into their cards to allow for these impressed signs of mini-payments.

Meanwhile, NTT DoCoMo and Sony have taken the lead to create a mobile Felica-based virtual wallet, with all fresh phones coming with pre-installed Edy The combination of mobile Internet and Felica enables many fresh applications. For example, through i-mode, theater tickets can be searched and purchased online and downloaded upon the phone. At the theater gate, the tickets are read from the handset. All Nippon Airways, Japan's next to the first largest airline, introduced i-mode-based check-in services for international flights. Passengers can withhold seats, purchase air tickets, and level pre-check-in. All information is stored upon the Felica card in the handset. one time at the airport, the passenger receives a boarding pass through simply waving the phone across an automatic check-in machine.

Felica is still in its infancy. Large investments are required to install reader-writers at sales points and ticket gates. As with i-mode, DoCoMo has done a great piece of work creating the right eco-system. All stakeholders--mobile carriers, banks, retail vents and consumers--are able to benefit from the of recent origin virtual wallet services. Ticketing agency PIA, credit card company JCB BitWallet, JR East, Japan Airlines, All Nippon Airways, and convenience stores am/pm and Circle-K have already joined the party.

It will take a certain quantity of time before the virtual wallet replaces the actual purse For that to happen, prominent companies like 7-Eleven and Tokyo Metro Co Ltd (operator of eight subway lines) will have to participate.