Wish upon a Wireless Wallet
By Justin Hall, Fri May 02 00:00:00 GMT 2003

Think communications and commerce, real and virtual united.

Japan’s mobile service providers have successfully folded email, web access, friendly conversation, GameBoy distraction and astrological projection into a mobile phone. Now they’re trying to figure out how the “keitai” can conquer its partner in our pockets, the wallet.

NTT DoCoMo has already tended billions of yen in micropayments. As each teenager on a Tokyo subway thumbs “Where are you?” into their mobile phone, the resulting packets generate revenues for Japan’s largest mobile service provider. DoCoMo’s ready mobile phone billing schemes ensure smooth transactions. Early on, they set a low limit for online payments. This made i-mode site subscriptions immediately approachable for a wide range of untrained consumers; there was no chance a mobile Internet newbie might spend thousands of yen on an unknowing ring tone binge. Unfortunately this also put a firm limit on the expansive dreams of some mobile commerce pioneers.

Kissing the Coke

Japan has the highest rate of vending machines per capita - one for every 23 people (by comparison, the United States has one vending machine for every 32 people). Most of these are low-tech, serving up sugar water for pocket change. But today there are twenty five thinking vending machines in teen-friendly Shibuya, in Tokyo; internet-connected, DVD playing Coke dispensing terminals, with a LCD screen and a printer. There’s also one of these high-tech coke machines in a quiet western-style house in Azabu-Juban, overlooking a Buddhist cemetery, across the street from the well-guarded Pakistani embassy.

Musician and storied Japanese game developer (D, D2, and Enemy Zero) Kenji Eno doesn’t like to carry coins. As a creative producer for the “c-mode” project, he has a say in this vended future; if it is up to him, Japanese Coke machines will soon be nanofabricators. For now, though, he bounces up from his chair, briefly pausing to stamp out a clove cigarette in an overflowing ashtray, before jamming his feet into slippers and bounding down to the lobby of Fyto, his creative consulting company. Next to the front door is a prototype high-tech Coke machine. Today you can buy Coke from an i-mode menu and some contents unique to the machine, including ordering a local map from the small vending printer, or paying to watch a short cartoon on the LCD screen. “If I want to get a map of Shibuya from a coke machine, I can use my DoCoMo mobile phone and select from the menus to get a barcode on my phone, then use it as an attestation – like kissing.”

“Kissing” is Eno’s way of describing the communication between the phone and the machine. Dial up a Diet Coke through the mobile phone menu, and you’ll see a bar code on the screen. Hold that bar code up to the appropriate spot, a small screen on the vending machine and the purchase is made. The kissing comes from the proximity and communications between these devices. Eno is fond of referring to the port on the Coke machine as a mouth. And he thinks this mouth might talk some Japanese consumers into trusting e-commerce. “In Japan people don’t want to type their credit card number onto the Internet. In US Europe, everyone does it, it’s easy. In Japan, it’s a mental thing.” So people can charge up their mobile phone for commerce from this machine: “We can pay a coin to a payment mouth for Coke or Pepsi, and like that we could pay to watch a movie or get a game.”


Even more than slaking thirst, the most frequent daily small change payments in Tokyo are train tickets. This Eastern Capital of Japan is crisscrossed by subway lines, administered by separate rail companies. Heavy train users must keep track of two or more means of payment and regularly renew their frequent rider cards. 60% of the Japanese population is estimated to own keitai denwa (mobile phone) and half walk through the train stations holding them, so these would seem to be an obvious way to pay for train tickets.

But so far the phone and the train ticket can not shake hands. Riding the Yamanote line from Shunjuku to Akihabara, Tokyo’s entertainment hotspot to the home of consumer electronics, should cost you about 200 yen. But the monthly limit for charges from any single vendor over i-mode is stuck at 300 yen. As a result, train patrons are stuck holding their mobile phone in one hand, and fishing around for their frequent railrider card with the other. While that future of mobile payment hasn’t arrived yet for the subways, penguins have.

Penguins in the

The Japan Railways East lines encircle Tokyo and extend out into the suburbs. Frequent riders can sign up for a Suica, the so-called Super Urban Intelligent Card, a piece of plastic just a shade thicker than a regular credit card, containing a small transmitter. Purchased with a 500 yen deposit, the Suica keeps track of a running balance of funds deposited on to the card at terminals in the JR East train stations. Then you need only hold your wallet or purse-bottom containing your Suica card within a few inches of the top of a train turnstile, the fare is deducted and you can walk through. Black and white tuxedoed penguins demonstrate that you can simply dip your card near the sensor, the kind of belly-gliding we imagine from our flightless friends. It feels like magic, each and every swipe.

But could we see similar Super Urban Intentelligent Card technology built into the slender Japanese mobile phones? According to Professor Funk, a recent announcement from NTT DoCoMo could signal the merging of the train ticket, the wallet and the mobile handset

Professor Jeffrey Funk is the author of “The Mobile Internet: Why Japan Dialed Up but the West Disconnected.” An associate Professor at the Kobe University Graduate School of Business, he has made a name for himself examining the frontiers of mobile commerce in Japan. Recently, he published a paper entitled, “From Ticket Reservations to Phones as Tickets and Money: New Applications for the Mobile Internet in the Japanese Market.” He based his study on the 1 April agreement between NTT DoCoMo and Sony that some future DoCoMo mobile phones will include the Edy electronic money technology. Edy (Euro, Dollar, Yen) is an electronic currency developed by a company including investment from Sony, NTT DoCoMo, mobile services rival KDDI, vending machine makers, banks and credit card distributors.

That all these various vendors have a hand in the pocket of the future is to be expected. Funk cites the many virtues of IC card technology for a wide range of commercial interests (IC stands for integrated circuit, the same sorts of chips that power our computer and keep information in RAM). Machines that now read magnetic strips or magnetic cards require frequent cleaning. Virtual money could mean the elimination of overhead and administrative spending, i.e. human workers: “money handling and its related maintenance costs represent about 20% of a typical rail line’s labor costs”

Non-static means of payment might allow for dynamic pricing, so off-peak times can be incented with lower prices. And most importantly, IC card-based payment schemes can be used to collect information on users. Currently the SUICA cards are not associated with any particular person. But a chip in a phone might be. And even with some anonymity, companies will likely be able to see that the same person who left Shinbashi station at 4pm stopped over at a Family Mart at 4.15pm to buy a rice ball, a disposable razor and a pornographic comic book. Of course the company that makes the card standard and distributes the technology has the greatest access to this consumer information. Japan Railways East pioneered the SUICA system and is now offering it free to other Japanese rail companies.

Whether the rail company wants to cooperate with NTT DoCoMo remains to be seen, but according to Professor Funk, software is the only difference between the IC card technology used in the train stations, and the IC card technology that will appear in mobile phones in coming years. This means that there will be thousands of card readers in and around train stations that could be used to pull money from DoCoMo’s new phones.

Above and beyond the simply reduction of necessary daily objects in a citydweller’s life, Funk cites a number of other benefits for mobile phones using IC card technology. For one, the phone offers some measure of security not afforded by these first generation IC cards. If the phone is lost, the associated wallet can be shut off; the remaining value of a lost or stolen card is there for anyone who will wield it. In addition, mobile phone users may recharge their wallets from anywhere, by going online and confirming a credit card number or bank account.

This signals a sea change in money. First we had the ATM which allowed us to withdraw cash is a wider variety of locations, nearly around the clock. Now we may no longer have our money tied to any particular place. Professor Funk imagines this gradually expanding network of IC card payment challenging credit card companies: “If people can use non-contact IC cards to ride trains, go to concerts and movies, and do shopping, many people will adopt them, costs will come down, performance will rise, and the number of applications will expand.” Still he does not foresee any one winner.

Some credit card companies are keeping up. Japan’s leading credit card issuer JCB has been including IC chips in some credit cards since January of this year. Convenience stores, the front lines of small package commerce in Japan, believe they might see faster transactions from IC cards and some will accept the new Edy currency starting this summer. There will likely be some stumbling blocks early on: particularly the cost to install new IC card readers at small stores and small train stations. But convenience is likely to win. When I leave the house, I have symmetrical bulges in my pockets: a wallet and a mobile phone. My wallet identifies me and allows me to pay for things in the real world. The phone identifies me and might allow me to pay for things in the virtual world. How nice it would be to be able to consolidate all this into one device; communications and commerce, real and virtual united.

Justin Hall wrote his first article exploring technology culture in 1990; since then he's written over 2,000 web pages at Links.net. Today he writes and speaks on electronic entertainment and he's bootstrapping his own TV talk show.