Towards a Cashless Society
By Eric Lin, Thu Sep 30 23:45:00 GMT 2004

Although their choices of 3G technology differs, KDDI has joined NTT DoCoMo in mobile payment technology. It will launch handsets with the FeliCa chip beginning next year.

It appears that NTT DoCoMo's efforts to encourage stores and businesses to adopt FeliCa as their next-generation payment system are working as planned. Although no figures on sales of FeliCa enabled handsets or the reader/writer equipment have been released, the standard has become popular enough that KDDI has chosen FeliCa as its mobile payment system as well. However KDDI will hang back and let NTT DoCoMo and its subscribers drive adoption before launching any models of its own.

KDDI will launch AU handsets that include FeliCa chips in the second half of 2005, but AU WIN (EV-DO) models will not get FeliCa until early 2006. DoCoMo followed a similar strategy, launching FeliCa on i-mode handsets a few months before a FOMA model came out. KDDI's delayed launch leaves plenty of time for more merchants to popularize the system by taking advantage of NTT DoCoMo's reader / writer fund. In addition, JCB and other financial institutions, transportation authorities and office complexes should have adopted FeliCa systems for payment and entry by next year as well. JCB should have its system online in a few months, and others will no doubt follow its lead.

Now that Japan's two largest carriers have chosen FeliCa for mobile payments, it is in Vodafone KK's best interest to follow their lead or lose out on the adoption and infrastructure these two are driving. If all three 3G carriers adopt the same payment technology, it is then likely that the move from a card and cash economy to contactless IC one in Japan is not a science fiction dream, but soon to be a reality. The question, then, is once all of Japan is using Felica, whether the rest of the world will adopt a compatible standard when companies like Nokia, Samsung and Visa introduce their NFC enabled technology. Often Japan adopts a technology a little too early for it to be compatible with what will become the "global" standard a few years later. Regardless of what NFC partners adopt, wallets may soon become a thing of the past in Japan.