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Friday, 17 May, 2002, 09:17 GMT 10:17 UK
Tokyo smart cards challenge cash
Japanese commuters are embracing the smart cards, BBC
Commuters like the new smart cards
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By J Mark Lytle
in Tokyo
Japanese commuters have embraced smart travel cards, with two-thirds abandoning their old passes in the last six months.

Japan's largest train company, Japan Rail East, has just completed the Tokyo introduction of new smart cards to replace traditional commuter passes and has high hopes that one day the cards will even replace the cash in your wallet.

Since the company introduced its Suica smart cards based on integrated circuit technology last November, take-up has been phenomenal.

After only six months, 3.6 million out of the 4.5 million Japanese who use commuter passes on JR East's network are addicted to the smart cards.

By the end of this year, JR East confidently expects almost everyone to have made the move from the old magnetic passes to the new cards.

No waiting

The cards, available upon paying a refundable deposit, work in the same way as standard magnetic train passes.

Japanese smart cards, BBC
The card that could replace cash
But the new technology has the added benefit that it can be charged with up to 20,000 yen (105).

This means a commuter does not have to stand in line to pay an excess fare.

Instead, the fare is automatically deducted when a holder waves their pass over the smart card reader.

The non-contact reader renders the transaction completely invisible, save for a display on the ticket gate that can be read on the way past.

"I like the new cards because I can just zoom through the ticket gates without even having to pause, even if I have to pay an excess fee," said 38-year-old Sumie Kawakami.

For some commuters, the smart card has almost become an object of desire.

"I don't use JR network to get home, so I have to use a traditional pass. Suica is so cool, I wish it was more widely available," said 19-year-old Yoko Onodera.

Smart payments

JR East is the largest train company in Japan, carrying 16 million passengers every day. Last year, its operating revenues rose to 2,546bn yen (13.4bn).

Its strategy has serious implications for how we might do business in the future.

DoCoMo's successful i-mode business model using mobile phones has shown over the last three years just how easy it is for companies to extract cash from consumers in drips when a micropayment system is available.

Since an automated ticket gate can deduct the equivalent of 50 pence from the Suica cards, the next step is to allow such transactions for non-transport-related purchases.

Smart card readers in shops could perform the same function when buying something as small as a newspaper or a pack of gum.

Although wide scale use of smart cards as cash is still some way off, even in Japan, there are plans for several of the nation's ubiquitous convenience store chains to introduce card readers in the near future.

See also:

08 Feb 02 | Business
New anti-fraud cards on the way
12 Mar 02 | Sci/Tech
Smart card aims to fight fraud
31 Jan 02 | UK Politics
Asylum seekers given 'smart' ID cards
15 Apr 02 | Sci/Tech
Smart cards head for Hong Kong
09 May 02 | Sci/Tech
Commuters face smart card confusion
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