BY JOHN FRANK
Japanese credit-card giant JCB Co. Ltd. is backing three Asian contactless card projects, convinced consumers will appreciate the quicker throughput and convenience of contactless technology. Two projects are in Japan while a third is in Taiwan.
In Taiwan, JCB issuer Taipai Bank already has distributed roughly 3,000 smart cards to employees of First International Computers, a maker of computer motherboards and servers. The employee cards include both contact and Mifare contactless technology.
The cards include five functions: credit, building access control, access control to parking facilities, employee ID, stored value for use in an employee cafeteria.
Contactless technology is used for access control for the company’s building and parking. It also is being used for the stored-value function. The issuer selected Mifare technology and JCB went along with the decision since it had experience working with Mifare in other contactless projects in Japan, said Masahiro Omoto, a senior vice president with JCB who oversees its IC strategy.
The program is being managed by Taipai Bank with processing being done by The National Credit Card Center in Taiwan.
In its native Japan, JCB has been awarded the operational contract for the Kansai Thru Pass, a contactless card that can be used for fare payment on buses, subways and train routes run by 39 transit companies in Kansai, Japan’s second-largest metro area. The Kansai region includes the cities of Kyoto, Osaka and Kobe.
JCB expects to issue more than 5 million Thru Pass cards during the next five years as it seeks to set up a merchant base of 10,000 point-of-sale terminals to accept payments from the cards. A time table for distributing those terminals, and the terminal pricing involved, are still being worked out by JCB.
“Pilot issuance is scheduled to commence from July 2003 and mass roll out to commence from February to March 2004,” Omoto said. Transit users will be able to obtain cards without paying a fee.
The transit companies involved decided that contracting with JCB to run the system would be more cost-effective for them than building their own card infrastructure from scratch. The deal marks the first time transportation companies in Japan have outsourced a contract to issue cards and set up terminals. JCB also will operate phone and Internet customer service centers for the card. It plans to handle transaction settlement for the transit payment operations with a new system it is developing with Hitachi, Ltd.
Beginning this June, JR East, a major Japanese rail operator, will start issuing the View Suica JCB Card which also will include contactless technology for fare payment. Both this project and the Kansai effort use Felica contactless technology developed by Sony.
Sony trumpets the durability and quickness of the technology for transit use. It’s already being used on the Hong Kong Octopus card, a major Asian mass transit project, and in Singapore’s EZ link transit card. Gate City Osaki, a large Japanese office complex, uses stored value cards with Felica for purchases in about 40 of its shops.
JCB is not disclosing who is supplying cards for its three latest projects nor how much it will be paying for its combo contact/contactless cards.
The JR East project represents a step up in functionality for the rail cards. JR East already had been using contactless cards for payment. The Suica prepaid cards can be used at 462 JR East stations in the Tokyo area as well as on nine Tokyo monorail stations.
The new View cards will add a credit function to the card. View is an in-house credit card owned by JR East. View can be used for purchases and cash advances at JR East outlets and its 16,000 affiliated domestic merchants. The JCB credit function included on the cards will be usable wherever JCB cards are accepted internationally.
JCB seems convinced of the functionality of contactless technology. “Contactless technology will achieve fast ‘touch & go’ fare settlement/facility access and cardholders will realize great convenience by using this kind of card,” said Omoto. “We expect this will make more cardholders carry these cards all the time and, by adding JCB credit card functionality to the card, there will be more chances that the cardholders will make purchases using JCB cards.”
JCB has 45.3 million cards in circulation worldwide and is accepted at more than 10 million merchants. Beginning in December 2001, all cards issued by JCB carried both EMV smart card compatibility and magnetic stripes. The company has issued more than 3 million smart cards to date and plans to convert its entire card base to smart cards by 2007.