Apple Inc. (AAPL) wants Japan to get rid of cash payments.
In an interview with Nikkei news agency, Apple CEO Tim Cook said the company intends to use its products – Apple Pay, iPhone, and Apple Watch – to become “a catalyst for taking cash out of the system.” “We don’t think the consumer particularly likes cash,” he said. Cook also said
To do this, Apple intends to use the FeliCa standard for Apple Pay in its latest iPhone7 to facilitate payments. Developed by Sony Corporation (SNE) and NTT Docomo Inc. (DCM), the FeliCa payment standard is the most popular payment system in Japan. It is used for multiple tasks from ticketing systems in public transportation to e-money services, and as residence door keys. In fact, it is considered the de facto standard for ticketing systems in Japan. (See also: Apple Pay Vs. Google Wallet: How They Work).
For Apple, the benefits of being on such a widely-used system are obvious. In addition to providing convenience to customers transitioning from another phone to the iPhone, the move could also boost the popularity of its device. According to a Bloomberg report, the FeliCa payment system was installed in 1.9 million payment terminals in Japan last year and users performed $46 billion worth of transactions on the system last year. The country is expected to have 107 million mobile phone users next year.
Apple has had a mixed record with Apple Pay. The service was responsible for $10.9 billion in payments last year, a mere fraction of total payments volume in the world. It joined forces with UnionPay, the largest bank network in China, to compete with Alibaba Group Holding Inc. (BABA) earlier this year. However, the service has not gained much traction there due to intense competition from other players and the absence of deals on its service. (See also: Apple Pay Payment Plan: How Does It Work?).