What's Really Behind the "Beep" at the Store Checkout - A Gentle Explanation of How Cashless Payment Works
What Happens in the One Second of the "Beep"
That one second when you hold up your smartphone at a convenience store checkout and it goes "beep." In fact, behind the scenes, a surprising amount of processing takes place. The checkout's scanner reads the pattern shown on the smartphone screen, and the payment information contained in the pattern is sent to the checkout's computer. The checkout's computer asks the payment server, "May I take 500 yen from this person's account?", the server replies "OK," and a "payment complete" signal reaches the checkout. All of this is completed within one second.
What supports this mechanism is a payment system that uses the black-and-white pattern. Most of the major smartphone payment services used in Japan, such as PayPay, Rakuten Pay, d Barai, and au PAY, use this pattern.
Two Payment Methods - The "Show It" Camp and the "Scan It" Camp
Payment using the pattern can be broadly divided into two methods. The first is the "store scan method." In this method, the store's checkout reads the pattern displayed on the customer's smartphone. This is what happens when you are told "Please show me your screen" at a convenience store or supermarket.
The second is the "user scan method." In this method, the customer reads the pattern posted at the store's checkout with their own smartphone. You often see it at independently run restaurants and food stalls. When the customer scans the pattern, an amount entry screen appears on the smartphone, and the payment is complete once they enter the amount and press the "Pay" button.
The store scan method requires a scanner on the store's side, but with the user scan method you only need to print the pattern and post it, so the initial cost is almost zero. This is one of the reasons why even small stores can introduce smartphone payment.
Which Route Does the Money Take?
At the moment of the "beep," the money does not go directly to the store. The flow of money is a little more complicated. First, the payment amount moves from the balance in the customer's payment app (or their credit card) to the payment company (PayPay, Rakuten, and so on). The payment company then deducts a fee (usually 1.5-3.5%) and transfers the rest to the store's bank account.
The timing of the transfer differs by payment company, but in many cases it is from the next day to a few days later. In other words, the money does not enter the store's account at the moment the customer goes "beep"; rather, the payment company stands in between and holds the money temporarily. This mechanism is basically the same as credit card payment.
Why Is It Safer Than Cash?
Some people may feel that "paying with a smartphone is scary." However, it actually has aspects that are safer than cash. First, even if you drop your smartphone, the payment app cannot be used unless someone gets past the lock screen. If you drop cash, whoever picks it up can simply use it.
Next is compensation in the event of unauthorized use. Major payment services have systems that compensate for damage from unauthorized use if certain conditions are met. If cash is stolen, there is no guarantee it will come back. Furthermore, because every transaction history is recorded in the app, you can know exactly "when, where, and how much you spent." Even without keeping an allowance book, your spending is recorded automatically.
The Reassuring Mechanism Behind the Beep
The instant "beep" at the checkout is not just for paying quickly. Behind it, a mechanism is at work that checks whether the payment was made correctly. Points such as whether there is enough balance or credit limit, whether the same payment has been made twice, and whether the usage looks suspicious are checked within a short time. If there is a problem, the payment is stopped on the spot. The reason we can finish paying without being aware of anything is that this invisible checking is done in an instant. Behind the speed, many checks that support peace of mind are hidden.
"Beep" Around the World - Differences Between Japan and Other Countries
The country where payment using the pattern has spread especially far is China. The two major services, WeChat Pay and Alipay, have permeated every aspect of life, and almost everything, from roasted sweet potatoes at street stalls to taxis and hospital bills, can be paid for entirely by smartphone. It is not unusual for people to carry no cash.
In Europe and the United States, on the other hand, "tap to pay" using NFC (near field communication) is more common than the pattern. It is a method of holding up your smartphone with Apple Pay or Google Pay, and it does not require displaying or scanning a pattern. Japan is a market where both are mixed, and the number of stores that accept both pattern payment and NFC payment is growing. Which is more convenient is a matter of preference, but pattern payment has the advantage that it can be used even on older smartphones.