The SUICA and ICOCA Cards are prepaid e-money cards that can be used for transportation and shopping (SUICA is sold by JR East and ICOCA is sold by JR West). Both cards work the same way, and can often be used interchangeably. Rather than having to purchase a train or subway ticket from a vending machine, just swipe your SUICA/ICOCA Card at the ticket gates as you enter and exit, and the fare is automatically deducted from your card. These cards can be used on JR trains, subways, buses, convenience stores, vending machines, restaurants, and many other retail outlets. They are very convenient, and it is easy to see why so many Japanese people are using them.
The card can be used to board a limited express train. However, the conductor will ask to see your tickets and you will be required to pay (in cash) any extra limited express fees and reserved seat fees that may apply. The cards will not allow you to enter Shinkansen stations unless you have purchased your Shinkansen tickets using a smartphone app (smart EX) that requires to input both a credit card and Suica card number.
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