Google Pay Bellyflops in Japan

Google Pay Japan is Zannen

That didn’t take long. No sooner had Google Pay landed in Japan when Android users without JP carrier locked Osaifu-Keitai phones noticed they weren’t invited to the FeliCa party and lost their shit. Then local Japanese tech journalists filed reviews and they were not kind: “zannen” which means “too bad” as in “too bad Google Pay is a knee capped imitation of a real FeliCa Osaifu-Keitai that any user could add and use on any Android phone.” Too bad it’s not a Global FeliCa iPhone.

I called it a few weeks ago:

Android Pay in Japan was limited and so far it looks the same for Google Pay in Japan too. If and when Google Pay Suica arrives it will likely be on Osaifu-Keitai /Mobile FeliCa enabled locked Android devices from Japanese carriers. Global FeliCa iPhone-like out-of-the-box Mobile Suica on ‘global FeliCa’ Android devices from anywhere looks to be a long way off.

FeliCa Dude called it earlier: “Android Pay is smoke and mirrors.”

Google Pay Japan is smoke and mirrors.

And HCE-F is dead.

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Why Americans aren’t using their phones to make payments in stores

Yes folks, yet another China is beating out the U.S. on mobile payments story based on quotes from Wall Street market analysts. Yahoo Financial reporter Krystal Hu stitches together a few pieces of market info blah with comments from Jordan McKee of 451 Research all framed around last weeks ‘Starbucks app is bigger than Apple Pay’ story :

U.S. Mobile transactions barely accounted for $1 out of every $100 spent in-stores last year…this year, 25.3% of smartphone users in the U.S. are expected to pay for physical purchases by phone, compared with an estimated 77.5% in China.

“Mobile wallets today are basically just your payment card,”

“It (the Starbucks app) does some creative things that go beyond just making a payment…It’s a good model for other wallets to imitate, adding multiple layers to build on the transaction experience.”

Comparing China QR Code mobile payments to the U.S. is pointless, like watermelons to apples. Krystal Hu would have been better off doing some actual research at her local supermarket, like my shopping experience at Harmons today. Harmons has Apple Pay but I was on an errand for my dad. I stuck his EMV chip credit card in the reader, pulled it out and waited.

Me: “Wow, that takes a long time.”
Cashier: “It’s waiting for me to hit the button, but it’s slow.”
Me: “Is Apple Pay any faster?”
Cashier: “Not really, you have to hold the iPhone really close to the terminal and even then it’s slow.”

Bingo. All the Apple Pay terminals I have used in the Salt Lake City region are really slow, not much faster than using a EMV chip credit card. Compare this to the Apple Pay Suica experience:

  • NFC-F response time is 50ms (milliseconds)
  • Average FeliCa transaction time is 200ms with most performance about 100ms because Suica is stored value with local ‘offline’ processing
  • Apple Pay Express Transit eliminates Touch ID/Face ID authentication
  • The antenna ‘hit area’ on American NFC terminals is tiny compared to Japanese terminals

Offline processing is common in Asia and Europe but not America. Most EMV contactless cards operate at 106 kbps (they can go higher but most do not) while Suica always operates at 424 Kbps. Faster payments processing and infrastructure all adds up to one thing: a better customer experience at the cash register or transit gate. Just touch and go.

Apple Pay and Google Pay growth will continue be slow because America does not have a transit platform to drive mobile payments, at least until the American payments infrastructure improves to the point where mobile payments offer an insanely great customer experience over plastic cards.

Muddled WWDC18 Apple Pay Rumors

The Information piece confused software with hardware
Screenshot of The Information

The Information article quoted in reports by 9to5 Mac and Apple Insider is a strange piece. It reads like the reporters don’t know if they are writing about hardware or software. Their key take away is: “The change to the near-field communication, or NFC, chip, which is expected to be announced next month, could pave the way for people to use iPhones for other security-sensitive interactions, from paying transit fares and opening car doors to verifying their identity in other ways.”

Changes to the NFC chip? Apple Pay Suica and Apple Pay Express Transit cards for Beijing and Shanghai already pay transit fares securely…Hello? Benjamin Mayo muddies the water further in his sloppy 9to5 Mac post, corrections in parentheses:

The Information says Apple is keen on replacing transit cards…it has discussed plans (way back in 2014) with Cubic. In the UK, iPhone customers can already travel on the Underground just by tapping their phone on the contactless terminals (plain old cash register credit card EMV contactless not the native MIFARE based Oyster card system built and operated by Cubic). iPhone 7 (iPhone 8 and iPhone X) includes a FeliCa chip (wrong, Apple licensed FeliCa and implemented it in the Apple A-Series Secure Element combined with a NFC A-B-F chip from NXP) to achieve a similar result for the transit infrastructure in Japan. Both of these existing integrations rely on thin layers above the usual Apple Pay protocols to function (what does this mean? any idiot can say this and sound like an expert).

It’s clear The Information writers mean more functionality is coming for Core NFC which debuted with limited capability in iOS 11. Later on the article says, “Apple will launch the latest version of its iPhone operating system, likely called iOS 12. Users of most iPhones made in 2014 or later will be able to activate these capabilities through a software update.” Developers would be a better choice here: developers will create the new NFC savvy software users will activate via, one assumes, a more robust iOS 12 Apple Pay Wallet and apps.

What does this all mean? A list of NFC functions on the FeliCa Networks site suggest what may be coming to iOS 12 Apple Pay Wallet: members card with points and coupons, mobile keys, mobile ticketing.

Mobile FeliCa functions can include members cards-mobile keys-mobile tickets

Door locks….check. It would be nice to go outside for a walk without lugging my fathers overgrown key chain to buzz myself back into his apartment building. Apple Watch with a custom Apple Pay NFC card would be a welcome solution. Hong Kong residents already have this with the FeliCa based Octopus card, current Core NFC limitations could be one reason why Samsung Pay beat out Apple Pay for Smart Octopus.

NFC points cards would help stop the plastic

Point cards…check. In Japan for example, JR East and WAON issue plastic member point cards so that customers can still get points regardless of the payment method: cash, card, digital wallet, etc. It’s a pain paying with Apple Pay while still having to dig a plastic point card out of the wallet standing in line at the convenience store with arms full of stuff. How nice it would be to have that JRE POINT card and more sitting in the iOS 12 Wallet with Apple Pay instead of bulking up my real wallet.

On the transit side Apple already has FeliCa (Suica, iD, QUICPay) and China Express Transit cards for Beijing and Shanghai with more coming. It would be great if iOS 12 NFC changes makes it easier to add other FeliCa transit cards such as Smart Octopus and MIFARE based T-Money (Seoul), Oyster (London) Clipper (San Jose) and Compass Card (Vancouver) or even the Singapore only CEPAS used in EZ-Link to Apple Pay. Native transit cards on smart devices are always going to be much faster and convenient than EMV contactless will ever be.

Yes, EMV Contactless Sucks for Transit

EMV Contactless Transaction speed is too slow for transit

It’s fascinating that Singapore’s Land Transport Authority (LTA) dumped the fast FeliCa (rated 200 millisecond transaction but Octopus clocks in at around 100ms) behind EZ-Link cards to roll their own faster CEPAS technology (rated 180ms transaction) but are now letting super slow EMV contactless (500ms plus and counting) on their transit reader infrastructure. It’s like ripping out all the cutting edge transit gate technology and replacing it with clunky old supermarket cash register technology.

Publicly run transit authorities are subject to politics and special interests just like any government agency. This sometimes leads to poor decisions and short term thinking. Transit magnetic cards, followed by contactless ‘smartcards’ were revolutionary and eliminated paper transit ticketing, a no-brainer ‘this is the future’ choice of that time.

The next wave smart device/digital wallet revolution for transit payments happening right now is exciting, messy and confusing. There are established stored value smartcard systems, EMV contactless, Chinese QR Codes, Apple Pay, Google Pay and more vying for attention. Visa, Mastercard, American Express have mountains of sponsorship money in one hand and the ‘big stick’ EMVCo standard in the other.

Transit agencies face bewildering choices: do they stay closed and in control of the ticket validation and chose technology that is best for them, or do they go open and let credit cards be used as tickets and give away control in the name of user convenience? What’s the price of those choices?

The essential question to ask is: what do you want your transit ticketing infrastructure to look like in 10 years and what do you want to build on top of that? Keeping it closed allows a transit authority, or group of authorities to build a transit platform. This ‘best of both’ approach keeps ticketing closed but incorporates all the new digital payment technology (EMV contactless, QR Codes, etc.) in a backup role for easy, anywhere, anytime recharge. This approach leverages the core strengths of each technology and player instead of wasting time and money in contactless turf wars.

Going open makes the credit card industry happy but doesn’t serve transit users or transit authorities in the long run. Credit card companies don’t care about ticketing infrastructure, transaction speed or operational consequences when it is slow or stops all together. If you want proof just look at the state of EMV terminal infrastructure in America. On average it is backwards, slow and full of broken promises that the customer experience will get better soon. If the credit card industry really cared about payments infrastructure, things would be much better and further along than they are now.

UPDATE
It’s worse than first reported, Singapore transit users are complaining of fried plastic contactless credit cards and of card issuers deactivating cards mid-transit for being over limit. This is the price for letting credit card companies manage transit ticketing.

Translink started EMV contactless not everybody likes it

Google Pay + HCE-F ≠ FeliCa Suica

Google Pay users outside of Japan should blame Google

Google Pay users outside of Japan who do not have a Osaifu-Keitai compatible model are waking up to the rude fact that Google Pay does not give them all that FeliCa Apple Pay Suica-like goodness out of the box.

Google Pay Japan is exactly what Android Pay Japan was: a thin veneer over Osaifu-Keitai that confuses the hell out of Android users around the world. A lot of angry users will vent and make up shit that this is a ‘Japan tech’ failure but the reality is that this is simply a Google choice made at Google HQ in the good old USA. Google could have licensed the entire proprietary FeliCa stack like Apple along with proprietary EMV contactless and proprietary MIFARE stacks that they already do, but they didn’t.

My money says it is a market related political choice to keep the JP carriers happy selling carrier locked Android devices. The Android equivalent of the Global FeliCa iPhone has yet to appear.