The Contactless Payment Turf Wars: PiTaPa Pitfalls

Japan Transit IC Mutual Use Association Map
The Japan Transit IC Mutual Use Association project started in 2007 and achieved transit and e-money interoperability in 2013. It continues to evolve and incorporate other transit smartcard systems into a single standard. Wikipedia

PiTaPa is the perpetual outliner of the major Japanese transit smartcards: Suica, ICOCA, TOICA, SUGOCA, Kitaca, PASMO, manaca, Nimoca, Hayaken. Starting in 2006 the major transit cards were stitched together into one common national platform for mutual transit and e-money use achieved by 2013. The result is the fertile ground that Apple Pay Suica is growing and thriving in. Apple Pay VP Jennifer Bailey recently said that Apple Pay is doing well in Japan. The Apple Pay Japan story is all Suica and transit reamains the golden uptake path for contactless payments on smarphones.

And then there is PiTaPa. PiTaPa is the main transit smartcard for non-JR ‘private’ rail companies in the Kansai: Hankyu, Keihan, Nankai and Hanshin. The excellent Japanese Transit IC map graphic on Wikipedia perfectly captures the problem of PiTaPa incompatibility and isolation: the background blue is transit only compatibility, the red is transit and e-money compatibility.

The PiTaPa Story
PiTaPa has an interesting history but not a particularly happy or successful one. It’s the perfect case study of what happens when banks and credit card companies call the shots on transit ticketing system infrastructure instead of letting transit company management make those decisions. It’s also a story of how most Japanese transit companies, except for JR East, failed to see the coming revolution of mobile digital wallet platforms.

The PiTiPa founding members originally planned to build a transit IC smartcard system just like Suica: pre-paid stored value (SV). Then Sumitomo Mitsu stepped in with a seemingly good idea: a Sumitomo Mitsui credit card + transit card post-pay combo card to save transit users from having to recharge the transit card smartcard at all. A credit card transit card for transit and shopping. What could go wrong? The Kansai area is home town for Sumitomo Mitsu, the Kansai banking indsutry Godzilla for over a hundred years, how could transit companies, Sumitomo Mitsu borrowers all, resist?

And so PiTaPa was born in 2004 as a Frankenstein credit card grafted with a transit card appendage that was supposed to do it all, but never delivered the benefits of either one. Sumitomo Mitsui imposed all the hoary old credit card conventions on the shiny new creation: credit checks and spending caps. It immediately shrunk the PiTaPa user base from everybody to people with good credit ratings who passed Sumitomo Mitsui credit checks. Compare this to Suica where everybody from kids to retirees with a ¥1,000 bill can buy Suica card at a station kiosk. That’s the beauty of stored value cards, simple immediate purchase and use.

The original PiTaPa did not sit well with a lot of transit users so a ‘PiTaPa lite’ card with deposits instead of credit checks, without the e-money function, was added in 2007. Unfortunately since PiTaPa was post-pay, PiTaPa didn’t work with the Japanese Transit IC e-money standard and was shunned by payment networks and merchants. Good luck trying to use PiTaPa credit outside of its core transit ghetto at 7 Eleven, other convenience stores or anywhere else.

If you want to know how well PiTaPa is doing in 2018 all you need to do is check the commuter pass pages of the PiTaPa member railroads: Keihan and Osaka Metro offer ICOCA commuter passes. Not only that but Osaka Metro and Keihan have moved away from PiTaPa commuter passes for general issue and use ICOCA instead.

No Future
The decision to let Sumitomo Mitsui call the shots instead of transit management killed any viable future for the PiTaPa system. PiTaPa uses the same FeliCa technology behind the highly successful Mobile Suica and Apple Pay Suica, but the unique one-off system architecture, limited user base and transaction volume mean PiTaPa will never be hosted on any mobile digital wallet platform. PiTaPa transit partners don’t want to spend resources to build a cloud and host mobile service because there is too much cost for such little return. And Sumitomo Mitsu will certainly never foot the bill to clean up the mess they created.

Now that JR East and Sony have announced ‘Super Suica’ for April 2018 that will incorporate all Japan Transit cards into one card system for transit, e-money and mobile, the PiTaPa participants face a choice: junk the old PiTaPa and get onboard the Super Suica express or be left behind in isolation with no future.

Transit payment platforms
The basic unsolvable problem is that banks and credit card companies want different things than transit companies. Banks and credit card companies want credit checks and caps, transit companies need as many people going through the transit gate as efficiently and safely as possible. These fundamental business differences will never be resolved, there will always be tension. That is why banks and credit card companies should never be in charge of running transit gates. They simply want to take their credit card cut and run, leaving the scene of crime, and the cleanup bill, to others.

You can see the similar things playing out on other transit systems such as Hong Kong’s Octopus system with AliPay and other QR Code ‘virtual banks’ putting pressure on operators to change transit ticketing system infrastructure to suit their needs, all paid by the transit operator of course.

It’s wasteful nonsense and who needs it? It’s last century credit card vs. smartcard, open loop vs. closed loop thinking. Digital wallet platforms like Apple Pay and Google Pay conveniently collapse the differences of open loop vs. closed loop rendering the whole argument pointless while offering a whole new game. Build a transit payment platform instead, in the long run it’s a win-win for transit companies and the banking industry.

It’s very simple: transit companies and a finance industry that stick with the old ways of thinking will miss the major unique new business opportunities offered by transit payment platforms hosted on digital wallet platforms, opportunities that build on transit but also extend it to exciting new places, a transit platform that grows and benefits everyone.

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JR East and Sony creating ‘Super Suica’ card for all Japan

Super Suica Card
The new super Suica card will replace all local transit cards for a single national transit and e-money card but still keep all the local commuter plans and points intact.

JR East and Sony announced co-development of a ‘national’ super Suica card that will replace local Japanese transit card variations such as ICOCA, TOICA, SUGOCA, Kitaca, PASMO, manaca, Nimoca, Hayaken and others into a single card that does it all. JR East and Sony plan to have the card in circulation starting April 2021. Too late for the 2020 Summer Tokyo Olympics party certainly, but great news for transit customers nationwide nevertheless. The clouds of uncertainty have parted, the transit platform future in Japan shines bright.

Japanese transit cards are already compatible with each other for transit and e-money purchases but commuter passes and point systems are still tied to local transit systems and not directly managed or stored via the current transit card architecture. You can use Apple Pay Suica in Nagoya and Osaka, but you can’t add a Suica Commuter Plan for an area outside of the JR East rail network. Also it is difficult if not impossible for smaller transit companies to host local transit cards on mobile. The new super Suica card will solve these problems and reduce costs for everybody. I suspect the current ¥20,000 Suica Card balance limit will also be raised to ¥40,000 or more for Japan-wide ‘Touch and Go Shinkansen’ service.

The new card will likely resemble the recently released Mizuho Suica: a basic super Suica card with localized branding, commuter plans and point systems. The Mobile Suica cloud infrastructure is already in place so everything will be hosted on that but there is much backend work for JR East to do for a 2021 launch. For it’s part Sony has to update the FeliCa middleware stack to make it all work on the new card architecture then deliver it to FeliCa licensees like Apple so they can incorporate it in iOS and watchOS.

It will be great to have a single Apple Pay ‘Super Suica’ card that can do it all, from ‘Touch and Go’ Shinkansen to commuter plans and point systems nationwide. There is no doubt in my mind this is the disruption that Apple Pay has brought to Japan. The market implications are enormous. It is the Apple Pay Suica Tokyo area growth outlined in the Apple Pay Japan One Year Mark replicated all over Japan. I don’t know about you but I can hardly wait for the next stage of Apple Pay Super Suica to arrive.

Update: more details and analysis here

Important Suica App update due October 10

JR East announced an important Suica App update that will drop immediately after the early morning Mobile Suica maintenance window that ends 5:30 am JST. The new version is Suica App v 2.3 with seemingly minor app UI changes but has big updates on the cloud service side. The new features are:

  • Mobile Suica password resets can be done from Suica App. Finally. Until the new system becomes operational, ‘I forgot my password’ resets can only be done with a web site form or calling the Japanese only, hopelessly overloaded Mobile Suica Call Center.
  • Mobile Suica members can cancel their account without logging in. This is very convenient for users who want to switch to Android devices. Because of the way Apple Pay and Mobile Suica are integrated, users have to cancel their account and set up a new one for Android use.
  • Mobile Suica members can see Suica cards parked on the Mobile Suica cloud. This is extremely useful to have in case you delete Suica on one device but have yet to load it onto a new one, or forgot you even had another Suica card. Anything parked on the Mobile Suica cloud will all be there and visible in Suica App.

There are great new features and I look forward to using them. It should also help free up the overloaded Mobile Suica Call Center as users can take care of mundane Suica account management without calling in. It would be great if the Apple Pay Suica performance enhancing iOS 12.1 update drops at the same time.

Apple Pay Suica performance improvements coming with iOS 12.1 update

iPhone X Suica Error Problme

Good news for Apple Pay Suica users: word coming down Apple developer channels is that iOS 12.1 contains Apple Pay Suica fixes and performance improvements.

Apple Pay Suica users report the following performance issues after updating to iOS 12.0 and watchOS 5.0:

  • Transit gate error flicker
  • Unresponsive Express Transit at transit gates with Face ID/Touch ID/Passcode Apple Pay authentication request
  • Suica card balance doesn’t update
  • Slow or failed Apple Pay Suica Recharge attempts

Affected devices: iPhone 7/7 Plus (JP models only), iPhone 8/8 Plus, iPhone X, Apple Watch Series 2 (JP Model only), Apple Watch Series 3, Apple Watch Series 4.

iPhone XS is not affected by iOS 12 Apple Pay Suica issues thanks to A12 Bionic.

Fortunately iOS 12.1 has Suica bug fixes: Apple Engineering closed my original iOS 11.2.5 Suica error bug report filed in January 2018 saying the issue has been fixed in iOS 12.1.

iPhone X Suica problem units will not see any improvement because it is a hardware issue for iPhone X units manufactured before April 2018. The only way to fix NFC problem iPhone X units is to get them exchanged. See the iPhone X Exchange Guide for details.

The final word on global FeliCa iPhone XS, iPhone XR, Apple Watch Series 4

Apple Pay Japan
The Apple Pay Japan pages also confirms global FeliCa for iPhone XS, iPhone XR and Apple Watch Series 4

Apple is slowly updating Apple Pay eligible device information and Suica information and finally got around to updating the Apple Pay Japan page eligible device specs. It’s the final word that iPhone XS, iPhone XR and Apple Watch Series 4 are really truly global FeliCa just like previous generation devices, but more important, from here on out, simply Apple Pay.

The last piece will fall into place when the Apple Watch platform adds Express Cards with power reserve that are specific to A12 Bionic iPhone XS and iPhone XR. Apple Pay will be feature complete on all devices, across the board.

iOS 12 Apple Pay Bionic
A12 Bionic NFC powers the new Express Cards with power reserve on iPhone XS/XR