Pixel 3 FeliCa details and Google Pay roadmap

Note: I’m updating and consolidating everything here instead of separate posts

Pixel 3 FeliCa related information is trickling in as devices get ready to ship. Pixel 3 details will give us a good idea of the Google Pay roadmap and answer some lingering questions:

  • Do Pixel 3 JP models have a Google custom FeliCa embedded Secure Element (eSE) implementation or use Sony FeliCa chips, and is the hardware the same across all SKUs?

The Pixel 3 JP models have a different hardware configuration. Google did the quickie solution of sticking a FeliCa chip in it, i.e. one Pixel 3 hardware configuration for Japan, another Pixel 3 hardware configuration for everywhere else. Not exactly the elegant long term vision thing that does not bode well for a global FeliCa Pixel 4: if Google is not creating its own custom Embedded Secure Element (eSE), the prospects of a global FeliCa Pixel next year are dim.

On the plus side Express cards with power reserve are a given as this feature already exists on Android Osaifu-Keitai smartphones with FeliCa chips. The down side is that this means Google Pay on Pixel 3 is exactly what it is on Android Osaifu-Keitai: a candy colored UI wrapper around the Osaifu-Keitai stack, an alternative front end. All icing, no cake. You get what Google Pay Japan supports but you have to add missing pieces like iD on your own. Even worse Pixel 3 apparently locks users into SIM free MVNO Osaifu-Keitai apps and their limitations, i.e. full Docomo iD support cannot be added.

  • Does Google Pay in Pixel 3 Japanese SKUs implement NFC switching?

iOS 10 didn’t have NFC switching support and was a big reason that Apple only activated FeliCa Apple Pay in the Japanese iPhone 7 and Apple Watch 2 models. NFC switching was necessary to support Global FeliCa iPhone 8 and later/Apple Watch 3 and later so that users could mix different card types (EMV, FeliCa, China Transit) in Wallet and have it all ‘just work’. If Google Pay does not support NFC switching then we have another reason why Pixel 3 is not global FeliCa.

  • Does Pixel 3 have express cards with power reserve?

As noted above Pixel 3 JP SKUs have a dedicated FeliCa chip like any other Japanese Android Osaifu-Keitai smartphone out there, the answer is yes.

Update: iFixit posted a Pixel 3 teardown, content and title updated

Update 2: the hardware for Pixel 3 JP SKUs has a dedicated FeliCa chip, major rewrite.

Update 3: Google Pay Japan on Pixel 3 is ‘pure’ Google Pay with the current limitations like no iD support and only allows installation of the ‘SIM Free MVNO’ version even on Pixel 3 devices from Docomo.

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Siri’s Strange Japanese

Siri’s Japanese is very strange and could definitely use some tutoring. Siri’s pronunciation of Asagaya has never been right and can never find Asagaya station when you ask for it. And for some reason today Siri forgot how to pronounce Japanese numbers. Instead of the correct Japanese for 22˚ C “Nijyū-ni do” Siri keeps pronouncing it “Twenty-Two do” like a Japanese first grader learning English the first time. Take a listen.

Apple Pay and the art of 2-way disruption: how Super Suica will change contactless payments in Japan and beyond

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 offer all the local commuter plans and point systems.

Global FeliCa iPhone, FeliCa Pixel, Super Suica and all that
Apple Pay Japan arrived just 2 years ago and has clearly disrupted the Japanese contactless payments market in many important and interesting ways. Things can change quickly and the disruption isn’t one way. Here is a timeline:

  • 2014
    Apple approaches JR East to have Suica on Apple Pay which requires Apple to implement the FeliCa embedded Secure Element (eSE) on A-Series/S-Series chips and set up a FeliCa Networks licensed key server.
  • September 2016
    Apple announces FeliCa support for iPhone 7 and Apple Watch 2 Japanese models, Japan Transit IC card e-money use is approximately 5.5 million transactions a month with a 10% YOY growth rate.
  • October 2016
    Apple Pay Japan starts with Apple Pay Suica as the centerpiece.
  • September 2017
    Apple announces iPhone X, iPhone 8 and Apple Watch 3 that have global FeliCa support: anybody coming to Japan can add and use Apple Pay Suica.
  • October 2017
    SmartEx Shinkansen Service starts: anybody coming to Japan can use Apple Pay Suica for Shinkansen travel.
  • September 2018
    Apple announces iPhone XS, iPhone XR with the A12 Bionic powered Express Cards with power reserve feature that builds on the global FeliCa feature of previous models, far more important for use in Japan than any other market, Japan Transit IC card e-money use tops 7 million transactions a month with a 20% YOY growth rate.
  • September 2018
    JR East and Sony announce ‘Super Suica’ card, starting April 2021 Super Suica will incorporate all Japanese transit cards in one card for transit, e-money and mobile.
  • October 2018
    Google announces Pixel 3 with FeliCa support, a first for Google hardware. Google Pay matches Apple Pay but only on a Pixel 3 JP models further splintering the Android platform between haves and have-nots.

As I predicted a year ago, the global FeliCa iPhone with NFC switching took Apple Pay to a whole new level and made FeliCa a de-facto NFC smartphone standard checklist feature that Google Pay could not match unless Google made their own hardware version of it, which they have done with Pixel 3 in Japan, their first official entry with Japanese carriers. If Google continues to follow Apple’s lead then Pixel 4 should be global FeliCa with NFC switching that further divides the ‘pure Google’ Google Pay haves from the have-nots.

The Apple Pay Black Ship
Japanese IT journalist Junya Suzuki wrote that Apple Pay would be the ‘black ship’ that would revolutionize Japan’s contactless payments market. Apple Pay was the match that finally lit the fuse of the huge Japanese contactless transit and payments infrastructure investment and launched it into orbit. In the 2 years since it’s arrival. Apple Pay Suica kicked Japan Transit IC card e-money growth into high gear 20% YOY growth even though most of the action is Tokyo area based: estimated e-money transaction growth rates in Tokyo alone are 40%. The first year of Apple Pay Suica proved that stored value (SV) transit cards, not credit cards, are the golden growth path for contactless payments.

And now because of the success of Apple Pay Suica, JR East and Sony are taking it to the next level developing the next generation Suica container format, which doesn’t have a real name yet (local coop transit smartcard?). I call it Super Suica and it’s due to launch April 2021. Super Suica will change Japanese contactless payments and transplant the Apple Pay Suica transformation from the Suica Tokyo home area to all transit regions nationwide. Everything transit will be on Apple Pay, everybody everywhere can use it for transit and e-money. Google Pay and Osaifu-Keitai will be there too.

But Super Suica isn’t just for Japan, it’s part of the vision JR East unveiled at the July 2016 NFC Forum Japan meeting to have NFC transit payment standards that work everywhere:

With a single seamless NFC standard and certification process in place, JR East roadmap goals are very clear:

  • Japanese customers with Mobile Suica devices can use their devices for public transportation and transit payments abroad.
  • Global specification certified NFC devices from abroad can use Mobile Suica.

Current limitations
NFC certification and global FeliCa smartphones are taking care of the hardware side, but NFC transit payments interoperability isn’t there because there hasn’t been a roadmap. Super Suica is the first step to create one. Japanese transit cards have been compatible with each other for transit and e-money since 2013 but important pieces are missing: commuter passes and point systems are still chained to local transit cards and have to be managed locally. You can travel with Apple Pay Suica anywhere, but you can’t add a commuter plan for an area outside of the Suica transit network.

Because of the costs associated with maintaining local data and account management it’s very difficult and expensive for large transit companies to host systems on mobile digital wallets. Nobody outside of JR East has managed to do it. It’s expensive for smaller local transit companies to issue smartcards and impossible to host them on mobile. Super Suica containers will solve these problems and greatly reduce costs not only for plastic card issuance and operation but also for hosting them on mobile digital wallet platforms.

Super Suica Roadmap

Super Suica Containers
The JR East and Sony co-development announcement of a ‘national’ super Suica card sounds exactly what the Aso government proposed back in 2008: one card to 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 Super Suica in circulation starting April 2021.

Development is divided between Sony, JR East and JR East Mechatronics (JREM), the JR East subsidiary company that manages Mobile Suica.

  • Sony: updating FeliCa OS for the new format
  • JR East: coordinating the deployment effort with the other transit companies
  • JREM: physical card development, providing background services for issuance and mobile

The press release is terse and light on details but 3 points are very clear:

  • Cost reduction
  • Support for local commute plans, points, branding and more in addition to the regular stored fare transit and e-money features of current issue cards
  • Everybody on board

The aim is clear: instead of complicated expensive account management systems that babysit all the extra functions the cloud magically attaches to current transit cards, with every transit company doing it differently, Super Suica will be a universal container that takes care of the extras on the card itself. There will be established protocols and one common format with a new FeliCa OS version to handle everything.

Current Account based Mobile Suica

Containers vs account management

This approach will streamline and simplify the entire Japan Transit IC system process for plastic cards and mobile, significantly lowering costs without sacrificing the great things about Suica: blazing speed and local processing without a network.

Functions that are geeky and complex like setting up auto-charge or purchasing Shinkansen e-tickets will become much easier and accessible. Missing functions like discount tickets, special fares, and regular line express train ticketing will be possible on mobile. JR East has talked about raising the current 20,000 JPY Suica balance limit, Super Suica is the perfect opportunity to finally do it.

The outcome for Japan
The change for Japan is obvious: the success of the Suica transit payment platform in the Tokyo region is made available everywhere. Actually it already is available everywhere but Super Suica will supercharge it.  JR East will offer to host everything on mobile so that everybody in Japan can use Apple Pay, Google Pay or Osaifu-Keitai for local transit, purchases, while offering all the local goodies and incentives.

Other big players like JR Central and JR West may not opt-in for hosting on Mobile Suica for political reasons but the incentives are certainly there and the cost of getting somebody else’s cloud service to do it will be much easier and cheaper than it is now. JR East looks eager to go the extra distance to get everybody on Mobile Suica cloud and should make clear that Mobile Suica is only managing containers, not account data.

The outcome outside of Japan
The possibilities outside of Japan are going to be interesting. Could the Hong Kong Octopus system opt for the new format and could it be made cross compatible? It’s nice to think that sister systems like Octopus and Suica could do that some day. Even if that doesn’t happen, the Super Suica container format will offer Octopus the same benefits of lower costs and make it easier to deploy on other digital wallet platforms outside of the currently exclusive Smart Octopus in Samsung Pay.

More than cross compatibility however I think Super Suica will shine a much brighter light on the shortcomings of using ‘Open Loop’ EMV contactless credit card payment networks for transit: non-existent account management, simple fares only, no commute plans, no points that tie in with other transit company services, etc. These are problems that are prohibitively expensive for any transit company to fix on their own and the banking industry payment networks will not.

EMV contactless transit shortcomings
EMV contactless for transit might seem like a good idea but it doesn’t deliver as much for the investment as Super Suica.

You know things are really bad when 9to5 Mac writes this about using Apple Pay on the Milan Metro:

A handy tip for anyone wanting to get around with Apple Pay without causing a fuss is to authenticate Apple Pay as you approach the gate. Doing it in advance helps remove the awkwardness of holding up other people if your fingerprint or face isn’t recognized first time, for instance.

This is a perfect example of dead-end last century credit card vs. smartcard, open loop vs. closed loop thinking and where it has brought us. Digital wallet platforms like Apple Pay and Google Pay collapse the differences of open loop vs. closed loop and destroy the old arguments while combining different NFC technologies and middleware software into one compelling new whole the creates an entirely new game: Build a transit payment platform instead.

A stored value native transit card on the front end with a credit/debit card on the backend for Apple Pay or Google Pay recharge is the best arrangement that leverages the strengths of both approaches working together instead of the old antagonistic and wasteful A or B arguments. In the long run it’s a win-win for transit companies and the banking industry.

For Asian countries that already have FeliCa transit systems (India, Indonesia, Hong Kong, Vietnam) Super Suica will let them do more. For transit companies in America and Europe, Super Suica will be a great chance to re-examine long-term goals and choose the best mix of technologies in light of the new business opportunities and models that digital wallets and Super Suica roadmap will offer.

One thing is clear: transit companies that stick with the old ways of thinking will miss unique new business opportunities offered by native transit payment platforms hosted on digital wallet platforms, opportunities that build on transit but also extend it into new places.

Pixel 3 FeliCa and iPhone X Suica problem switchers

iPhone X Suica problem switcher
a iPhone X Suica problem switcher

That didn’t take long. A few hours after the Pixel 3 announcement with confirmation of FeliCa models for Japan, iPhone X users like this one are ready to dump their iPhone X Suica problem devices for a shiny new Pixel 3.

Apple doing nothing about the iPhone X Suica problem in Japan is a dangerous proposition that’s gives Google a wonderful business opportunity. The danger is that Apple does not realize that Japanese users are the savviest NFC users in the world: Suica and Osaifu-Keitai smartphones have been around a long time, far longer than Apple Pay Suica. Even if Japanese users know nothing about the iPhone X Suica problem, they immediately and instinctively know a NFC lemon device from a good one.

Forcing NFC savvy Japanese iPhone X users to stumble in the dark and deal with the Apple Support “we have never heard of the iPhone X Suica problem” runaround is terrible short term get-rid-of-the-problem vs. long term vision thinking. I guess it means that Apple is OK giving Japanese business away to Google and that giving away some business is less expensive than fixing a problem. Anyway you look at it I think the current approach is a mistake but especially so in the Japanese market.

Pixel 3 FeliCa

JCB added their FeliCa QUICPay payment network to Google Pay yesterday, a sure sign that Pixel 3 has FeliCa. This narrows down the possibilities I outlined in the previous post:

1) Pixel 3 does not support FeliCa: this is unlikely given how much Google has advertised in Japan and would kill the Pixel brand in Japan forever.

2) Pixel 3 does the iPhone 7 thing and only supports FeliCa on Japanese specific SKUs: this is more likely but will piss off Android fans outside of Japan.

3) Pixel 3 does the iPhone 8 thing with a global FeliCa Pixel 3: most people will be happy and inbound Android users can finally join the Mobile Suica party.

4) Pixel 3 does the iPhone 8 JP global FeliCa but TD‑LTE Band 42 support is JP carrier exclusive: MVNO fans will be frothing at the mouth and cursing at the wind.

5) Pixel 3 does the iPhone 8 global FeliCa thing with TD‑LTE Band 42 JP SKUs both in SIM-free and select carrier locked arrangements: this would be the best outcome for MVNO users and for actually selling some product.

#5 is best but #3 and #4 will do.

Update: too bad global FeliCa fans, Google did the #2 iPhone 7 Japan SKU only FeliCa thing. The only questions left are what’s the embedded SE arrangement (eSE) which can give us a clue about Google’s NFC roadmap, and whether Pixel 3 JP FeliCa has Express cards with power reserve like iPhone XS/XR. Probably not.

Update 2: Looks like Pixel 3 uses a custom eSE for FeliCa.