iOS 12 Suica bugs exacerbate iPhone X Suica problems and create confusion

iOS 12 Apple Pay Suica bugs are causing headaches for some users getting exchanges for iPhone X Suica problem devices (a NFC hardware problem across all iOS versions): users find they have the same Suica problems running iOS 12 (iOS 12.0 specific software bugs) on NFC hardware problem free Revision B iPhone X devices. Unfortunately for iPhone X users the 2 issues merge in a perfect storm. It’s confusing and only natural to assume nothing is fixed and yet another Apple Support runaround iPhone X exchange is needed to fix it. If you are using iOS 11.4.1 on Apple Pay Suica iPhone X, I suggest staying with it and not updating to iOS 12 just yet.

Apple Pay Suica users who update to iOS 12 and watchOS 5 report the following problems:

  •  Unresponsive Express Transit cards at transit gates where Apple Pay requests a Face ID/Touch ID/Passcode unlock
  • Transit gate error flicker
  • The Suica card balance doesn’t update

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. iOS 12.1 developer beta 4 went out earlier this week with 2 more likely to go before the official release. The just announced October 30 Apple Special Event would be a natural iOS 12.1 official drop date.

The iOS 12.1 and watchOS 5.1 updates will hopefully fix remaining Suica issues and provide relief for long-suffering iPhone X users who really need some peace of mind that only Apple can provide.

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Japan’s economic revival, the cash tax and the contactless payments boom

Anybody who has lived in Japan any length of time knows the economic reality here is rarely reported accurately in the western media. The worn out narratives of the ‘lost decade’ (or is it two?), the ‘aging society’, the ‘Japan is so over’ are just too easy for the challenged journalists of our era not to use. Otherwise they might have to actually do research and fact checking.

When some American friends visited Japan in 2010 I took them on a hot spring tour. For the entire trip they marveled at how prosperous things seemed, “the media always says that Japan is in such bad shape. I can’t believe the difference.” I imagine that lots of inbound visitors are surprised by the reality they find in Japan, especially visitors from the West where the worn out narratives are endlessly recycled.

Japan’s economic revival began with the Nikkei stock market revival when the Abe Government took power on December 26, 2014. A nice little Christmas present that keeps on giving. And now Morgan Stanley is taking notice, it even mentions the role of contactless payments in Japan’s continuing economic growth:

Another contributor to growth will come from Japan’s shift away from cash. Just 21% of transactions in Japan are currently cashless, versus an average of 45% outside Japan. “Reducing the cost of cash processing is a key element of productivity reforms,” says Japan Banks analyst Mia Nagasaka, who forecasts that cashless transactions will expand to 30% of the total by 2025.

Although a reduction in cash transactions is good news for the economy as a whole, it is particularly important for banks. As in the U.S. and other markets, Japanese banks stand to save a great deal as consumers switch to mobile banking and paying with credit cards or digital wallets rather than cash. All told, Nagasaka believes that Japan’s megabanks could raise their average return on equity from 6% currently to 8% by 2025 through cost-cutting and technology adoption. Under this scenario, valuations for Japanese banks would improve from 0.6 times book value to nearly 1x—a big leap in an industry that many investors had written off.

With just one year to go until the Japanese sales tax is raised to 10% there are some very interesting implementation proposals the Abe Government is putting on the table. The most interesting one is the ‘cash tax’: when you pay for things in cash you pay a 10% sales tax, when you pay for things with contactless payment you pay 8% sales tax, exactly what everybody pays now.

If the proposals are passed by the Japanese National Diet, it will certainly drive the growing contactless payments wave to tsunami size. Everybody who does not use contactless payments now will certainly start doing so to save 2% at at checkout. The changes will be fascinating to watch. Apple’s global FeliCa move is looking more genius all the time.

NTT Docomo and SMBC kiss and make up for VISA…maybe

It’s very strange that the JCB QUICPay network has gained the most benefit from the Apple Pay makeover of the Japanese contactless payments market instead of the Docomo iD network. Docomo invented the Osaifu-Keitai standard with Sony in 2004 and was the natural favorite, but iD has only treaded water while JCB has seen steady gains in QUICPay issue cards, customers and transactions.

Docomo iD problems boil down to bad blood between Docomo and Sumitomo Mitsui Banking Corporation (SMBC) who issue and manage Docomo d-CARDs and help run the iD payment network. Up until 2016 VISA d-CARD was king. Then something happened. Things got so bad between the 2 companies that Docomo removed all VISA branding from their website and Docomo stores strongly urge new customers to create a Mastercard d-CARD not a VISA d-CARD. VISA might seem like the target here but SMBC, the first Japanese bank to issue VISA back in 1968, are the real power behind the VISA throne in Japan, and the real target for Docomo ire.

VISA refusing to sign on directly with Apple Pay Japan or offer NFC switching that Mastercard, JCB and AMEX do is undoubtably a big friction point because it diminishes the iD brand and VISA d-CARD. VISA also half-heartedly pushing VISA Pay Wave again, with SMBC pulling, doesn’t help. Which makes the NTT Docomo/SMBC detente ‘let’s build a new future together’ announcement so interesting. Here are the 3 announcement points <with comments>

  • First of all Docomo and SMBC agree to start all over again to rebuild the d-CARD business and develop new services. <Nice boilerplate stuff with no promises and no deadline for delivering anything>.
  • Sumitomo Mitsui Financial Group will buy back all outstanding shares of Sumitomo Mitsui Card Co. (34% of the company) from NTT Docomo by April 1, 2019. <Why does Docomo want out of the credit card business? Do they think that credit card industry pricing and fee structures are unsustainable in the face of ubiquitous contactless payments of all flavors, online banking and ever more competition? Do they think the credit card industry is going to have to live on far less and have to aggressively restructure? Or is it something else like getting out of the 2 year contract subsidizing business? Inquiring minds want to know.>
  • Docomo NTT and SMBC will work together to develop and deliver more cashless solutions and expand the iD network. <That sounds nice but what does it really mean? Is VISA finally joining the Apple Pay Japan party? Is Google Pay support coming on iD?>

Like all cold war detente agreements, the proof will be in the pudding.

7-Eleven Japan ATM Suica Recharge Service

7-Eleven ATM e-money recharge

7-Eleven ATM Suica Cash Recharge service started today. I gave it a test run but it’s not as fast or convenient as Smart Charge kiosks at JR stations. The video highlights the user experience and the weak points:

  • 7-Eleven ATM Apple Pay Suica Recharge is not Express Card savvy. You have to use Touch ID/Face ID and put Suica in the manual ready state like an Apple Pay credit card.
  • The reader stand on the right of the touchscreen is designed for plastic cards with the NFC hit area at the bottom of the stand. This means you have to put iPhone on the stand upside down for Apple Pay Suica to work. It’s very awkward.
  • The process is not that fast.

The service is OK but nothing more. Suica cash recharge at the JR station or the convenience store cash register is a faster deal, and the convenience of Apple Pay Suica Recharge always beats cash recharge. The main benefit is that 7-Eleven ATMs are plentiful, open 24 hours and offer Suica cash recharge during the Mobile Suica late night maintenance offline hours 1am~4am.

Pixel 3 FeliCa details: eSE, NFC switching, missing global FeliCa

This is a place marker for Pixel 3 FeliCa details that will be coming in over the next few weeks after the new devices ship in America and Japan. I’ll update here instead of separate posts. Those details will give us a good idea of Google’s NFC 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?

This sounds trivial but we’ll find out how Google leverages the Open Mobile API in Android 9 Pie and how it relates to the eSE. If it is the former then Google Pay might finally be freed of its current dependence on the Sony/Docomo Osaifu-Keitai software stack. If the latter then Google Pay will be same silly candy wrapper UI that currently runs on Japanese Android carrier locked smartphones and we can forget all about a global FeliCa Pixel 4.

  • 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 know why Pixel 3 is not global FeliCa.

  • Does Pixel 3 have express cards with power reserve?

If Pixel 3 has Sony FeliCa chips, then power reserve is a given. If Pixel 3 FeliCa is a Google custom implementation then I suspect not and Pixel 3 Google Pay Suica will suffer the same OS version performance problems that Apple Pay Suica has on non-A12 Bionic devices. At least until Google can build, or pay somebody to build, a A12 Bionic clone.

Hopefully we’ll find answers and more as Pixel 3 teardowns and other details start hitting the web.