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.

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.

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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:

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 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

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.

The iPhone X Suica problem upgrade dilemma

I wrote about the upgrade dilemma facing users with iPhone X Suica problem devices in my iPhone XS quick review but wanted to break the discussion out into a separate post. A12 Bionic bulletproofed Apple Pay Suica performance in iPhone XS and iPhone XR along the Express Cards with power reserve feature are remarkable and a good reason for Apple Pay Suica users to upgrade.

 

But it’s a dilemma for iPhone X users in Japan who have yet to obtain a Revision B iPhone X exchange for problem iPhone X devices: to upgrade or not to upgrade, to put up with the Apple Support hassle of getting an exchange for a Rev-B iPhone X or not. If you can get a good ‘as is’ iPhone X trade-in price from a carrier upgrade program, the iPhone XS/XR Apple Pay Suica performance is a huge step up from a problem iPhone X device. You won’t believe the difference.

If you plan to sell the device in Japan on an auction site like Yahoo Japan here are a few tips for getting a better price based on my experience:

  • Get an Rev-B iPhone X exchange as you can get a better price advertising a ‘just like new’ exchanged device. You can also advertise the ‘manufactured after April 2018 Rev-B iPhone X Suica problem free’ aspect as that has recognition value in Japan and nowhere else.
  • If the iPhone X is a Japanese carrier model A1902 make sure the carrier SIM lock has been removed which is easy to do. For Docomo iPhone X models also make sure the ‘Docomo Network Limitation‘ has been removed as well. You can check device status on the Docomo web site and request limitation removal. List the IMEI number in the product description so that potential buyers can check it for themselves.
  • If the iPhone X has AppleCare+, offer to transfer AppleCare after the sale.

If you don’t choose the upgrade option and have a problem iPhone X, be sure to exchange it for a Rev-B iPhone X as it is easier to do in Japan than anywhere else. You can certainly live with a Rev-B iPhone X NFC performance as it matches iPhone 8. Current iOS 12 Apple Pay Suica performance problems are fixed in the upcoming iOS 12.1 update.