The Suica 2.0 launch in the Tohoku region on May 27 is not simply a launch. It marks the transition to a whole new business model for JR East. The future is Suica as a mobile payment and services platform that leverages JR East transit infrastructure. It has to be because the traditional business model of selling train tickets is declining along with the population of Japan. Fewer people, fewer trains. Lifestyles and work styles are changing too, as expected, but COVID has drastically accelerated societal shifts that planners expected to happen gradually such as doing away with work day commuting and the need for commuter passes.
And there is mobile. The ability of doing things with an app and a credit card instead of having to go to the station ticket office or kiosk has made a lot of station infrastructure irrelevant. Station infrastructure and ticketing systems built for the era of cash based kiosks for paper tickets, commuter passes is redundant in the Mobile Suica era, and maintaining local JR Green Window Ticket Offices in every station is expensive.
For example, long time JR East commuters have witnessed the gradual elimination of paper ticket kiosks in favor of pink Suica recharge kiosks. This is because over 90% of JR East Tokyo area transit users use Suica or PASMO and the reason why there are fewer expensive maintenance heavy IC + paper ticket gates and more inexpensive easy maintenance IC only gates at stations. Are there are more IC Card only exits in rebuilt stations especially with connecting shopping malls.
Open Loop Reality All of this is taking place while multiple transit companies are testing open loop transit for deployment as a way to increase revenue. One of the issues that people don’t discuss about open loop transit is the lack of integration on a large scale like closed loop Suica. Open Loop doesn’t travel well. When you examine the deployments around the world, it is limited to isolated systems with simple fare structures. That’s why I call the Japanese test installations transit boutiques. It doesn’t integrate well across complex fare structures and multiple transit connected companies. It doesn’t work for reserve seat Shinkansen and express train eTicketing. Complex transit ticket packaging and fare validation speed is where closed loop shines. In real world testing open loop isn’t an improvement over Transit IC. The mix and match transit gate environment, predictably, slows things down. Open Loop has its place in the transit mix, but I believe the return on investment will not live up to expectations.
Integration is the key The promise of Suica 2.0 boils down to creating a whole new level of integration. The current Transit IC standard is a strong one because it integrates cards across different transit regions with cross compatible eMoney purchasing. The integration of mobile with Suica took it to a whole new level as the world’s first transit payment platform, as did Apple Pay integration in 2016. By moving fare processing to the cloud, Suica 2.0 will integrate isolated Suica regions, integrate new flexible fares and new types of commuter passes while promoting local services in new ways. It will eventually incorporate QR ticketing as well. As cloud based transit IC systems are linked together, the integration will spread beyond JR East. Integration is the only way forward for the Transit IC platforms, Suica, PASMO and ICOCA, to evolve and survive and grow in the mobile era. It’s going to be a very interesting journey.
The railway station barrier-free fee system is “a Japanese railway fare system established with the aim of promoting barrier-free railway stations in urban areas” by leveraging a fee on urban railway users in Tokyo, Kansai and Fukuoka areas. It is a barrier-free train station tax if you will, added to regular adult fare and commuter passes but generally not child fares or school commuter passes. The barrier-free tax will cover station infrastructure costs for adding platform doors, elevators, etc., to the designated metropolitan area stations.
From 2023-03-18 most railway companies in the Tokyo area, both JR East and non-JR, raised transit fares to pay this barrier-free station tax. Here is the breakdown for the Greater Tokyo area focusing on JR East.
Non-JR East Tokyo area railway companies are raising regular fares by ¥10 but commuter passes are a different story.
While barrier-free stations are good thing and not a big tax to pay for all that new infrastructure, the timing could not be worse. Living costs are rising across the board, little increases add up, eating into salaries that are not rising much, if at all. Each transfer on a multiple transit line routes now has increased fare with each transit operator section. For example: my work commute uses JR East and Tokyu lines, the old fare was ¥419, new fare is ¥457.
In real world use it simply means if you have an Suica Off-Peak Commuter Pass, don’t enter your start station during the station designed morning ‘Peak Time’ on work days. If you do the commuter pass doesn’t work. Any time outside of ‘Peak Time’ you are good to do. This is much better than the convoluted, often confusing Suica Off-Peak JRE POINT Campaign that ends March 31.
Apple Pay Suica users can purchase Off-Peak commute plans in an upcoming version of Suica App (v5.2.1), but you must purchase a new pass. Regular commute plans can only be renewed as regular commute plans, they cannot be migrated to off-peak plans. School commute plans and passes will not be charged the barrier-free tax which is good news. Another bonus: high school and jr. high school students can add and use Mobile Suica school commute plans staring March 18.
Keio and Keikyu are raising fares later this year in October.
Regular adult fares are up ¥10 in line with JR East, some have also raised child fares by ¥10. Commuter passes are generally being raised more, and there are no off-peak commuter passes. Kansai area transit operators are raising fares on April 1, Fukuoka on March 27. Be sure to check how the fare and commuter pass increases apply to your local commute situation.
With the new train schedule and barrier-free transit tariff going into effect on March 18, current Suica Commuter pass users like myself who use the JRE POINT Off-Peak Commuter Point Service that ends this month, face a dilemma: does the Off-Peak Commuter Pass offer the same level of JRE POINT reward savings? Let’s face it, in these inflationary and looming tax increase times, pinching every point to yen counts.
It comes down to 3 choices: (1) a more expensive regular commuter pass that is difficult to swallow without the off-peak transit point return, (2) a less expensive Suica Off-Peak commuter pass without off-peak transit points, (3) no commuter pass with repeat transit points.
As my work place pays commuting expenses based on regular non-commuter pass transit fare, going with the less expensive off-peak commuter pass lets me pocket the difference. So my choice basically comes down to off-peak commuter pass or no commuter pass with repeat transit points, depending on which one gives better JRE POINT returns, better purchase price savings, or both.
Here is a comparison of the price increases for my 6 month commuter pass between JR East Asagaya and Tokyu Ikegami. The route is Chuo-Yamanote-transfer at Gotanda-Ikegami. The JR East portion covers 11 stations and 15 kilometers of track. Tokyu covers 12 stations and 11 kilometers of track.
Right away we can see that the JR East fare increase basically adds the barrier-free tariff, a 1.4% increase. The Tokyu fare increase is more than just the tariff, a lot more at 13.8%, likely including electricity price increases, salary increases, and what not. Tokyu also does not offer an off-peak option.
Now that we have the new commuter pass prices for both JR East and Tokyu, let’s run a simulation to find which configuration has the best JRE POINT returns. For the latter I used the very handy JRE POINT simulator, highly recommended for running reward point numbers. Remember, that off-peak and repeat points only apply to JR East fares.
As my work place covers the regular fare price, old and new regular fare difference is set at zero. Off-Peak points are calculated for 6 months based on 2022 returns. Repeat and recharge points are calculated on 20 round trips between Asagaya and Gotanda a month x 6 months for old and new fares. The return is the purchase difference plus JRE POINT with 1 point = 1 yen.
The simulation results are pretty much in line with my expectations. Suica Off-Peak commuter passes do give you the best value, by a little bit, especially when your company is reimbursing you at regular fare rates, which many companies seem to do. You also get the best value when your commute is exclusive to JR East lines as JR East has not raised fare increases, only adding the barrier-free tariff. The return drops when including connecting non-JR East lines but still give the best overall return. One thing is for certain: if you ride JR East lines regularly with Suica and are not registered with JRE POINT, you are throwing money away.
There’s a very interesting section at the in the Apple Platform Security May 2022 document in the section covering transit and eMoney cards.
Adding transit and eMoney cards to a family member’s Apple Watch In iOS 15 and watchOS 8, the organizer of an iCloud family can add transit and eMoney cards to their family members’ Apple Watch devices through their iPhone’s Watch app. When provisioning one of these cards to a family member’s Apple Watch, the watch is required to be nearby and connected to the organizer’s iPhone using Wi-Fi or Bluetooth. Family members are required to have two-factor authentication enabled for their Apple ID for this to occur. Family members can send a request to add money to a transit or eMoney card from their Apple Watch using iMessage. The content of the message is protected by end-to-end encryption, as described in iMessage security overview. Adding money to a card on a family member’s Apple Watch can be done remotely using a Wi-Fi or cellular connection. Proximity isn’t required.
Commuter passes (commute plans) are purchased in Suica or PASMO app and new versions are coming that support student ID certification. The student takes a picture of their school ID card in the app and uploads it along with a requested commute route. They can use student commuter passes on iPhone or Apple Watch, which is the only wearable option for Mobile Suica • PASMO. All other wearables, including Pixel Watch Suica, do not support commute plans, only regular Suica.
After the student ID is certified they complete the commute plan purchase. Here is where it gets interesting. If the student does not have a credit card, they can purchase it via the new ‘one time purchase’ option with a parent’s card. Most Tokyo high schoolers already seems to have a Mobile Suica or PASMO, but now that they don’t need the plastic card for going to school, they can buy a commute plan and toss the plastic. That means the Tokyo area HS set will finally be 100% mobile for payments and transit.
But what about the JHS set, especially the younger ones who might not have payments cards? This is where Apple Watch Family Sharing Suica via iMessage comes in handy:
“Hey ma, I need recharge!” “I just gave you ¥5,000.” “But that was Tuesday and I have to eat before going to the Juku, can’t study when I’m hungry”
When foreign issue VISA cards in Wallet stopped working for Apple Pay in-app Suica and PASMO recharge on August 5, the first people to howl in pain were Apple Pay PASMO users who suddenly couldn’t recharge with their Chase Sapphire VISA cards. Chase Sapphire still codes for 3x travel points with a PASMO recharge and long time resident Suica users migrated to PASMO when JR East and VISA shut down 3x travel points in May 2021.
I confirmed that recharge with my Wells Fargo Signature VISA wasn’t working and contacted Mobile Suica support. The official line: there should be no problem with foreign issue cards, contact the card issuer. I then contacted Wells Fargo card services support, official line: there should be no problem with your VISA, contact the merchant. Entirely expected of course but I did confirm that Mobile Suica transaction attempts were not even showing on the Wells Fago system. They said it seems to be a ‘communications issue’… code word for: something’s not right on the merchant transaction authorization side.
I suspected a larger issue than just Apple Pay and an Android Suica user confirmed the same non-JP VISA problem with Google Pay Suica. I also alerted IT journalist Junya Suzuki who focuses on mobile payments. His first thought was something might be going on with the VISA Japan merchant acquirer side of the payment network. For reference, the merchant acquirer handles transaction authorization from the merchant side, ‘this transaction is clear to send to the card issuer.’ The issuer then clears the transaction with the customer account, ‘this customer is good to pay for this charge.’
Merchant acquirer relations are very secretive, nobody knows who is the merchant acquirer is for Mobile Suica/Mobile PASMO though I suspect it is SMBC Group who are the goto banking group for VISA Japan. Maybe they were tightening online transaction security…or something else, everything was clear as mud though he did say this:
An acquirer made the decision stopping handling cards issued in other countries… Another guy suggests Apple or such acquirer may face money laundering issue by registering Apple Pay with pre-paid Visa cards or such…In addition, that means JRE doesn’t know what’s happening on this problem.
In a later article he described JR East as a ‘victim’ of a situation forced by VISA, their hands are clearly tied. VISA payment network and their merchant acquirer are highly selective as well. For example: foreign issue VISA works fine for Apple Pay in-app purchases with Japanese apps like Starbucks, but not in-app purchase with JR East for Suica recharge. This means any and all ‘security concerns’ excuses don’t wash, they’re just a ruse.
Security and Apple Pay Enhanced Fraud Prevention It’s helpful to examine the impact of phishing attacks targeting NTT Docomo, Line Pay, PayPay and other QR code mobile payment service users in late 2020, and JR East online service users (Mobile Suica, JRE POINT, Eki-Net and VIEW card) in early 2022. Phishing attack responses were varied and vague. Companies like to say they value customer security but are short detailing what they’re doing because details hashed out with the card brands and merchant acquirers are secret non-disclosure territory.
Japanese credit card issuers responded by upgrading to EMV 3-D Secure v2 (3-D stands for three domains: merchant/acquirer domain, the issuer domain, and the interoperability domain), for non-digital wallet browser and mobile app payments. EMV 3-D Secure is the EMV e-commerce browser and app authentication tokenization specification with the card brands using their own naming and implementing merchant support in their respective payment networks.
On the merchant side JR East has beefed up security to fight Mobile Suica phishing attacks with tighter monitoring of Suica App recharge with the app registered credit card (not Wallet app recharge). However it’s important to understand 3 key points:
These security measures only apply to the target of phishing attackers: Japanese credit card users who have a registered Suica, a Mobile Suica account and use Suica App recharge.
Japanese issue VISA cards work for Suica recharge without any problems.
3D Secure compatibility issues have nothing to do with Apple Pay and Google Pay, they don’t use it. This is a common misconception on social media sites.
These are domestic issues that do not apply to inbound visitors using unregistered Suica cards in Wallet without Suica App or a Mobile Suica account. And yet VISA is blocking their foreign issue cards for recharge.
It’s also important to understand that EMV 3-D Secure has nothing to do with Apple Pay, Google Pay, Samsung Pay and similar digital wallets who have their own tokenization. Apple Pay has very high security however, Apple Pay has been making some changes to enhance security for online and in-app purchases. Apple Pay quietly launched Enhanced Fraud Protection in April 2022 when Apple Cash switched from Discover to VISA. The updated Apple Pay and Privacy text added a new section:
For cards with certain enhanced fraud prevention, when you attempt an online or in-app transaction, your device will evaluate information about your Apple ID, device, and location if you have enabled Location Services for Wallet, in order to develop on-device fraud prevention assessments. The output of the on-device fraud prevention assessments, but not the underlying data, will be sent to Apple and combined with information Apple knows about your device and account to develop Apple Pay transaction fraud prevention assessments. These transaction fraud prevention assessments may be shared with your payment network, together with a shipping address identifier and IP address if available, in order to prevent fraud at the time of transaction. The shipping address identifier differs per payment network and may be used to confirm whether shipping addresses for different transactions using a particular card on your device are the same in a way that does not reveal the underlying address. You can check whether a card has this enhanced fraud prevention at any time by going to the back of your payment credential in Wallet. To prevent the sharing of fraud prevention assessments with your payment network, you can select another card.
This means that Apple Pay ‘might’ share iPhone/Apple Watch location information when making online or in-app purchases. So far VISA cards are the only ones that have Enhanced Fraud Protection but it doesn’t seem to apply to all VISA issue cards and it’s impossible to tell which VISA cards use it. My Wells Fargo VISA card for example doesn’t show any sign of enhanced fraud prevention in Wallet app card details.
Does enhanced fraud prevention have anything to do with Apple Pay Suica and PASMO recharge not working for foreign issue VISA? The short answer is no, but it’s a background development to be aware of because: 1) it’s limited to online and in-app purchases, 2) VISA pushed for ‘fraud prevention assessments’ so they could obtain device location information and more. VISA pushing this agenda could be causing issues on the merchant acquirer side.
The VISA open loop power play So we circle back to foreign issue VISA use in Japan again. Why are cards cleared for Apple Pay, cards that worked fine up until August, not working? The timing is perfect when you also consider that VISA is heavily promoting ‘VISA Touch’ EMV contactless and open loop transit in Japan as a challenge to the home grown FeliCa based Transit IC card system. It’s very convenient for VISA Touch open loop marketing purposes when Apple Pay Suica and PASMO are kneecapped as easy payment and transit options for inbound visitors.
VISA has a history of not playing nice with Japanese stored value cards on mobile and not playing nice with Apple Pay. Japanese issue VISA cards didn’t work for Apple Pay in-app purchases and Suica recharge until May 2021, VISA waited 5 years to ‘resolve’ that issue. VISA cards still do not work with Mobile WAON and Mobile nanaco on Android and Apple Pay, they likely never will. My take is that VISA is not happy with people using VISA cards like an ATM to move money into stored value prepaid cards for making payments, earning points, etc., that are not VISA.
Hopefully this can all be fixed so that everything just works again, but I have learned over the years that card brand payment issues are never simple or solved quickly. VISA has never played nice with Apple Pay in Japan since the very beginning. At the very least we can mark this down as another skirmish in the ongoing digital payment turf wars.
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