Octopus Card Coming to Apple Pay

Update: Apple Pay Octopus is coming with iOS 13
Update 2: with the Apple Pay Octopus rollout approaching, I am consolidating new information and developments on More Apple Pay Octopus Details

Note: Older Octopus coverage (December 2018~March 2019) has been merged here

It’s exactly a year since the Hong Kong Smart Octopus card launched on Samsung Pay. And just like last year, rumors are flying again before a launch, this time on Apple Pay. We will know in the next few weeks. It may arrive in tandem with a iOS 12.x update though last years launch on Samsung was a quick and low key ‘what? it’s here?’ affair.

Global FeliCa has been standard on all iPhone and Apple Watch models since 2017 and the device use profile will certainly match what Apple support lists for Suica:

  • An Apple Watch Series 2 (purchased in Japan), Apple Watch Series 3, or Apple Watch Series 4
  • An iPhone 7 or iPhone 7 Plus (purchased in Japan), iPhone 8, iPhone 8 Plus, iPhone X, iPhone XS, iPhone XS Max, or iPhone XR

The process for adding cards will be slightly different from Suica and closer to Apple Pay China Transit Cards for Beijing and Shanghai: new cards can be created in Apple Pay Wallet and plastic cards can be transferred, but just like Suica, plastic Octopus cards cannot be used after being transferred.

A lot of iPhone users in Hong Kong have been waiting for Octopus on Apple Pay since the debut of global FeliCa iPhone, it will certainly be a welcome addition.

UPDATE
Hong Kong transit directions will also be added to Apple Maps with the Apple Pay Octopus launch. They will be integrated similar to Japanese transit in Apple Maps that notifies insufficient Suica Express Card balance for on route transit fare.

Apple Maps Transit integrates Apple Pay Suica information

More Apple Pay Octopus

I assumed the previous post would be ignored in the end of year rush period. However the timing perfectly coincided with an Octopus Cards Limited press conference where the CEO demurred any Octopus tie-up with Apple and the post got much more attention than I ever anticipated. Obviously there are lots of iPhone users in Hong Kong who want Apple Pay Octopus. A few readers were confused by the situation and asked for some clarification.

First of all the source who correctly predicted last years Smart Octopus on Samsung Pay launch tipped me about the Apple Pay launch. That in itself was enough for me but here’s the thing: Even if the information is wrong, if Octopus Cards Limited (OCL) is serious about expanding Octopus use on digital wallet platforms, taking the next step of getting Octopus on Apple Pay is the only way to achieve that.

Digital Wallets like Apple Pay and Samsung Pay are the most tightly integrated NFC software and hardware digital wallet platforms out there with integrated FeliCa, but Apple is the only one to implement the necessary Secure Element on their own A Series/S Series hardware with FeliCa Networks keys, and sell the package globally. All the major NFC technologies are standard on Apple Pay: NFC A-B-F, EMV, FeliCa, MIFARE, VAS.

Octopus on Google Pay might look nice on paper but it can’t achieve anything of scale yet because of the highly fragmented nature of Android: to date hardware manufacturers have yet to produce an answer to Apple’s global FeliCa iPhone and Apple Watch, even though everybody’s smartphone has a NFC A-B-F chip. Not even Google has pulled it off. Huawei says they are planning to add global Felica but it will take time.

OCL is playing coy because majority shareholder Hong Kong MTR has added QR Codes and EMV contactless to the transit gate mix removing the exclusive Octopus Card franchise, but the technology and market politics don’t mesh. On one hand you have a fast, established and ‘open’ in-house contactless payment system (as in anybody can buy a plastic Octopus card and ride) basically run by public transit companies. On the other hand you have slow and ‘closed’ contactless payment systems (as in only people with certified credit cards and bank accounts can ride) run by major outside credit/debit network companies chipping off money from both customers and transit companies.

In this context putting Octopus on Apple Pay isn’t just adding a card to a digital wallet platform, it is also a statement of who ultimately controls, operates and benefits from the public transit gates. It’s more about market politics than technology, in other words another battle in the contactless payment turf wars. The outcome will be fascinating to watch but determines whether Octopus will remain a great transit payment platform for Hong Kong with a future, or not.


Apple Pay Octopus and the iOS 12.1.3 Release Window

JR East posted a special maintenance schedule this month for Mobile Suica on 1/15, 1/22 and 1/28. The work appears concentrated on the Suica Recharge backend which hopefully points to improved Apple Pay Suica Recharge performance.

I think it also points to something else: a iOS 12.1.3 release with Apple Pay Octopus/Hong Kong transit directions for Apple Maps service around January 29 Cupertino time, early am January 30 in Hong Kong. The timing fits with a full beta test cycle wrap up but more importantly it fits as a kickoff for the Chinese New Year vacation period, good news for an important market to Tim Cook who desperately needs some good news right now.

Go for it Tim! It will undoubtedly help Apple sell more global FeliCa iPhones because Octopus on Apple Pay is a great marketing angle for the iPhone XR/XS models with Express Card power reserve and bulletproofed FeliCa performance. I have yet to experience a single Apple Pay Suica gate error from my iPhone XS with daily use since the launch date.

UPDATE
It occurred to me after posting the above that Apple has introduced transit cards and the technology behind them with larger point releases: iOS 10.1 for Suica (FeliCa) and iOS 11.3 for Beijing and Shanghai Transit cards (Apple flavored PBOC 2.0 ED/EP). In this scenario iOS 12.2 is the logical starting point for Octopus on Apple Pay. However, Octopus is FeliCa which has been part of Apple Pay for over 2 years, Apple has ample engineering and testing experience with the technology to add Octopus with a smaller point release, or none at all which was the case with contactless student ID cards.

The original source reports pointed to an end of January rollout, now that iOS 12.1.3 is released we will see how it plays out between now and iOS 12.2. Considering the Apple Pay Suica launch meltdown on iOS 10.1 update day, Apple would be wise to launch on a quiet network day as Apple Pay Octopus day 1 user additions will far outstrip any regular credit card Apple Pay rollout, the use profile for prepaid transit cards is very different.


Updated Smart Octopus Samsung Pay Image Hints at Apple Pay Octopus Launch

Samsung has updated their Smart Octopus on Samsung Pay advertising. The tag line used to read “only on Samsung Pay,” the updated tag reads “First Smart Octopus in Samsung Pay”. The Samsung Pay Smart Octopus exclusive window is over. I think we are getting very close to a Apple Pay Octopus launch possibly coming with the iOS 12.1.3 update.


Someday We’ll Be Together

iOS 12.2 beta 6 has dropped with no sign of Apple Pay Octopus from beta code spelunkers like Guilherme Rambo. A source close to the Cupertino mothership also indicated the situation in Hong Kong is “complex.”

Live by the rumor and pay the price, it looks like the story sources and my judgement were wrong: Octopus won’t be on Apple Pay when the OS 12.2 update is released at the March 25 Apple Special Event Octopus Cards Limited and Apple were originally planning an Apple Pay Octopus rollout for Chinese New Year but for some reason it was postponed. Nevertheless, I stand by what I wrote back in December:

Octopus on Apple Pay isn’t just adding a card to a digital wallet platform, it is also a statement of who ultimately controls, operates and benefits from the public transit gates… The outcome will be fascinating to watch but determines whether Octopus will remain a great transit payment platform for Hong Kong with a future, or not.

I also have a new prediction that we’ll see Apple Pay Octopus with the iOS 13 release this fall. Take it for what it’s worth, but I feel confident that we can celebrate some good news in September.

Advertisements

iOS 12.1.1 Suica Express Transit Performance

Apple has never issued an iOS update that specifically mentions Suica or Express Transit Card performance, so each update becomes a guessing game of what’s fixed and what’s not. iOS 12.1.1 was released December 6 in Japan and there has been very little mention of Suica performance on Twitter. Not necessarily a good thing, if performance has changed dramatically, good or bad, people tweet about it.

I reached out to a few trusty Revision B iPhone X Suica user sources. They report no change from the buggy Suica performance they’ve experienced since upgrading to iOS 12. A few iPhone 8 users have also complained about buggy Suica performance. My experience with Suica Express Transit on iPhone XS continues to be excellent though Apple Pay Suica recharge performance is poor when recharging from a Suica notification short cut.

Here’s the iOS 12.1.1 performance score as I see it:

  • Suica Express Transit performance on pre A12 Bionic iPhone: B-
    • Occasional error flicker at transit gates
    • Unresponsive Apple Pay Suica recharge, 50% failure rate when recharging via Suica notifications
  • Suica Express Transit performance on A12 Bionic iPhone: A-
    • Unresponsive Apple Pay Suica recharge, 50% failure rate when recharging via Suica notifications

As pointed out in earlier posts Suica Express Card with power reserve on A12 Bionic is a significant departure from previous devices both in operation and performance. Also the iOS 12 Suica Express Card error flicker issue is a iOS 12 software issue that is completely different from the iPhone X Suica NFC hardware problem.

The quick summary is that Suica Express Card performance has not improved from iOS 12.1. We’ll have to wait until iOS 12.1.2 and try again.

The 30% Apple Pay Japan Solution

Japanese IT journalist Sachiko Watatani who writes for MyNavi posted a fascinating 2 part (1 and 2) iPhone user survey regarding Apple Pay. There are many interesting details but the big summary points are:

  • Only 27% of iPhone users who can use Apple Pay use it
  • 50% don’t use Apple Pay but are interested in using it
  • 22% don’t use Apple Pay and don’t care about using it

Other important data points: 34.4% use Apple Pay daily, 24.9% use Apple Pay every 2~3 days, 37% use it for public transportation, 69% use it for convenience store purchases. Unfortunately the survey questions did not make any distinctions between different card types like Apple Pay Suica which is stored value with Express Card functionality, and regular Apple Pay credit cards. The survey only addressed “Apple Pay” use.

Comparing results with the earlier MMD Labo report is frustrating because the surveys addressed different user sets with different questions. The only thing worth comparing is the “don’t use mobile payments but am interested” category. The MMD figure was 29.9%. The much higher interest in Apple Pay is probably due to Suica and the ubiquity of transit IC payment store options. Other noteworthy comparison tidbits from MMD are mobile payments for transit use @ 63.5% and convenience store purchases @ 59.1%.

Watatani san was confused about the low transit use result and thought it might be due to PASMO commuters answering the survey. I think she is partly right. One of the biggest findings from earlier this year was that Apple Pay Suica use is highly regional because the initial uptake is closely linked to commuter passes. Getting all the transit IC cards and commuter passes on mobile is something that JR East and Sony are already working on.

The good news for Apple is that 50% of Japanese iPhone users who don’t use Apple Pay are interested in using it. The bad news is that Apple has to give them better reasons to use it. A good starting point would be the items I outlined earlier: extend Apple Pay Japan prepaid card support while working to lower merchant side transaction fees, and for goodness sake issue a iPhone X Suica problem repair program.


iPhone Battery Replacement Refugees

MacRumors posted an excellent reminder that the iPhone $29 (¥3,200) battery replacement program ends December 31. If you want to take advantage of lower battery replacement prices for SE, 6, 6 Plus, 6s, 6s Plus, 7, 7 Plus, 8, 8 Plus, and X act now. IT Media News reports that Japanese iPhone users are finding it very difficult to make reservations with ‘battery replacement refugees’ having to extraordinary efforts to get one.

Don’t wait and become a refugee, if you need an iPhone battery replacement start getting one now.

Holding onto iPhone sales in Japan

note: this post has been incorporated in a separate summary post

The iPhone XS Japan launch was muted with none of the lines of the 2017 iPhone X launch. But as of last weekend the local Docomo store was completely out of iPhone XS stock, this weekend was the same. The store doesn’t list iPhone XR stock. It’s all you need to know which iPhone model is selling: people who want to upgrade their iPhone are choosing iPhone XS. iPhone XR is nice but the price is not nice enough to drive iPhone upgrades for people on the fence. If the WSJ iPhone XS price cut in Japan story is correct we should start seeing iPhone XR specials from Docomo, au and SoftBank this week.

I suspect there are lots of iPhone users on the fence, a XS price cut for JP carriers makes sense but as outlined earlier it won’t be enough. The Japanese government is pushing for market changes and Apple needs to change with it and do more if they want to hang onto iPhone market share. In order of importance these are:

  • Issue a iPhone X Suica problem repair program
    This is essential. As I have written many times before Apple really damaged their reputation in the Japanese market by sweeping defective NFC iPhone X production under the carpet. Apple can repair some of the damage by replacing iPhone X Suica problem devices and agressively fixing iOS 12 Suica Express Card performance issues.
  • Extend Apple Pay Japan and lower transaction fees
    Include important missing pre-paid cards that are on Osaifu-Keitai and Google Pay: nanaco (7 Eleven), WAON (AEON), Edy (Rakuten). Nanaco and WAON are particularly important in areas rural outside of the JR transit hubs. It’s said that Apple Pay Suica transaction fees are 3.75% while Google Pay Suica is 3.25%. The Japanese government pushing for a card transaction fee cap of 3.25% plus contactless payment incentives as part of the sales tax increase in 2019. Apple would be smart to lower Apple Pay transaction fees inline with proposals now instead of later.
  • Add TV content and improve Apple Music services
    Japan is the 2nd largest music market after the United States. Japanese TV content is missing on the Apple content platform that everybody else has (Amazon, Netflix, Hulu, etc) and can bundle, Apple cannot. If Apple waits for their subscription service rollout, it may be too late. With big bad Dentsu, the Imperial Death Star of Japanese media as the power driving Spotify in Japan, Apple Music also has to work overtime to keep up: hire the best Japanese music curators, create some cool J-Pop Beats 1 programs instead tired old UK content and fix the iCloud Music Library Japanese music metadata mess so Apple can sell HomePod.
  • Fix Apple Maps and Siri
    This is a given that has been covered before: the total experience needs to greater than the sum of the parts.

There isn’t much time, the 10% Japanese sales tax is due to start October 1, 2019.