Blame the Apple Pay Ventra delay on open loop

Washington DC SmarTrip and Greater Los Angeles TAP transit cards both launched on Apple Pay the first week of September within days of each other. They upstaged Apple Pay Ventra which was announced as ‘coming soon’ way back in March 2019 but has yet to launch. Chicago Ventra users are understandably frustrated with the ‘coming soon’ Apple Pay Ventra, especially when CTA celebrates the Apple Pay SmarTrip rollout with another Ventra ‘coming soon’ ad.

All three fare systems are managed by Cubic Transportation Systems who also run the London Oyster and Sydney Opal systems. Cubic systems all use the same MIFARE smartcard technology but the interesting thing about SmarTrip and TAP is: (1) they are the first Cubic managed digital wallet transit cards, (2) neither system has implemented open loop fare payments for tap and go credit cards.

Ventra, Oyster and Opal all have open loop, and as of this writing Cubic has yet to deliver those transit cards on digital wallets. Why?

The SmarTrip/TAP Apple Pay launch gave us the answer that nobody wants to discuss: open loop support adds a layer of complexity and cost that stymies the support of native digital transit cards. Complexity and higher cost means fewer choices and delays, it’s as simple as that.

Open Loop is sold as the cost effective future of transit ticketing but it’s had a surprisingly rocky time in the American market. The failure is pinned on transit companies but I think credit companies are to blame. The arguments for open loop are plastic era constructs that ignore how mobile digital wallet platforms and mobile apps have changed everything. For example the oft cited open loop benefit of plastic smartcard issue cost savings completely overlooks the cost savings of digital transit cards on smartphones.

It’s high time for the credit card industry to rewrite the open loop marketing script for the mobile era, but they don’t want to do that. Expect more of the same. In the meantime, let’s hope the SmarTrip and TAP Apple Pay rollout is a sign that Chicago will be getting Apple Pay Ventra real soon.

The Apple Pay Code Payment + App Clip Connection

The Apple designed App Clips code combines a visual code and a NFC tag

When the AliPay Apple Pay leak surfaced earlier this year the stock story was that Apple Pay must support AliPay and WeChat Pay if Apple Pay is to have any relevance for iPhone users in China. The real story is more interesting and is centered on App Clips, not AliPay or other specific QR code payment players.

Until now Apple Pay has been all about the NFC ka-ching thing, but it has also evolved along the way. Apple Pay debuted with NFC-A EMV in 2014, it added NFC-F FeliCa with Suica in 2016, MIFARE Student ID passes and PBOC China transit cards in 2018.

iOS 14 is the first time Apple Pay is moving beyond NFC. CarKey will incorporate Ultra Wideband when the Car Connectivity Consortium Digital Key 3.0 spec is finalized and ‘Code Payments’ are coming at some point in the iOS 14 cycle.

Tap or Scan Simplicity
The strength of code payments is simplicity and low cost. iPhone is both a radio (NFC) and camera (scanner). NFC always has an advantage over a scanner in that it works without light and can be activated just by the user pointing their device at an NFC reader or tag.

The downside is the NFC reader side of the equation: the reader + cash register/transit gate + transaction software has a higher initial investment than a code scanner attached to a POS system. The promise of App Clips is they finally put NFC, specifically NFC tags, on the same low cost entry bar of QR codes.

App Clips are activated by:

  • App Clip Codes
  • NFC Tags
  • QR Codes
  • Safari App Banners
  • Links in Messages
  • Place Cards in Maps

Let’s examine the ‘real world’ App Clip activation triggers: Apple App Clip codes, NFC tags, QR codes. For Apple designed App Clip codes, “You can scan them with your camera or tap one using NFC.14” The #14 footnote is interesting: “Camera support for scanning an App Clip code will be made available in an iOS 14 software update later this year.”

This means those fancy Apple designed App Clip codes are coming after the initial iOS 14 launch, and when they do Apple Pay Code Payments will certainly be coming with them. It boils down to one thing: making App Clips a simple tap or scan process. NFC tags still enjoy the ’point here’ advantage as App Clip does the rest. For visual codes the user has to launch the camera and scan before App Clip takes over.

The Code Payment/App Clip Network Connection Requirement
Apple Pay Wallet NFC payment cards have 3 major features that payment apps do not:

  • Direct side button Wallet activation with automatic Face/Touch ID authentication and payment at the reader
  • Device transactions without a network connection
  • Ability to set a default main card for Apple Pay use

Apple Pay Code payments can possibly offer this for dynamic code payments where a scanner reads the code off the iPhone screen. However, static code payments are messy because Apple Pay requires a network connection to process the payment just like apps do. In the Apple Pay code payment scenario suggested by the AliPay screenshot leaks, a static code scan directly activates the appropriate Apple Pay code payment (AliPay, etc.), the user enters the amount, taps ‘Pay’, authenticates, and Apple Pay does the transaction via the network connection. It’s a similar scenario for NFC tag payments.

It’s because of this network connection requirement that I believe Apple is pushing Apple Pay NFC tag and code payments wrapped in the App Clip experience. They will work by themselves of course, but they work better as part of the total App Clip experience. This is where App Clip codes come in.

What about App Clip codes? The iOS 14 preview page says:

App Clip codes are Apple-designed identifiers that are uniquely paired to specific App Clips and provide an easy way to find and launch an app experience at the exact place and moment you need it. You can scan an App Clip code with your camera or by tapping one using NFC.14 We will be adding support for them in an iOS 14 software update later this year.

How is this any different from regular NFC tags or QR codes? I suspect it’s a mini qualification program for developers, payment providers and merchants to supply the ultimate App Clip experience. It also works as App Clip branding and advertising for Apple.

Are there special App Clip code tags that push the App Clip experience further than regular NFC tags and QR? I suspect so and that could be fun. Think about it, what if the Apple designed App Clip code NFC tag activated an App Clip with code payment. A QR payment without the static QR code. That would be the ultimate App Clip experience indeed.

Goodbye FeliCa Octopus, save the last tap for me

In the 2019 Apple Pay Octopus saga one thing was clear: Octopus was living on borrowed time. On the eve of the Apple Pay Octopus launch I wrote:

Octopus Cards Limited (OCL) has been slow extending the service to include mobile. Instead of putting early effort into digital wallet support for Apple Pay/Google Pay/Samsung Pay, OCL wasted time and resources developing the niche Mobile SIM product which didn’t pan out. This lag coupled with the rise of AliPay and WeChat Pay QR Code payment empires put enormous pressure on OCL to do something…

With so much traffic and business from the mainland, OCL owner MTR is looking to add QR Code Open Loop transit support (paywalled link) at some point. There is also the pressure of creating a Greater Bay Area transit card, and pressure from credit cards and banks. Every player wants a piece of the action…MTR gates will eventually look like the ones in Guangzhou with PBOC/FeliCa/QR Code readers supporting Octopus, China T-Union, AliPay/WeChat Pay…At which point I say OCL doesn’t have a viable transit platform business anymore.

Mainland China dumped the MIFARE based Beijing and Shanghai cards for their own slower PBOC 2.3/3.0 China T-Union standard, I don’t think it’s a stretch to see the same thing happening to Hong Kong Octopus at some point…Supporters will undoubtably point out the technical merits of China using a single transit standard but that’s just a red herring. The deciding factors will be good old money and politics: is it more profitable to keep Octopus in place or junk it in favor of QR and China T-Union, and who benefits from it all?

Out of Time

I thought the success of Apple Pay Octopus bought it some time, but on August 28 the South China Morning Post published a story where OCL CEO Sunny Cheung says they will join the China T-Union initiative for seamless transit integration between Hong Kong and China. He to goes out of his way a few times to say how ‘old’ NFC technology is:

Cheung said internet users’ criticism of Octopus being a tech laggard died down in June after people were allowed to add their Octopus account to Apple Wallet on their iPhones. Cheung, who admitted he was stung by the criticism, regarded Octopus’ breakthrough on the iPhone as one of the best times of his stint with the company. “This was one of my biggest challenges,” he said. “The breakthrough helped refresh Octopus’ image even though it is still using NFC technology.”

From Hong Kong’s Octopus aims to spread tentacles with contactless card for paying fares in mainland China

I guess Sunny thinks that QR Codes are cutting edge. He is retiring and doesn’t have to deal with the fallout of his misguided OCL management or care about criticism anymore.

Octopus can certainly be ‘dual mode’ with separate NFC A + CYN China T-Union purse and NFC F + HKD Octopus purse in one card, if OCL comes up with a new card architecture. But that’s an expensive undertaking when mainland China has been ruthlessly weeding out all MIFARE and FeliCa transit cards and replacing them with the slower PBOC 2.0/3.0 China T-Union standard, aka the supermarket checkout spec. It’s only a matter of time before Octopus gets the same brain lobotomy.

There is also the plastic card issue business angle to consider. Read FeliCa Dude’s Octopus on iPhone 7 post paying special attention to the Octopus plastic card issue steps he outlines. I’m sure the Hong Kong powers that be don’t want that profitable franchise to stay with Sony forever. They will work to keep it local which is exactly what the China T-Union PBOC 2.0 spec allows OCL to do.

We all know at this point that ‘one country two systems’ is just an illusion. It may not come soon but as transit gates and store readers are gradually replaced with newer models over the next few years, those models will all have dual mode support. And when the time is ready, OCL will turn off FeliCa. Until then, enjoy it while it lasts.

iPhone SE too popular in Japan?

Yes, as crazy as that sounds, but according to Kenta Yamaguchi’s piece on ASCII that’s exactly what is happening. The point of his story is that starting today, second brand carriers Y! mobile and UQ Mobile are selling iPhone SE instead of iPhone 8. Until yesterday they only offered the budget Apple Pay Suica capable iPhone 7 and normally they would offer iPhone 8, but iPhone 8 is nowhere to be seen in the budget lineup. Instead they are offering iPhone SE only 4 months after it went on sale at first tier carriers.

The big loser here is Rakuten Mobile who do not offer iPhone SE. Apple fully understands the ‘Face ID sucks in the face mask COVID era’ market opportunity, aka unfortunate success, that is the A13 Touch ID powered iPhone SE. Apple also wants many background NFC tag reading capable iPhones out there for iOS 14 App clips, so iPhone SE is going on sale everywhere.

Yamaguchi san says the SE is so popular that major carriers are bitching it will slowdown the 5G migration in Japan…while still selling as many iPhone SE units as they can. 5G will just have to wait until Apple comes up with a budget 5G Touch ID iPhone SE.

Suica UI tweaks in iOS 14/watchOS 7

As with every major iOS update the Apple Pay Suica UI gets a minor tweak or two. Sometimes they pan out, sometimes they don’t. The dynamic commute plan ‘Renew’ button was a little more descriptive in b4 and b5. At best it’s was of questionable value when the language was Japanese but downright embarrassing to look at when the language was English.

Since Wallet card UI elements can be dynamic why not highlight the expiration date in red instead? Apple engineers fortunately had the better sense to change the button label back to the sensible iOS 13 design in iOS 14 b6, the final design.

watchOS 7 Suica is getting some useful tweaks: card transaction history, low balance and commute plan renewal reminders, and Suica card information can now be viewed and/or set directly on Apple Watch. In watchOS 6 these can only be viewed or set in iOS Watch App.