The overheated Japanese payments market kicked into consolidation mode with the Line Pay Pay Pay merger announcement last November. The next consolidation was announced today with the Origami Pay startup folding into the the merpay startup. The deal is expected to close by February 25. Now that a market shakeup is in full swing I think we can expect mergers for other smaller players like kyash before the Tokyo Olympics.
It will be interesting to see what comes out of the merger of the QR Code Origami and NFC Apple Pay merpay. Perhaps we might end up with a flexible frontend solution like the recently released Toyota Wallet which combines both approaches. And it seems that the arrival of Toyota Wallet was a big factor that pushed the market into the consolidation cycle we are now witnessing. I just hope the backend is flexible too and not chained to a single banking empire. We shall see.
The latest OMNY bump in the road perfectly captures the downside of making contactless credit/debit cards a one size fits all solution. As the New York Post piece (via MacRumors) points out, some Apple Pay Express Transit users are being double charged for fares. Perhaps they didn’t know that Express Transit was enabled in the first place, perhaps the iPhone passed too close to the OMNY transit gate reader. It’s a classic “you’re holding it wrong” situation that has nothing to do with Apple Pay Express Transit and everything to do with the current EMV architecture and how banks implement it.
Part of the problem is that OMNY is new, it’s not working across the entire MTA system yet, and open loop EMV bank cards will never replace all classic MetroCard fare options. That job is for the MIFARE based OMNY transit card due in late 2021. Until the system is complete Metro users will have to juggle different cards and deal with a very long transition. Transport for London (TfL) users have had MIFARE based Oyster cards since 2003, contactless credit/debit cards have been ubiquitous since the 2012 London Olympics when open loop was added to the TfL Oyster fare system.
To Biometric or not Biometric? Open Loop credit/debit cards on transit gates instead of native transit cards always come with banking and credit industry baggage. Even in the contactless card heaven that is said to be London, there are a surprisingly number of gotchas: minimum limits for using cards, max limits that require PIN codes. It’s an endless loop of banks pushing one way and merchants pushing back.
The golden uptake for Apple Pay in Japan was Suica and is the same story everywhere: it’s all about getting rid of coins for transit, coffee, sandwiches, etc. The small stuff. This is the 20,000 JPY prepaid heavenly region where Apple Pay Suica sings and banks so desperately want to shut out all other players and keep all the marbles. But bank cards have an authorization problem: banks set spending limits not the card architecture. The line is always changing, what works today might not work tomorrow. The prepaid Suica architecture itself is the firewall that does away with user authorization because local processing transaction at the transit gate or store reader is all the authorization necessary.
Coke ON is one more point gimmick app that offers a free beverage for points, bottle top ‘stamps’, earned with purchases via FeliCa/Coke ON IC (Transit IC, Rakuten, nanaco, PiTaPa, WAON), credit cards and QR (LinePay, PayPay aka Line PayPayPay) linked via Coke ON. Up until now Suica was excluded from earning stamps but will join the other Coke ON IC cards starting January 14.
The Coke ON app is not particularly user friendly. It wants your data, your location and your Bluetooth to connect to Bluetooth enabled Coke vending machines. And it seems overly aggressive, at least according to a very long Twitter thread. I’m not sure what exactly the issue is for the user but it seems related to location services and suspect card reads.
Japanese users have complained about Apple Pay Suica location based transaction notification details since the default feature appeared with the iOS 12.2 Suica make over. I have no problems using Apple Pay Suica on iPhone 11 Pro to buy drinks without Coke ON. The problem described in the tweet thread could be a Coke ON incompatibility with Mobile Suica despite Suica compatibility listed on the vending machine side. Hopefully this is fixed for the Coke ON Suica debut, however I don’t plan on giving away my iPhone data to collect Coke ON app bottle top stamps.
The end of the year season is down for the count. Barring any news items like Apple Pay Octopus really launching this year, this is probably my last news post for 2019. Not news really, just tidbits.
Lingnan Pass and ShenZhen transit cards coming to Apple Pay in 2020 This piece of news came from Twitter users noting that the Lingnan Pass will come to Apple Pay in 2020. The Lingnan Pass and ShenZhen Transit pages show announcements released today (December 11), a machine translation roughly says Apple Pay support is coming soon. China has had the PBOC 2.0~3.0 contactless standard and T-Union transit card architecture in place for some time, with local transit cards slowly being updated to the new format. Beijing and Shanghai transit cards arrived on Apple Pay with iOS 11.3. Additional China transit cards were tested in an early developer preview of iOS 11.4 but dropped before the developer beta. Beijing/Shanghai transit cards were labeled beta up until iOS 12.2. Apple Pay Lingnan Pass and ShenZhen Transit will likely follow the Beijing/Shanghai transit card model with bank card recharge limited to China Union Pay (Interesting side note: Octopus and Lingnan Pass have a dual mode transit card). If Tim Cook does visit Hong Kong and China on his trip, things might shape up to be an excellent Apple Pay transit card year end Asian adventure.
Apple Pay Ventra This was promised as ‘coming later this year’ back in May. As of December 10 Ventra Twitter support is still promising users to “stay tuned.” Let’s hope Cubic is working overtime to make it happen. Update: Ventra has changed the Apple Pay Ventra blurb from ‘coming later this year’ to ‘coming soon,’ we’ll see Apple Pay Ventra in 2020.
JP POST going Cashless This was announced some time ago but is worth repeating: Japan Post is going cashless starting February 2020 in select central post offices, rolling out to all branches by May 2020. Your favorite plastic credit cards, eMoney cards (iD, QUICPay, Suica, etc.) and QR Codes (The PayPayPay crowd) can be used to pay for postage, sending packages, stamps, postcards, catalog items, etc. It would be nice if cashless payments improve post office lines and wait times, but I guarantee that’s not going to happen.
Handsfree touchless Mobile FeliCa payments technology based on UWB+Bluetooth on Mobile FeliCa announced by Docomo, Sony, NXP Semiconductors in December 2019. A new JR East touchless transit gate was also reported by Kyodo News around the same time and was confirmed by JR East. The new touchless payments technology uses FeliCa for transactions but uses a UWB+Bluetooth front-end instead of NFC.
No delivery date for touchless gates or touchless payments has been announced but as Junya Suzuki pointed out in his recent article, Japanese transit infrastructure investment runs in 7~8 year cycles. The Takanawa Gateway station opening and the Tokyo Olympics in 2020 are the kickoff for the next transit infrastructure cycle. I see 3 basic transitions for JR East and the other major transit companies.
Suica transition from legacy architecture to next generation ‘2 cards in 1’ Super Suica staring in spring 2021.
FeliCa transition from NFC only front-end to incorporate UWB+Bluetooth radio technologies for handsfree touchless payments. News reports suggest deployment of JR East touchless walkthrough gates starting in 2023.
QR Code transition from legacy magnetic strip and other paper ticketing. Testing and evaluation is due to start at Takanawa Gateway station in 2020 with new Suica+QR Code dual reader transit gates.
Next generation Suica and Touchless Mobile FeliCa represent an interesting twist in that both require a new version of FeliCa. My take is that the new versions of FeliCa OS are one and the same, and that both Super Suica and Touchless incorporate UWB and Bluetooth protocols for transactions in addition to NFC-F.
Zero-sum Game Reset? People are already complaining ‘oh no, not more JR East/FeliCa proprietary BS,’ but that snap judgement is way too early. Outside of the basic technologies we don’t know what standards are involved for handsfree touchless payments, but we do know that NXP is partnering with Docomo and Sony on the effort. That means MIFARE is already working on it too. JR East announced at the 2016 Tokyo NFC Forum conference that they are dedicated to working for open compatible transit payments (i.e. open ticketing between transit operators, not EMV).
Let’s take JR East at their word and assume that there is just one flavor of UWB+Bluetooth touchless, that it is fast, that it is open. In this scenario the same UWB+Bluetooth touchless front-end could be used by anybody from the large established proprietary players like EMV, FeliCa and MIFARE to open transit payment associations like Calypso. I hope this is the scenario that plays out. We don’t need a repeat of the ‘let’s make NFC A-B (Philips and Motorola) an open standard and shut NFC-F (Sony) out of the game’ nonsense that didn’t help anybody except QR Code players.
The Apple angle is interesting. Global NFC support put Apple Pay ahead of the curve. Apple putting UWB into iPhone 11 this year could be another ‘get ahead of the curve’ move so that everything is ready to roll with Super Suica on iOS 15/watchOS 8 in late 2021. I doubt anybody will see it this way, but I think touchless Mobile FeliCa and JR East plans for it are one factor in Apple’s decision.
Handsfree Touchless Smartcards? One very important question: does this stuff work on smartcards? So far only smartphones have been mentioned in the press releases. Indications are that Super Suica is launching with new IC smartcard issue, by necessity it will have be backwards compatible with current transit card IC infrastructure.
If JR East plans to deploy touchless gates systemwide starting in 2023, Super Suica plastic transit cards must work seamlessly with the new gates. It doesn’t make any sense to issue yet another card, Super Duper Suica, to work with handsfree touchless. It also doesn’t make sense if touchless is only for smartphones. If it’s going to work in the minds of transit users and be used at all, all of it has to work perfectly, out of the gate.