Someday We’ll Be Together

iOS 12.2 beta 6 has dropped with no sign of Smart Octopus support in Apple Pay 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: Smart Octopus won’t be on Apple Pay when the OS 12.2 update is released at the March 25 Apple Special Event. Nevertheless, I stand by what I wrote back in December:


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.

Smart 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.

Smart 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.

I also have a new prediction that we’ll see Apple Pay Smart Octopus with the next major iOS release iOS 13, in 6 months. Take it for what it’s worth, but I feel confident that we can celebrate some good news at that time.

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Security weaknesses cool China QR code use

Not all Japanese IT journalists are gaga over QR codes. Takefumi Makino writes on ASCII that QR codes really don’t make much business sense given that Japan already has a massive NFC/FeliCa contactless payment infrastructure in place. It’s so massive that QR payment players Line Pay and PayPay have said they are considering FeliCa cards for their respective payment networks. It’s all about accessing the mature population segment (60 and above) who hold the family purse strings but don’t like using smartphones and apps to pay for things, but they will use plastic.

As Makino san points out, the most attractive aspect of QR is the low cost that cleverly leverages the existing mobile and internet/cloud infrastructure: any store owner with a smartphone can offer contactless payments. Throw in lots of reward point goodies and you have a nice payment platform lock-in. In countries without a long history of credit card use like China and India, low overhead QR codes are an attractive ‘launchpad’ to bigger, better things. But there are well known QR code security weak points.

In China ‘static’ QR codes used for paying parking ticket fines quickly became a scam problem. QR players migrated to one time use/one minute window ‘dynamic’ QR codes, but even those codes have been hijacked from customers waiting in line with smartphone out and QR code ready:

The latest trend in China is paying for things ‘in-app’ or using face recognition technology, both of which have nothing to do QR. Makino san argues that QR is really just a convenient startup technology for contactless payment systems that migrate to better and more secure technologies. I think it is a valid point. Competing payment system technologies like FeliCa/Suica will soon leverage mobile and cloud infrastructure that could eliminate the QR cost advantage. It will be fascinating to see how the QR payment startups in Japan pan out over time.

MerPay on Apple Pay

If you were hoping for a streamlined cashless payment roadmap for Japan, forget it. Things are just going to get more complex as various reward point ecosystems (Rakuten point, d-Point, Ponta point, etc.) slug it out for dominance across smartphone apps (QR Codes) and digital wallet platforms (NFC). Mercari joined the fray with MerPay on Apple Pay, a virtual prepaid Mastercard provided via the Sumitomo Mitsui bank group and hosted on the iD contactless payment network.

Mercari was founded by a former Rakuten employee and follows their basic business model of hosting a virtual marketplace for buyers and sellers. The idea behind MerPay is that sellers can use money earned from sales or points via the virtual prepaid card for store purchases, Suica recharge, etc. Users can also recharge MerPay from a linked bank account.

Hachimaki san of Kanmu Ltd. has dug into MerPay details with a helpful flowchart.

Welcome Suica

JR East announced a special plastic Suica card for inbound tourists called “Welcome Suica” that will be available from September 1, 2019 at major Tokyo area stations and service centers. The main attraction according to the press release is that the Welcome Suica card does away with the ¥500 deposit, and the hassle of getting it back when leaving the country, but the card is only valid for 28 days from the issue date.

You can be sure that Welcome Suica cannot be added to Apple Pay or Google Pay and will strictly be plastic issue like Rinkai Suica and Monorail Suica. JR East also says that unused Welcome Suica balances will not be refundable but the unique card design makes a nice souvenir.

The whole thing sounds like it would have been a nice idea before Apple Pay Suica and Google Pay Suica, both of which allow users to add digital Suica cards without a deposit.