The iPhone 9/SE NFC Tag Apple Pay Equation

I’ve always said the iPhone 9/SE2 hits the iPhone sweet spot in Asia, especially now. An affordable entry level device with face mask friendly Touch ID and Bionic powered global NFC: Express Cards with power reserve and Background NFC tag reading. It was almost a year ago when Jennifer Bailey unveiled NFC Tag Apple Pay. Steve Moser of MacRumors tweeted the essential features: tap and Apple Pay without an app or signing up for an account. Apple has not said a word since.

I think part of the problem for Apple is pictured in the slides accompanying Moser’s tweet, the ‘Pay with Apple Pay in app’ one. The allure of background NFC tag reading is that it’s almost ‘Express card lite’; as long as the screen is on, even locked, iPhone natively reads a NFC tag and does something like activate loaded and ready Apple Pay. The trouble is, only Bionic chip iPhone models do this. Non-Bionic iPhone models have to use an app to read NFC tags. Think quick, would you fire up an app, sign in, and read a NFC tag just to buy cheap coffee? Probably not.

My take is the entry level non-Bionic iPhone 8 is holding up NFC Tag Apple Pay. Apple Pay needs the entire iPhone lineup to be Bionic and app free, an entry level A13 Bionic iPhone 9/SE2 solves this problem. It’s a perfect iPhone for the Japanese market in these face mask mandatory times where Face ID doesn’t work, and a nice match for the recently announced JCB NFC tag payment service that uses SmartPlate software. It probably won’t have a U1 chip that would let iPhone 9/SE2 have a longer service life as UWB Touchless joins NFC in iOS 14 Apple Pay. Nevertheless iPhone 9/SE2 with Bionic NFC will be more than ample, it will do very well.

Update: one thing I forgot to mention is the Sign in with Apple requirement that goes hand in hand with Background NFC tag reading. The current deadline is June 30.

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iOS 14 Apple Pay: going the distance with Ultra Wide Band Touchless and QR

It’s that time of year again to look into the WWDC crystal ball and see what changes might be in store for iOS 14 Apple Pay. 2019 was an exciting year with the important Core NFC Read-Write additions for ISO 7816, ISO 15693, FeliCa, and MIFARE tags. Since then we’ve seen iOS apps add support for contactless passports, drivers licenses, retail and manufacturer vicinity NFC tags, transit ticketing, badging, and more. Some expectations ended up on the cutting room floor. The NFC tag Apple Pay feature that Jennifer Bailey showed back in May 2019 has yet to appear. Apple Pay Ventra and Octopus transit services slated for 2019 and iOS 13 failed to launch, as of this writing, still delayed.

Predicting anything in 2020 is risky business because of the COVID-19 crisis. iPhone 12 might be delayed, iOS 14 might be delayed, features brought forward, pushed back…all plans are up in the air, even WWDC. Some developments are clear, but timing is opaque. What follows is based on: (1) NTT Docomo announcement of Ultra Wideband (UWB) ‘Touchless’ Mobile FeliCa additions and JR East developing UWB Touchless transit gates, (2) CarKey and the Car Connectivity Consortium Digital Key 3.0 spec and (3) Mac 9to5 reports of AliPay coming to iOS 14 Apple Pay.

Going the distance
The NFC standard has been around a long time, long before smartphones, conceived when everything was built around close proximity read write physical IC cards. The standards have served us very well. So why are NTT Docomo and Sony (Mobile FeliCa) and NXP (MIFARE) adding Ultra Wide Band + Bluetooth into the mix?

Ultra Wide Band + Bluetooth delivers Touchless: a hands free keep smartphone in pocket experience for unlocking a car door, walking through a transit gate or paying for takeout while sitting in the drive thru. It’s the same combo that powers Apple AirTags. UWB Touchless delivers distance with accuracy doing away with “you’re holding it wrong” close proximity hit areas necessary when using NFC. With Touchless your iPhone is essentially a big AirTag to the reader,

For Apple Pay Wallet cards it means hands free Express Card door access, Suica Express transit gate access and payments that ‘just work’ by walking up to a scan area or car. As Junya Suzuki pointed out recently, UWB Touchless is passive compared to the active NFC ‘touch to the reader’ gesture and will live on smartphones, not on plastic cards. Those will remain limited to NFC which does not require a battery.

Secure Element evolution and digital key sharing
The addition of UWB Touchless however means that the secure element, where transaction keys are kept and applets perform their magic, has to change. Up until now the secure element worked hand in glove with the NFC controller to make sure communications between the reader are secure and encrypted. For this reason embedded secure elements (eSE) usually reside on the NFC controller chip.

Apple chose to put a Global Platform certified Apple Pay eSE in their own A/S series chips. The arrangement gives Apple more control and flexibility, such as the ability to update secure element applets and implement features like global NFC. The addition of UWB Touchless in FeliCa and MIFARE means both smartphone and readers need new hardware and software. Apple already has UWB in the U1 chip on iPhone 11. Mobile FeliCa software support could be coming with the next generation ‘Super Suica’ release in the spring of 2021 that requires updated FeliCa.

Recent screen images of a CarKey card in Wallet…with Express Mode can we call it Suicar?

The arrival of UWB Touchless signals another change in the Secure Element as shown in middle CarKey screen image: digital key sharing via the cloud where the master key on the smartphone devices ‘blesses’ and revokes shared keys. Mobile FeliCa Digital key sharing with FeliCa cards and devices was demonstrated at the Docomo Open House in January, also outlined in the Car Connectivity Consortium (CCR) Digital Key White Paper. An interesting aspect of the CCR Digital Key architecture is the platform neutrality, any Secure Element provider (FeliCa, MIFARE, etc.) can plug into it. Calypso could join the party but I don’t see EMV moving to add UWB Touchless because it requires a battery. EMV will probably stick with battery free NFC and plastic cards.

Diagram from Car Connectivity Consortium (CCR) Digital Key White Paper

The QR Code Equation
There is another possible eSE change for Apple Pay. A few weeks ago a reader asked for some thoughts regarding the AliPay on iOS 14 Apple Pay rumor with a link to some screen/mockup images on the LIHKG site. Before getting to that it’s helpful to review some key Apple Pay Wallet features for payment cards: (1) Direct Face/Touch ID authentication and payment at the reader, (2) Device contained transactions without a network connection, (3) Ability to set a main card for Apple Pay use.

The images suggest a possible scenario implementing AliPay in iOS 14 Apple Pay:

  • AliPay has a PassKit API method to add a ‘QR Card’ to Wallet.
  • Wallet QR Card set as the main card is directly activated with a button double-click for Face/Touch ID authentication and dynamic QR Code payment generation in Apple Pay.
  • Direct static QR Code reads activate AliPay Apple Pay payment.

If Apple is adding AliPay to the ranks of top tier Wallet payment cards, they have to provide a way in. The new “PKSecureElementPass” PassKit framework addition in iOS 13.4 could be just that. Instead of PassKit NFC Certificates, the additions suggest a Secure Element Pass/certificate. Secure Element Certificates instead of NFC Certificates. The burning question here is does AliPay have a Secure Element Java Card applet performing transactions with keys and without a network connection? If so we have QR Wallet payment cards. Direct Apple Pay Wallet QR integration would open up things for 3rd party (non bank) payment players. QR integration might also help Apple skirt NFC monopoly allegations that got Apple Pay in trouble the Swiss government.

Dual Mode and flexible front ends
The addition of QR and UWB with NFC for payments opens up a long term possibility suggested by Toyota Wallet. The current app lets the user attach a QR code app payment method and/or a NFC Wallet payment method to an account. It’s intriguing but clunky. Wallet QR Payment support would allow Toyota Wallet to move the entire payment front end to Wallet and let the user choose to add one or both.

It’s the latter that interests me most. Instead of having separate NFC and QR payment cards from the same issuer for the same account, I’d much rather have one adaptive Wallet card that smartly uses the appropriate protocol, QR, NFC, UWB for the payment at hand. Capable, flexible, smart. This is what digital wallets should do, things that plastic can never achieve. Let’s hope Apple Pay Wallet makes it there someday.

Mobile PASMO Q&A

What is Mobile PASMO?
Mobile PASMO is an app service, identical to Mobile Suica, for Android v6 Osaifu Keitai devices or later. Users can recharge a virtual PASMO card on the device with a registered credit card, purchase or renew commute plans, view use history, restore the PASMO card from the cloud in case of a lost device, PASMO bus transit users can also earn ‘Bus Toku’ points. Mobile PASMO launched March 18. Details are listed on the Mobile PASMO site (Japanese only).

Is it compatible with Google Pay? (Updated)
Not at this time. Users need to be careful: active Google Pay can block Mobile PASMO transactions. Bank cards are limited to Mobile PASMO app registered credit cards: American Express, JCB, Mastercard, Visa. Credit card registration is processed by PASMO and seems to be the weakest part of the system where users are experiencing the most trouble (the rest of the system appears to be licensed Mobile Suica IT assets). Only Japanese issue cards are accepted.

Is the Mobile PASMO app multi-lingual? (Updated)
Everything is Japanese language only. Android users can download the Mobile PASMO app on Google Play.

Can I use Mobile Suica and Mobile PASMO on the same device? (Updated)
Only 6 recent Osaifu Keitai Type 1 devices support multiple transit card installs. On older Type 2 devices you can only install one and have to choose. As FeliCa Dude explains in his excellent Reddit post, “Mobile PASMO: the “me-too” that’s all about them, and not you” the Mobile FeliCa Android stack on older FeliCa chip devices isn’t like Apple Pay and does not support multiple transit cards or the ability to select one for Express Transit. Type 1 devices updated to Osaifu Ketai 8.2.1 can set one (and only one) ‘main card’ for Express Transit use, with Mobile Suica and Mobile PASMO on the same device. Here is a full device list of Type 1 (Mobile Suica and Mobile PASMO), Type 2 (Mobile Suica or Mobile PASMO), Type 3 (Mobile Suica).

I have a Mobile PASMO capable Type 2 device, which mobile transit service should I use?
It all comes down to commuter pass use, if you live in the Suica/PASMO region and use a JR East line on any part of your commute, Mobile Suica gives you the most options. If you do not use a JR East line as part of your commute, Mobile PASMO is the natural choice.

Will Mobile PASMO be coming to Apple Pay? (Updated)
iOS 13.4 has some indications that Mobile PASMO might be coming at some point. Mobile PASMO uses licensed Mobile Suica assets and technology, the backend is very similar with a different operator. Apple Pay Wallet does have the ability to host multiple transit cards and select one for Express Transit. In theory a user could have a Suica and a PASMO together in Wallet. We’ll have to wait and see if the PASMO group has enough cloud resources to plug into Apple Pay/Google Pay and how willing they are to deal with non-JP issue credit cards.

Isn’t next generation ‘2 cards in 1’ Suica supposed to fix this? (Updated)
Mobile PASMO throws cold water on the one big happy mobile transit family concept of next generation Suica: sharing resources instead of “me too” fiefdoms. Even if the new card architecture fixes all the current shortcomings, which it is supposed to do, nothing can fix the selfish mindset of transit companies who refuse to cooperate. As FeliCa Dude points out, Mobile PASMO is a boondoggle, the result of JR East and PASMO Association failing to cooperate and mutually host commute plans. I suspect that auto-charge transit company premium branded credit cards are getting in the way. Japanese transit companies need to put aside old grudges and cooperate intelligently to get all transit players on mobile as fast as possible. Everybody loses out if they do not.

UPDATE: Japanese programmers digging into Mobile PASMO details find that PASMO licensed Mobile Suica IT assets for Mobile PASMO service. This makes a lot of sense and is an encouraging sign that Mobile Suica cloud resources can be licensed to host other transit IC cards for mobile (ICOCA, TOICA, manaca, etc.).

UPDATE 2: Junya Suzuki posted an article with more Mobile PASMO system details. One leading company in the PASMO Association (Tobu, Keio or Odakyu) licensed Mobile Suica assets and technology from JR East. Cut and paste IT. As said above, this is encouraging because other transit companies (JR West, JR Central et al) can license Mobile Suica assets and park it on whatever cloud service they want: AWS, Azure, NTT Data and so on. Mobile plumbing for connecting Apple Pay and Google Pay is already in place.

Transit Cards on Mobile

Recent Hong Kong rumors say the long delayed Apple Pay Octopus will finally launch in March April 2020 along with the recently announced Apple Pay support for Guangzhou, Shenzhen and Foshan China T-Union transit cards. The rumors also suggest that putting China T-Union cards on Apple Pay is easier than Octopus. Is this true? Let’s take a look.

The chart below lists native transit cards on mobile digital wallets by service launch year, limited to reloadable virtual transit cards already in service or formally announced by wallet platform vendors (Apple/Google/Samsung/etc.) and/or transit operators. Best viewed in landscape mode.

YearCardAreaOperatorOS/Digital WalletNFCProtocol
2006Mobile SuicaJapanJR EastOsaifu Keitai/SymbianFMobile FeliCa
2011Mobile SuicaJapanJR EastOsaifu Keitai/AndroidFMobile FeliCa
2015TmoneyKoreaTmoney Co. LtdSamsung PayAMIFARE
cashbeeKoreaEB Card Co.Samsung PayAMIFARE
2016Mobile SuicaJapanJR EastApple PayFMobile FeliCa
China T-UnionChinaVariousHuawei Pay/Samsung PayAPBOC 2.0
2017Beijing/Shanghai TransitChinaBMAC/SPTCCApple PayAPBOC 2.0*
2018iPassTaiwaniPass Co.FitBit Pay/Garmin PayAMIFARE
EasyCardTaiwanEasyCard Co.Garmin PayAMIFARE
HOPPortlandTriMetGoogle PayAMIFARE
Smart OctopusHong KongOCLSamsung PayFMobile FeliCa
2019HOPPortlandTriMetApple PayAMIFARE
Smart OctopusHong KongOCLApple Pay (announced/delayed)FMobile FeliCa
VentraChicagoCTA/CubicApple Pay (announced/delayed)AMIFARE
Mobile mykiVictoriaPublic Transport VictoriaGoogle PayAMIFARE4Mobile
2020ShenzhenGreater Bay RegionShenzhen Tong LimitedApple Pay (announced)APBOC 3.0 (?)
GuangzhouGreater Bay RegionGuangzhou Yang Cheng Tong LimitedApple Pay (announced)APBOC 3.0 (?)
FoshanGreater Bay RegionApple Pay (announced)APBOC 3.0 (?)
SmarTripWashington DCWMATA/CubicApple Pay (announced)AMIFARE
EasyCardTaiwanEasyCard Co.Samsung PayAMIFARE
VentraChicagoCTA/CubicGoogle Pay (announced)AMIFARE
Mobile PASMOTokyoPASMOOsaifu Keitai (announced)FFeliCa

Transit card payment mobile protocols are FeliCa, MIFARE and PBOC 2.0/3.0, the later is the Chinese variant of EMV which uses Type A NFC with the slowest grocery store checkout transaction speeds of the three protocols:

Each card organization has formed its own specifications based on the EMV specification based on its own business refinement and expansion, such as China UnionPay’s PBOC 2.0 specification…PBOC based on the EMV standard, combined with the needs of domestic banks, the People’s Bank of China promulgated the PBOC series of standards:
1 PBOC1.0: e-wallet / electronic passbook / magnetic stripe card function
2 PBOC 2.0: E-wallet extension application, debit/credit application, personalization guide, contactless IC card standard
3 PBOC 3.0: Cancel e-wallet and electronic passbook application, cancel downgrade transaction, multi-algorithm extension, multi-application extension, mobile payment standard

Super Lu

Compared to other contactless smartcards in use, the data transmission of <China T-Union> Yang Cheng Tong is criticized by commuters that it takes 1~2 seconds between the card and reader to complete the transaction, though the operator claims that the data communication only takes 0.5 seconds in its official site.

Wikipedia Yang Cheng Tong
YouTube comment lucidly explains the speed differences between NFC types (blocked outside of Canada)
This Wikipedia chart needs to be updated but illustrates how many China T-Union cards there are

Some China transit cards used FeliCa and MIFARE protocols in the past but have been migrated to the PBOC 2.0/3.0 China T-union card spec for interoperable transit cards that work across the country, similar to what Japan has with Suica, ICOCA, PASMO, etc. Mobile FeliCa developed by Sony and NTT Docomo has been around the longest and works across multiple mobile hardware platforms from Symbian handsets, to Android, to iOS/watchOS. MIFARE and PBOC 2.0 have a shorter history on mobile. The key period is 2015~2016 which saw transit card debuts on Apple Pay, Samsung Pay and Huawei Pay. Initial Apple Pay support for Beijing and Shanghai transit cards was listed as beta on iOS 11.3. An NFC engineering source said the early Apple implementation was not the full PBOC 2.0 spec, apparently fixed in iOS 12.3 when the beta label was removed.

One of the biggest advantages of transit cards in digital wallets is the freedom of anywhere anytime recharge with credit/debit cards; transit users are no longer chained to station kiosks to recharge plastic smartcards or renew a pass. The more payment options supported on the recharge backend, the more convenient. These are great customer features, so why is it taking so long to get transit cards on mobile in America and Europe when there are many China T-Union transit cards already on mobile?

Many transit card fare systems outside of Asia are managed by Cubic Transportation Systems, including Oyster, Opal, Clipper, OMNY, Ventra and SmarTrip to name a few. Cubic and operators like Transport for London and Transport for NSW have focused primarily on Open Loop EMV card support as a mobile solution instead of native virtual transit cards.

Publicly run transit system resources are usually limited so using bank cards for open loop transit is seen as a way to reduce system costs. The downside is that banks get a cut from transit gate transactions and transit cards for mobile are slow in coming, if at all. Cubic’s very first virtual transit card effort, the long delayed Apple Pay Ventra, is all the evidence you need when open loop is a priority and transit cards are not. Despite the recently announced Google Pay and Cubic alliance, I think transit cards on mobile will continue to arrive in a slow trickle. Let’s face it, HOP is the only American transit card that has gone mobile so far, and it’s not managed by Cubic. It’s the same story in Australia with Melbourne myki Google Pay.

Putting aside the open loop fad for a moment, I think the large deployment of China T-Union cards on mobile comes down to one simple thing that has nothing to do with protocols or smartphone hardware: all China T-Union cards share a common recharge backend cloud provided by Union Pay. It’s the reason why China T-Union sports a similar logo, the Union from Union Pay, and can only be recharged with a Union Pay card. It’s all one package. From Apple Support:

Here’s what you need to create a new Beijing Transit or Shanghai Transit card in Wallet to use with your iPhone:
An iPhone 6, iPhone 6 Plus, or later, set up with Face ID, Touch ID, or a passcode
A China UnionPay debit card for Beijing, or a China UnionPay credit or debit card for Shanghai that you’ve added to Wallet

Add a Beijing or Shanghai transit card to Apple Pay

A common recharge backend cloud shared by all transit cards with the same card architecture makes hosting virtual cards much easier, the various transit operators don’t have to host everything directly or build a cloud backend from scratch, and there’s nothing to negotiate because Union Pay is the only payment network.

China T-Union in the cards for Hong Kong Octopus?
China T-Union illustrates the power a national transit card standard backed with a shared cloud resource but it’s a straightjacket: Union Pay is the only payment network allowed. The real interesting development here is that QR Codes (AliPay/WeChat Pay) for transit, and everything else, are mainstream in China. There are many reasons for this outcome but on the transit gate QR Codes and PBOC-EMV transit cards are pretty much the same speed. There isn’t enough difference to care, and AliPay/WeChat Pay represent a choice outside the Union Pay straitjacket with all kinds of incentives to use QR.

Another interesting development is the pressure from QR Code players like Alipay for a piece of MTR transit gate action, and the Greater Bay Area transit card negoiations with Yangchengtong on the Hong Kong MTR/Octopus Card Limited mobile strategy roadmap. QR is mobile only of course, but a dual mode FeliCa/PBOC card approach for the Greater Bay Area is much cheaper and easier to implement on mobile than plastic.

Unfortunately in the face of pressure MTR/OCL, a world leading transit platform business model and innovator, has been surprisingly slow rolling out virtual Octopus cards on digital wallets to encourage the migration from plastic cards with new kinds of mobile services. It’s a troubling turn of events because OCL has had all the necessary transit on mobile infrastructure in place to move forward quickly for some time.

The recent Hong Kong protests followed now by the coronavirus crisis are certainly slowing things down. In the end however, growing mobile services is the best way forward for Octopus to remain a viable Hong Kong MTR business in these uncertain times. Because if it does not, Octopus risks becoming just another China T-Union card. Put it this way, if OCL doesn’t innovate and invest it its future as a world’s leading transit platform, it does not have one.

Smartphone payments grow with Japan CASHLESS Rebate program

Good news: Japanese consumers are using less cash and more cashless payments. The winners are smartphone contactless apps like Mobile Suica (NFC) and PayPay (QR) which saw use rates grow from 16.4% to 28.6% in the August 2019 to January 2020 period. The CASHLESS Rebate program has clearly lifted all cashless methods which it was designed to do. The bad news? We have no idea where the economy is going in the coronavirus crisis with the Tokyo Olympics in the balance.

The new cashless payments market report from Mobile Marketing Data Labo (MMD) has a few other interesting tidbits. Apple Pay Suica is the most used payment method on iPhone followed closely by PayPay, convenience store purchases are nearly 80%.

The growth of smartphone payments makes sense because it’s one the easiest ways for users to enjoy the benefits of the CASHLESS Rebate program with multiple payment choices, and most convenience stores offer an instant 2% rebate for cashless purchases. The next challenge is how cashless payment trends play out after the rebate program ends June 30.