Category: QR Code Payments

It all connects: JR East QR Eki-Net Tickets

One of the great things about Japanese trains is how seamlessly train travel connects nationwide. Reserve a ticket, get your seats assigned and travel to your destination anywhere in the country even on different JR company express trains and Shinkansen. This is the legacy of the JNR developed MARS system (Magnetic electronic Automatic seat Reservation System) for express train and Shinkansen seated ticket reservations that powers station ticket kiosks, travel agency systems and nationwide ticket reservation offices. MARS is the tabernacle of JR ticketing. Back in the JNR days ‘Green Window’ reservation window in stations staff knew everything inside out and got you the best connections at the best price. They still do for the most part but are quickly disappearing in favor of online reservations. MARS was designed so well that it has been difficult for JR Group to move forward to ticketless mobile apps with the same JNR era MARS-like unified vision.

But even in local regions cross company thru transit is a given even though designated local regions do not use the JR Group MARS ticketing system. There is a small catch however: you must have a ‘connecting ticket’ specifically designated for the destination on a different connecting company line. For paper tickets that is.

One great innovation of Suica, PASMO and the Transit IC standard was that it did away with the need to purchase special connecting local area tickets. Just tap and go, each company transit gate automatically calculates and deducts the stored fare (SF) from Suica. Another innovation of Suica was IC fare. IC fare is, in almost all cases, slightly cheaper for local area transit in the Tokyo region as the fare is calculated in 1¥ unit increments instead of the 10¥ increment for paper tickets, a benefit of lower cost ticketless IC fare processing. Cheaper IC fare is also encouragement to use IC cards instead of paper tickets. As of FY 2021 JR East says 95% of Tokyo area transit uses Suica/PASMO.

Nevertheless, despite Suica being around 20 years and the Transit IC standard in place for 10, paper mag strip tickets are still with us. Why? A number of reasons but the biggest one being they are essential for long distance interconnected transit. Travelers can get on a local JR West train in the Osaka region, transfer to the Shinkansen and ride to Tokyo, transfer to a JR East local train and ride to their destination with a single purchased set of paper tickets, usually with a discount when purchased far enough in advance. Can’t we already do this with Suica and the like? Yes and no.

Bad JNR Breakup
The 1987 breakup of JNR had some bad repercussions that are still with us today. It came at a crucial point just as the next generation ticketing Suica smart card was in development, delaying deployment for many years. One outcome was this delay fossilized JR Group interconnecting tickets to MARS based paper ticketing.

Post breakup JR companies developed their own transit IC card systems with little regard for MARS JR Group integration, limiting coverage to high volume traffic areas where they could recoup transit IC system installation costs. This resulted in large sections of lower traffic rural lines being left off the Suica/Transit IC map with paper tickets the only option. I experience this situation whenever I travel from Tokyo to Minobu. Suica only goes to Kofu, but the Minobu line is not wired for Transit IC as the Minobu station signage makes very clear.

The TOICA transit IC only covers about half of the JR Central lines, a similar situation in other JR Group companies

A transition from mag-strip paper tickets but what about MARS?
When JR East unveiled their next generation transit gate prototype in late 2019 with Suica and QR Code readers but no paper ticket slot, it was clear that closed loop QR ticketing was the transition plan for retiring paper tickets. Mag-strip paper recycling costs are increasing and mechanical paper ticket transit gates are expensive to purchase (said to be 10 million JPY per unit) and maintain. Migrating to QR eliminates these costs…but it will be a long transition. The end of mag-strip paper tickets will only be happen when all JR Group companies have QR integrated with an updated MARS for ticket reservations and validation.

Filling gaps
Despite all appearances, JR Group companies have been busy creating a foundation of new services that fall into basic categories:

•Extensions: (1) Closing Transit IC gaps on their respective systems with hard wired stations or readers installed on trains for tap-in/tap-out transit, (2) Extending Transit IC beyond JR Group systems with lower cost cloud based solutions or government subsidized installations for connecting transit operators.
•Cross region transit between Suica-TOICA-ICOCA-SUGOCA regions (Atami, Maibara, Shimonoseki, etc.), this has started with through cross region Transit IC commuter passes, the next step is through cross region for regular cards.
•Online Reservation and Ticketing: MARS integrated Eki-Net, EX/Odekake-Net that offer eTicketing for Shinkansen, Ticketless reservations for express trains and special seasonal package tickets.
•Special Issue: Suica/PASMO for disabled users with discounts that replace paper passes

By company:

JR East
Suica is extending to cover the entire rail network starting in the Tohoku region in May 2023 with a new lower cost cloud based Suica system (aka Super Suica Cloud), Suica has recently expanded to cover Tohoku region bus companies via the Suica 2 in 1 Region Affiliate Card program that kicked off in 2020. Suica/PASMO for disabled users will also launch.

JR West
Has been extending ICOCA with the final extensions coming to the Shimonoseki region in March 2023 along with the Mobile ICOCA launch.

JR Central
Announced TOICA will be coming to all lines and stations “soon”, along with more EX non-Shinkansen ticketing options and EX-MaaS package tours that cover train, hotel, car rentals, etc.

In short QR will be a mobile only default replacement for MARS paper tickets while JR East-Central-West are extending Suica-ICOCA-TOICA to be the default mobile + physical card mode for local travel. This covers all of Honshu but we still don’t know what Transit IC expansion + QR MARS plans are in the works for the smaller, financially weaker JR Group companies: JR Kyushu, JR Hokkaido, JR Shikoku.

The Eki-Net QR Super Suica Cloud Connection
One of the little noticed key aspects of the JR East Eki-Net QR Ticket announcement is the initial service launch area and time: Tohoku. This is the same area where the Cloud Suica extension is launching in May 2023. Eki-Net QR starts here over a year later, between October 2024~March 2025. This new Suica system has a few tricks up the sleeve that give a clue how Cloud Suica and Eki-Net QR complement each other. Let’s start with the new Suica/PASMO cards for disabled users launching in March 2023. Fare discounts for disabled users are very complex as they are certified by the resident local ward or city. Up until now paper passbooks were manually examined at entrance or exit to verify the fare discount.

Suica/PASMO disability fare cards are the first time the discount is validated by the Suica system. Look very carefully at the valid use regions because Suica 2 in 1 Region Affiliate cards were designed to support special fares on non-JR East transit and region affiliates will support Suica/PASMO disability cards when they launch. As both Cloud Suica and QR will use the same cloud linked transit gates, it’s a given they will also share the same backend validation system.

The new cloud based gate validation system going online in May 2023 (on right) will certainly validate both Suica and QR

Where does Eki-Net QR fare fit?
The Eki-Net online reservation and ticketing system we use now is be the same one people will use to buy and display QR Code tickets. You can already use QR Codes to pickup paper tickets from a station kiosk, displaying the same QR Code to go through a gate is the next natural step. The essential question is which fare grouping QR tickets will reside in. Currently JR East has 2 basic fare groups:

  • eTicket and Ticketless (Suica / Transit IC cards)
    Local region fare tier rounded to 1¥ that is usually slightly cheaper, Eki-Net Shinkansen eTickets with bigger discounts, Eki-Net Ticketless Express Train Reservations with bigger discounts
  • Paper Tickets
    Local region fare tier rounded to 10¥ that is usually slightly more expensive, express train and Shinkansen tickets without eTicket/Ticketless discounts, special campaign and seasonal tickets, package tours, etc., with discounts.

The JR East Eki-Net QR diagram give us an idea of how it will work for long distance, multi-stage travel in the JR East region:

As the diagram shows, the only possible MARS integration point is the Shinkansen ticket portion. The rest of the ticket is internal JR East local fare ticketing. The most interesting point is the first local transit leg from Kami-Morioka to Morioka. This is the Yamada line that does not have Suica service and is not included in the May 2023 Cloud Suica expansion. This is why no tap-in validation shown at the start point.

The logical progression is that Eki-Net QR tickets simply replace the paper ticket tier. There’s a huge variety of one-off specials and package tours that don’t fit well in the Suica eTicket/Ticketless box that would be ideal for QR treatment. We shall see but I suspect JR will want to keep some differentiation in place because NFC Suica/Transit IC ticketing works without a network connection, QR Code ticketing does not. And we all know that station network environments are the worst.

Eki-Net QR tickets will only be for mobile devices. Suica will be the choice for plastic and mobile
Eki-Net already issues QR Codes for picking up paper tickets, this is what Eki-Net QR Tickets will replace.

New Transit Gate Design
Last but not least we have QR reader equipped transit gates that JR East will start installing in stations starting December 2022. Like the paper to QR transition, installation will see a gradual replacement of older end-of-life combo Suica + paper transit gates with new Suica+QR+paper transit gates. We may also see installment of the earlier Suica + QR prototype gates that JR East tested in 2020.

One aspect of both designs is the QR reader is placed way in front of the Suica reader, which is placed as far back as possible. This peculiar design has an important function of preventing ‘Suica Express Transit’ card clash when a user is going though the gate displaying a QR Code. JR East doesn’t want an extraneous Suica card read/write to clash with a QR read that sets Suica to ‘start transit’ mode. The gates will almost certainly automatically turn off the blue Suica reader when it detects a QR Code, but keeping the readers far apart is a good thing. We don’t want any MTA OMNY-like launch nonsense. A similar NFC/QR clash is common in Europe when the different readers are place too close.

Looking Ahead
This is only a start. JR East has only announced the broad outlines of their paper to QR transition, the real transition will kickoff when other JR Group companies announce their plans which they have not done so far. One thing is for sure, the trusty old JNR MARS based mag-strip paper ticket reservation system is finally getting an upgrade for the cloud based mobile ticketing age.

The open loop mobile connectivity challenge

The recent additions of stera transit (Visa-SMBC-Nippon Signal-QUADRAC) open loop test systems in Kyushu covering Fukuoka metro, Kuamamoto city transit and JR Kyushu expand the VISA Touch transit boutique deeper into western Japan territory. Open loop based cloud processing advocates like to portray these developments as proof that local processing based FeliCa systems like Suica et al. are expensive bygones due for replacement.

There’s just one little problem that open loop advocates fail to mention: mobile connectivity, aka the Suica app problem, the QR Code payment problem, the Smart Navigo HCE problem, etc. Wide LTE and 5G deployment doesn’t mean reliable mobile and internet connectivity that mobile payment apps depend on, and carrier outages quickly bring down the cloud transaction processing side of the equation. This was proven, yet again, on July 2 when major carrier KDDI suffered a massive nationwide outage that lasted for 80 hours. Let’s make a quick reference graph for examining local processing vs cloud processing in the mobile era.

Stera is a mobile based payments platform from the SMBC group (basically the VISA JP group) that does away with the NTT Data Cafis dedicated backbone and replaces it with the internet based GMO Payment Gateway. This is the same stera that powers the open loop stera transit initiative.

The weak point of course is that since mobile powers the gate reader side, when mobile service goes down, stera gate readers stop working. As everybody found out during the KDDI network meltdown, Mobile Suica kept right on working on the transit gate and the store checkout reader, while mobile app based code payments and point systems all stopped. Some vital services that depended on KDDI connectivity like ATM networks also stopped working.

Cloud based Suica will face some of these challenges when it goes online in March 2023. The only difference being how much local processing stays intact and how much system buffering there is (how much it needs to talk with the cloud server to do the job), we shall see. Which brings me to the point I want to make. The media almost always portrays the open loop/cloud vs closed loop/local match as a winner takes all, one size fits all proposition. As the KDDI meltdown proves, this is stupid, and dangerous. Never put all the eggs in one technology basket. I don’t think the risk will go away, not as long as telecommunication company corporate structures don’t foster and promote their engineering talent (the people who actually make things work) deep into the executive decision making forums.

Open loop in Japan is geared for inbound tourists the supplements, but does not replace, the old reliable Transit IC infrastructure which is evolving and reducing costs too. They compliment each other, address different needs and uses. One size doesn’t fit all. If it did, Oyster card would have died years ago.

Recharge your recharge, the winner/loser debate doesn’t mean jack in the post-Apple Pay Japanese payments market

I love articles like this one. It’s fun examining how the writer, freelancer Meiko Homma, takes old news bits, worn-out arguments and weaves them into a ‘new’ narrative with a titillatingly hot title: “QR Code payments won the cashless race, Suica utterly defeated.”

Her article trots out some QR Code payment usage data from somewhere, the PASPY transit card death saga that illustrates the increasingly difficult challenge of keeping region limited transit IC cards going, the fact that Suica only covers 840 stations out of a total of 1630, all while conveniently ignoring recent important developments like the Suica 2 in 1 Regional Affiliate program, and big updates coming in early 2023: Cloud Suica extensions and the Mobile ICOCA launch.

It has the classic feel of ‘here’s a headline, now write the article’ hack piece passing as industry analysis we have too much of these days. The Yahoo Japan portal site picked it up and the comments section was soon full of wicked fun posts picking apart the weak arguments.

I’ve said it before and say it again: the winner/loser debate doesn’t mean shit in the post-Apple Pay Japanese payments market. PayPay for example, started out as a code payment app but has added FeliCA QUICPay and EMV contactless support along with their PayPay card offering. Just like I predicted, these companies don’t care about payment technology, they just want people to use their services. My partner and I actually see less PayPay use at checkout these days and more Mobile Suica. Why?

The great thing about prepaid eMoney ‘truth in the card’ Suica, PASMO, WAON, Edy, nanaco, is they are like micro bank accounts coupled with the backend recharge flexibility of mobile wallets (Apple Pay, Google Pay, Suica App, etc.). PayPay, au Pay, Line Pay and similar Toyota Wallet knock-off payment apps with Apple Pay Wallet cards, are deployed as mobile recharge conduits that smart users leverage to put money into different eMoney micro bank accounts and get the points or instant cashback rebates they want to get at any given campaign moment. This is where the action is.

And so we have recharge acrobats like Twitter user #1: step 1 recharge PayPay account from Seven Bank account, step 2 move recharge amount from PayPay Money to PayPay Bank, step 3 move recharge from PayPay Bank to Line Pay, in Wallet app recharge Suica with Line Pay card. Or like recharge acrobat Twitter user #2: Sony Bank Wallet to Kyash to Toyota Wallet to Suica.

#1
#2

Phew…none of this involves transfer fees so it’s up to user creativity to come up with the recharge scenario that works best for them. Does it count as PayPay use or Line Pay use or Mobile Suica use? Does it matter?

It’s not about winners or losers, it’s about moving money around. Mobile Suica is extremely useful because of it’s recharge backend flexibility, thanks to Apple Pay and Google Pay (which does not support PASMO yet). This is the case for US citizens working in Japan who get a great return of their Suica or PASMO recharge right now using US issue credit cards because of the exchange rate. This is something visitors to Hong Kong cannot do with Apple Pay Octopus as the OCL recharge backend is far more restrictive than JR East. The biggest gripe users have with Suica is ¥20,000 balance limit.

In the weeks to come we’ll be sure to see hand wringing articles debating the future of Suica, open-loop, etc.,etc., because let’s face it, IT media journalists need something to write about in these challenging times where everything has to be sold as winner/loser, black/white, 0 or 10, and nothing in-between, to get any traction at all. As for me, I think it’s far more interesting, and real, to observe how users are using all these nifty mobile payment tools.

UPDATE 2022-07-04: Thoughts on the KDDI network outage
That was fast. No sooner had the “QR Codes won the mobile payments race” article appeared when major Japanese carrier KDDI experienced a nationwide mobile network meltdown on July 2 JST, lasted a full day with a very slow, still in progress, recovery affecting more than 40 million customers. Suddenly social media channels were full of people complaining that QR Code payments didn’t work, assuming that Mobile Suica and other NFC mobile payments stopped too. Which was not the case though a few fake posts claimed, or just ‘assumed’ people were stranded inside stations. Fortunately there were numerous online articles setting the record straight.

It’s a lesson that people soon forget in our attention span challenged social media era. We saw plenty of QR Code payment downsides in the 2018 Hokkaido Eastern Iburi earthquake that knocked out power and mobile service across Hokkaido. At the time some fake Chinese social media posts claimed AliPay and WeChat pay ‘still worked’ in Hokkaido at the time, of course they did not.

Mobile payment disruptions happen with every natural disaster and war. Good and safe practices don’t come easy when smartphone apps lure us down the easy path without spelling out the risks. It’s a lesson we have to learn again and again, that while network dependent code payment apps have some benefits, they also have limits and security risks. One size does not fit all, NFC and code payments each have their place and role to play in the expanding mobile payments universe. The key is understanding their strengths and weaknesses.

WWDC22 Wish List

It is hard to be enthusiastic about this year’s WWDC when Apple’s entire integrated software/hardware business model is coming under attack. With so much distraction these days there’s not much of a wish list, just a few observations for Apple Pay, Apple Maps and Text Layout.

Apple Pay
First up of course, is Apple Pay. After Jennifer Bailey’s WWDC21 appearance where she announced home keys, hotel keys, office keys and ID for iOS 15 Wallet, and the separate Tap to Pay on iPhone PR announcement release in January, I don’t think Jennifer will be in the WWDC22 keynote. She’s not going to appear just to explain that Apple Pay is not a monopoly, that’s Tim’s job with CEO level pay grade, it’s unlikely she’s doing to appear to just recap details of what’s already been announced.

Bailey’s job is to announce new features, and I don’t think that after the big iOS 15 rollout of new Wallet features and Tap to Pay on iPhone there’s nothing really new. And it’s not her job to announce new frameworks, that’s what the sessions are for. Things that I have been wishing for these past few years such include easier, more open NFC Pass certification process and/or new frameworks for developers to access the secure element for payments or use Tap to Pay on iPhone. There needs to a clearer path for developers who want to use the secure element for payments (Wallet) or iPhone as payment terminal (Tap to Pay on iPhone).

Apple needs to open up the NFC/Secure Element Pass certification process and clarify the process

The only possible ‘new’ Apple Pay Wallet feature I can think of is the long in the works Code Payments. It has been lurking in the iOS shadows since iOS 13, so long that Apple legal inserted official mention in a recent Apple Pay & Privacy web page update: “When you make a payment using a QR code pass in Wallet, your device will present a unique code and share that code with the pass provider to prevent fraud.” If Apple Pay delivers native device generated QR code payments without a network connection, just like all Apple Pay cards to date, it would be quite a coup but by itself, but probably not worth a Jennifer Bailey appearance. Other future goodies like passport in Wallet or ID in Wallet for other countires are too far out to mention, at least in the iOS 16 time frame.

Apple Maps
The only new Apple Maps feature that suggests itself is AR enhanced ‘Look Around’ indoor maps for stations. That’s the conclusion after examining the current (February ~ May 2022) backpack image collection in Tokyo, Osaka, Kyoto and Nagoya. It is highly focused on stations, and stations such as Shinjuku, Tokyo, Shibuya, Ikebukuro, etc., are mostly underground, surrounded with densely packed extensive maze like malls.

This means Apple image collection in Japan is going indoors for the first time, likely at pre-arranged times when people are scarce. This is hard to do at a place like Shinjuku station as multiple companies collectively manage the entire site (JR East, Odakyu, Keio, Seibu, Tokyo Metropolitan Bureau of Transportation, Tokyo Metro, just to name a few).

Apple needs something new with indoor maps as the current incarnation is inadequate for stations. As Google Maps Live has shown in Tokyo station, AR walking guidance is a good fit for indoor maps that navigate users through intricate, information dense underground station mazes, though Google’s version has its problems. New and improved, AR enhanced “Look Around” style indoor station maps with walking directions that seamlessly guide users from transit gate to final destination would be far more useful than they are now.

Recent image collection suggests Indoor Station Maps might be coming in iOS 16
Apple backpack Image Collection backpack is mostly focused on station areas

Overall, I am not optimistic that Apple Maps in Japan can become a top tier digital map service. The local 3rd party map and transit data suppliers that Apple depends on to make up the bulk of the Japanese service are decidedly not top tier. Old problems remain unfixed. In the case of the main Japanese map data supplier things have deteriorated.

Increment P (IPC) was 100% owned by Pioneer but was sold to Polaris Capital Group in June 2021 with a new CEO (ex Oracle Japan) who quickly changed the name to GeoTechnologies Inc. Under hedge fund Polaris Capital Group led management the company has been busy inflating the number of cushy company director positions, never a good sign, and pushing out shitty ad-ware apps like Torima. The focus is leveraging assets not building them.

Apple’s Japanese map problem can only be fixed by dumping low quality GeoTechnologies for a top quality digital map supplier like Zenrin (the amateurish UK backed Open Street Map effort in Japan is not worth serious consideration) or Apple aggressively mapping Japan themselves. Apple has not pursued either option: the image collection effort in Japan is leisurely and limited, its use remains restricted to Look Around. Until this changes, expect more of the same old fundamental Japanese map problems in iOS 16 and beyond. Apple Maps is a collection of many different service parts. Some evolve and improve, some do not. Let’s hope for a good outcome with the data Apple is collecting for indoor station maps.

Apple Typography TextKit 2 migration
WWDC21 saw the unveiling of TextKit 2, the next generation replacement for the 30 year old TextKit, older than QuickDraw GX even, but much less capable. TextKit 2 marked the start of a long term migration with most of TextKit 2 initially ‘opt in’ for compatibility. We’ll find out how much of TextKit 2 will evolve to default on with an ‘opt out’. There are holes to fill too: the iOS side didn’t get all the TextKit 2 features of macOS such as UITextView (multiline text), some of the planned features like NSTextContainer apparently didn’t make the final cut either. We should get a much more complete package at WWDC22. Once the TextKit 2 transition is complete, I wonder if a Core Text reboot is next.

watchOS 9 Express Cards with Power Reserve?
Mark Gurman reported that watchOS 9 will have “a new low-power mode that is designed to let its smartwatch run some apps and features without using as much battery life.” While this sounds like Express Cards with Power Reserve (transit cards, student ID, hotel-home-car-office keys) and it might even mimic the iPhone feature to some degree, it will not be the real thing. Power Reserve on iPhone is a special mode where iOS powers down itself down but leaves the lights on for direct secure element NFC transactions. iOS isn’t involved at all.

Real Power Reserve requires an Apple silicon design that supports the hardware feature on Apple Watch, it cannot be added with a simple software upgrade. Until that happens, a new watchOS 9 low-power mode means that watchOS still babysits Express Cards, but anything that gives us better battery life than what we have now is a good thing. We’ll find out later this year if Apple Watch series 8 is the real Power Reserve deal.

Enjoy the keynote and have a good WWDC.

Apple Pay Enhanced Fraud Prevention

Screenshots courtesy of eurozerozero

Apple Wallet VISA card users report receiving ‘Enhanced Fraud Prevention’ notifications today that outline changes how Apple shares ‘fraud prevention assessments’ with payment card networks based on analyzed information from user Apple Pay transactions (purchase amount, currency, date, location, very likely more). The changes seem to apply to web and in-app purchases.

Apple has been doing most of this already. The new Apple Pay and Privacy text expands upon earlier iOS user guide text: If you have Location Services turned on, the location of your iPhone at the time you make a purchase may be sent to Apple and the card issuer to help prevent fraud. Perhaps Apple is changing ‘may be sent’ to ‘will be sent’.

Enhanced Fraud Prevention might cause problems for some Apple Pay users when people start traveling again as in-app purchase is used for adding money to transit cards. There have already been a few very recent and odd, ‘I can’t use my home issued Apple Pay card to recharge PASMO’ complaints on social media from inbound visitors. Until now this kind of thing has been unheard of for Apple Pay Suica•PASMO users. A new complication to keep an eye on going forward. So far Wallet Enhanced Fraud Protection notifications only seem to be going out to VISA card users. Why and why now?

Because it’s starting with VISA with the focus on web and in-app payments, my first thought was this is partly a response to bad publicity from the silly VISA-centric ‘Apple Pay Express Transit has been hacked!‘ story that make the rounds last October. The new Apple Pay and Privacy text outlines how the new policy applies to various Apple Pay operations: adding a card, paying with Apple Pay, using transit cards, etc.

QR Code payments in Wallet are also referenced. The official mention may indicate the long in development feature will finally see light of day, perhaps iOS 15.5, we shall see. The text says, “When you make a payment using a QR code pass in Wallet, your device will present a unique code and share that code with the pass provider to prevent fraud.” The notification privacy text is worth reading. Unfortunately there is no way to confirm which VISA cards in Wallet are using Enhanced Fraud Prevention. I think this is a failure of privacy disclosure on Apple’s part. There should be some indication in Wallet app card details, but there is nothing.

2022-04-22 Update
Some clarity on the timing of the Enhanced Fraud Prevention rollout: Wallet notifications went to VISA card users in various Apple Pay regions (US, Japan, Australia and more) the same day Apple switched the Apple Cash card brand from Discover to VISA debit. Kissing the Green Dot Bank and Discover backend goodbye for VISA is the smart thing to do if Apple wants to take Apple Cash international. Enhanced Fraud Prevention had to be in place first for that to happen.