Dear Jennifer Bailey

Dear Jennifer,

Congratulations on the success of Apple Pay in Japan! The success is all Suica of course, but it was a very smart move and Apple Pay has transformed the Japanese payments market like the arrival of Commodore Perry’s Black Ships. The market is a hot fun mess with plenty of opportunities. Here is another one.

I love coffee. So do Japanese. In Suginami City Tokyo, coffee shops, cafes and kissaten are always packed with people spending money who don’t like Starbucks. No doubt you know that Starbucks continues to stonewall Apple Pay here, but there is a nice end-around play to win that game. Did you see today’s news announcements from Docomo and Doutor that starting June 3 Docomo d POINT rewards will be given and accepted at all Doutor Coffee shops? That looks boring but believe me, it’s huge.

It’s very simple: cut a deal with Docomo and put a contactless version of the d POINT rewards card on Apple Wallet, just like PONTA. Don’t stop there. Put the Doutor prepaid card on Wallet too. After all it’s just MIFARE like the Student ID cards, and since Doutor is putting out a Dotour App for card online recharging on April 22, the backend system is in place for a Wallet version.

With those cards in Wallet, lots people who have not used Apple Pay in Japan would start using Apple Pay. Kind of like Apple Pay Suica for coffee lovers who don’t use Suica. It would be cool and cutting edge for customers to earn d POINT rewards at Dotour Coffee Shops just by paying with Apple Pay, again just like earning PONTA rewards at Lawson. But reward points for drinking coffee is the real incentive, and the payoff. I guarantee it would strengthen your hand with Starbucks in a big way, and help Docomo sell more iPhones. Tim would be very happy.

Think about it. Seriously.

Love and Kisses,
Ata Distance

Advertisements
Featured

Apple Pay Express Transit Coming to America with HOP and Ventra

The October 2016 launch of Apple Pay Suica in Japan was an important one with several ‘firsts’: FeliCa was the first non-EMV contactless payment NFC technology on the Apple Pay platform, the first appearance of Express Transit cards that worked without Touch ID/Face ID and supported the full feature set (commuter passes, etc.) of regular plastic smartcards. The success of Suica on Apple Pay remains the fullest expression and gold standard of what a transit smartcard on mobile can be, with transit, e-money, lightning fast performance and Apple Map integration rolled into one.

Express Transit arrived in Beijing and Shanghai in 2017 with the iOS 11.3 addition of PBOC payment technology to Apple Pay, but the cards remain in perpetual beta (more China transit cards were on tap for iOS 11.4 but pulled), are not yet interoperable in other transit areas, require a China UnionPay debit card for recharge instead of any Apple Pay card, and cannot be used for e-money purchases.

iOS 12 added MIFARE support which is the technology used for contactless Student ID cards that launched last September. Student ID cards are basically Express Transit cards called ‘Express Mode’, without transit that open door locks and come with e-money services. The arrival of MIFARE in iOS 12 was an indication that other card services would come to Apple Pay.

The addition of Portland HOP (Coming Soon says Apple, TriMet says summer) and Chicago Ventra (coming later this year) marks the first time iPhone users in America have the opportunity to use Apple Pay Express Transit en masse. Even snotty TfL users don’t have that and it looks like they never will. iPhone users can already use EMV contactless Apple Pay credit/debit cards for transit in Portland and Chicago so why did Tim Cook go out of his way to mention them at the Apple Special Event on March 25? It’s the Express Transit card thing, best captured by Suica on Apple Watch in this tweet:

Express Transit vs EMV Contactless

Using Apple Pay Suica in Japan for instant transit and store purchases nationwide without using Face ID/Touch ID spoils a person for using anything else in Wallet. I use Apple Pay credit cards to add money to Suica and little else. In Japan there are entire ad campaigns built around Express Transit:

With Apple Pay Express Cards on Apple Watch you can do this too, this is how you sell Apple Watch in Japan

I spent last summer in Salt Lake City learning just how slow and bumpy the average Apple Pay EMV contactless credit card American experience is. Checkout terminal infrastructure is creaky with poorly marked tiny NFC hit areas with little or no user feedback. Invariably I heard, “try it again” or the ultimate punchline, “You’re holding it wrong.” No wonder in-app payments are bigger than Apple Pay USA. Things are rough on the system backend too: UTA unceremoniously dropped Apple Pay EMV contactless support while I was there.

Express Transit fully reproduces the user experience of plastic transit cards adding much more functionality and convenience, while doing away with small but important Apple Pay EMV stress points such as using Face ID/Touch ID and dealing with multiple Wallet cards. Chicago Ventra support offers some insight on the current state of EMV transit:

  • Get your device ready, first, for fastest entry
  • “Card clash”: touch only your desired payment method
  • Multiple credit cards: always use the same card on the same device on Ventra readers

Another downside of EMV contactless is that it’s a very dumb smartcard. EMV was created by the credit card consortium for leisurely check out at the local supermarket, not for daily commuters zipping through transit gates at rush hour. EMV transactions are always slower than a transit card with none of the functionality or benefits. The differences between transit smartcards and EMV are nicely captured on the HOP page.

Furthermore bank cards are owned by the bank, not the transit company or the customer. That means conditions for both transit company and customer to use it. Transit cards however are owned by the transit company, the prepaid balance you put in them is yours.

I’ve always questioned the purported wisdom and convenience of letting banks directly on transit fare gates. It’s a devil’s bargain as Chicago Ventra found out with their own Mastercard branded debit card experience. Predatory banks and fees will never go away. My position is that it’s a better long term business opportunity for transit companies to limit bank cards to the backend for adding money to transit cards on digital wallets, where they really shine, and focus instead on building better services tied to transit cards that benefit customers and businesses of the entire transit region, aka a transit platform business model.

Building a Future: interoperable transit cards and e-money

There is some interesting discussion regarding Express Transit vs EMV on the MacRumors site. Most people see the convenience of Express Transit without Face ID/Touch ID, some don’t. Heavy travelers in particular prefer one EMV card thing to ride transit anywhere rather than juggling different transit cards. It’s a trivial issue on digital wallets but they have a point. It is exactly a key issue explained by Egon Terplan in his article Falling in Love With the Trains of Japan: nationwide interoperable transit cards.

It took Japanese transit companies a decade to make their transit cards interoperable with each other through incremental upgrades on backend systems and IC smartcard issuance. This is much easier to achieve with digital wallets attached to cloud backends, and since most transit fare card systems in America are designed and/or operated by the same company, Cubic Transportation Systems, interoperable transit cards shouldn’t be that hard to do. It doesn’t take much imagination to see the usefulness of a HOP card that works on Chicago Ventra, NYC MTA, LA TAP, and vice versa.

This usefulness can be vastly expanded with the addition of an e-money service that frees the prepaid card balance for other uses outside of transit, a transit card version of John Hopkins J-Card or DukeCard e-money that works nationwide is a powerful thing. It is hard to explain just how powerful and transformative simple things like Apple Pay Suica Express Cards can be unless you experience them first hand. The simple ‘it just works’ success of Suica is built on layers of infrastructure where each new layer adds functions that strengthen the whole.

Now that transit cards are finally arriving on digital wallets in a big way this year, with Apple Pay delivering some of those advantages to iPhone users, here’s hoping that America can experience it and be inspired to build the same thing over time.

Looking ahead we can expect more details of the New York MTA EMV transit fare service rollout, LA Metro has said they expect Apple Pay support for the TAP fare system (EMV only?) later this year as well. Hong Kong iPhone users are fervently hoping for Smart Octopus on Apple Pay now that the Smart Octopus on Samsung Pay exclusive is apparently over. iOS 13 might be a Apple Pay Transit coming out party for many. That would be great fun.

Last but not least here are some Express Transit card tips and other things I have learned from 2 years of daily Suica use.

  • HOP and Ventra use the same MIFARE technology as Student ID cards, Express Transit device specs are the same: iPhone 6S and later, Apple Watch Series 1 and later.
  • Express Cards only work while Face ID/Touch ID is active. Express Cards stop working when Face ID/Touch ID is disabled. Be careful if you wear face masks on your commute, it’s easy to disable Face ID without realizing it with a rude surprise at the transit gate. Face mask users can mitigate this by turning off Face ID for unlocking iPhone but leave it on for Apple Pay.
  • Apple Watch with Express Cards is a great combination but in winter when wearing layers of clothes, iPhone is faster at the gate.
  • iPhone X users need to be aware of the iPhone X NFC problem which can cause endless gate errors with Express Transit. You may need Apple to replace it, never an easy thing.
  • iPhone XS/XR users can finally put the Express Cards with power reserve feature to good use, it is cool and assuring knowing that you have 5 hours of reserve power to clear the final destination gate.

Another step for global FeliCa

It’s nice that NXP and FeliCa Networks (all things FeliCa mobile owned by Sony, Docomo and JR East) have collaborated on putting EMV, FeliCa and MIFARE on one chip. The NXP PN81 does it all and is certified for FeliCa too and not just NFC A-B-F:

FeliCa Networks and NXP share the vision to provide global travelers and  mobile phone owners in Japan an integrated contactless experience for payment, ticketing, and other popular use cases towards 2020 and beyond,” said Tomoharu Hikita, president and CEO of FeliCa Networks.

It sounds like global FeliCa for any smart device, something which Apple has been selling worldwide since 2017. Let’s hope Android manufacturers can start offering it too with the NXP PN81.

Taiwan EasyCard lands on Samsung Pay (U)

Yahoo Taiwan reports EasyCard coming to Samsung Pay

Back in August 2018 when the Taiwanese Representative Office in Tokyo announced that EasyCard and iPass would accept credit card recharge starting in October, I suspected backend support was being put in place for Apple Pay support. I was half right, the addition of credit card recharge was a sign that the cards were getting ready for digital wallets but not Apple Pay. Yahoo Taiwan reported that Samsung is negotiating with the EasyCard Corporation to bring the MIFARE based EasyCard to Samsung Pay in 2019 via a software update. That finally happened April 11.

EasyCard is a stored value (SV) transit card similar to Suica used for both transit (MRT, Metro, buses, ferries, etc.) and e-money purchases. It will be the 2nd Samsung Pay ‘exclusive’ after Hong Kong’s Smart Octopus launch in December 2017 which is FeliCa based like Apple Pay Suica but still exclusive to Samsung Pay.

Apple Pay does support MIFARE cards in iOS 12/watchOS 5 which is the technology behind the recently added contactless student ID cards. Technically there is nothing standing in the way of getting EasyCard and iPass on Apple Pay. The sooner all SV transit cards are natively hosted and widely available on digital wallet platforms (Apple Pay, Google Pay, Samsung Pay, etc.) the better, it only becomes truly useful when everything is well integrated.

Update
EasyCard on Samsung Pay launch announcement April 11.

Why Apple Pay Suica is a success and Apple Maps is not

Inbound Apple Pay Suica user experiences are endlessly fascinating and occasionally enlightening. This tweet video captures the usual ‘whoa, that’s fast’ first time reaction.

The responses are equally interesting with a few ‘so what? we have that in (London, Moscow, China, etc.)’ which is true but it’s not the same. Almost all of them are slower, don’t have e-money functions, don’t have nationwide coverage and are not hosted natively on pay platforms like Apple Pay or Google Pay. They rely on slow buggy EMV contactless credit card transactions on transit gates instead, in short they are not transit payment platforms.

Apple Pay Suica is clearly a great service and success that has not only changed contactless payments in Japan but changed Apple as well, with Apple incorporating global FeliCa and implementing A-12 Bionic powered Express Card with power reserve technology which matches the performance of dedicated Sony FeliCa Chips on the A-Series.

What makes Apple Pay Suica a success? It is a unique layering of hardware and software that tightly integrates into a single seamless experience. At the core is the basic Suica IC card format and the transit gate system technology was created by JR East and Sony in the 1980s to solve a user experience problem with magnetic commuter pass cards. Successive layers were added over time: e-money, nationwide Transit IC card interoperability, and perhaps most important of all, Mobile Suica. The Super Suica additions will further enhance the fundamental technology in 2021.

Apple Pay support arrived in October 2016, global FeliCa was added in 2017. These were 2 layers from Apple that fit perfectly and extended the entire platform with a whole new ease of use service level. The result is a service where each layer builds on and enhances the whole. This is Steve Jobs 101: work from the user experience back to the technology so that the total experience is greater than the sum of the parts.

The Apple Maps problem
Contrast this with Apple Maps. Justin O’Beirne recently published a detailed progress report of Apple’s ‘new’ (in America only) map. There was surprisingly little discussion on tech blog sites, Nick Heer was one of the few to share a few observations. O’Beirne and Heer both focus on data collection and prioritization as the core problem for Apple to fix if Apple is ever going to close the map gap with Google. I think that is a misconception that got Apple Maps in trouble in the first place.

I’ve never seen data collection as the biggest problem that Apple needs to fix. In Japan for example the data collection problem can be solved quickly by swapping out 3rd rate data suppliers with first tier JP suppliers like Zenrin who already field large data collection and verification teams. Google and Yahoo Maps Japan both use Zenrin and build on top of that solid foundation with their own data.

Integration and coordination have been, and continue to be the biggest problem. If Apple cannot do a good job integrating and coordinating different map service layers so that they build on each other, it will continue to be what it is now: a collection of loosely connected technology services that don’t work together very well and tend to pull each other down instead of up. A few examples:

  • Transit
    Apple has a very good Japanese transit data supplier Jourdan, the same one Google uses. Unfortunately the good transit data gets wasted by the limited search and sort App Maps transit UI that is completely manual, doesn’t dynamically update travel times or arrival estimates, or even provide location-based alerts when you arrive. Those kinds of integrated transit notifications on Apple Watch alone would sell a lot more devices.
  • Siri
    Siri is one the most important service layers for integrating navigation, transit and indoor maps. Unfortunately Siri is poorly connected where it should be hooked into every nook and cranny. Japanese Siri can locate the nearest station, usually, but that’s it. Siri doesn’t do transit searches or suggestions.
  • Navigation
    Turn by turn has been offered in Japan for a few years but it still basically useless without traffic information, which is still missing. Lane Guidance was only added just recently.
  • Data Duplication
    This happens all the time as Apple fails at coordinating and verifying data sets from different JP suppliers.

And so on. I included data duplication as it illustrates my basic point that no matter how good the basic data collection is, it’s worthless without a robust integration and coordination process. A smart team of human editors with deep local knowledge understand how services should connect, what works and how it should work. A truly  great team also knows how to focus and do more, much more, with less. This is impossible to achieve with the current one size fits all mentality.

Apple Maps Japan is a classic ‘the total is less than the sum of its parts‘ product. To be sure there are some good parts, but in Japan they don’t add up. The different layers stay separate and never integrate into a seamless whole like Apple Pay Suica does. It’s great that Apple is making process with its map reboot effort in America but the real test will be how well they integrate it all. A laser focus and smart integration is the only way Apple can close the map gap with Google.