Dear Jane, we fucked up, sincerely MTA

The piecemeal MTA OMNY rollout is a lesson how not to do a transition from old system to new system. A case where poor design, poor management choices and unanticipated user interaction, each insignificant in isolation, snowball into a nagging long term problem.

The problem goes like this:

(1) Apple Pay Express Transit is opted in by default and iPhone users don’t always know it’s on. They don’t care about using Apple Pay credit cards on OMNY anyway because fare options are limited and OMNY isn’t installed everywhere and won’t be until at least the end of next year. They use good old MetroCard and put iPhone away in the right pocket or purse carried on the right shoulder.

(2) When the user gets to a OMNY fare gate they swipe MetroCard with its peculiar forward swipe motion on the reader which is located above and behind the OMNY NFC reader, which is positioned low and angled at pocket level. As “MetroCard sucks, it may take several (forward) swipes to enter”, the user leans into the gate while doing this and boom: OMNY reader activates iPhone Express Transit and charges fare without the user knowing it.

Default opt in Express Transit has been with us ever since Apple Pay Suica arrived in 2016. But transit cards are not credit cards and everything was fine. Things got sticky when iOS 12.3 introduced EMV Express Transit that uses bank issued credit/debit/prepaid cards for transit on Apple certified open loop systems. Currently these are Portland HOP, NYC OMNY and London TfL.

HOP and TfL don’t have problems with Express Transit. Both systems use contactless exclusively. HOP has stand alone validators, not gates. TfL gates have the NFC reader located on the top. OMNY on the other hand will have MetroCard swipe cards around for years to come: the OMNY transit card replacement is still in development with no release date. With the slow transition pace and current gate design expect the OMNY Express Transit problem to be around until MetroCard is dead, and OMNY is complete with the new tap only card.

In retrospect MTA should have done it this way: (1) rollout out the OMNY card MetroCard replacement first and add open loop support as the very last thing, (2) design better OMNY gates in two kinds, dual mode NFC + swipe, and single mode NFC only. This way MTA stations could do what JR East stations do: start with single mode tap only express gates on the edges and dual mode gates in the middle. As the transition progresses the dual mode gates get fewer and pushed to the sides with single mode gates taking over.

Apple could help by keeping automatic Express Transit opt in only for native transit cards (Suica, SmarTrip etc.). EMV Express Transit should always be a manual opt in. I understand Apple’s perspective: they want to present Apple Pay Express Transit as a seamless one flavor service, not good/better/best Express Transit flavors. The reality however is that the current technology powering EMV open loop fare systems isn’t up to native transit card standards. Apple can’t fix that.

Unfortunately MTA has taken the dumb path of blaming Apple instead of fixing their own problems. New York deserves a world class modern transit system, OMNY is an important step in building one. MTA management performance so far doesn’t inspire much confidence. Let’s hope they focus on the rollout and deliver it without more delays or problems.


Blame the Apple Pay Ventra delay on open loop

Washington DC SmarTrip and Greater Los Angeles TAP transit cards both launched on Apple Pay the first week of September within days of each other. They upstaged Apple Pay Ventra which was announced as ‘coming soon’ way back in March 2019 but has yet to launch. Chicago Ventra users are understandably frustrated with the ‘coming soon’ Apple Pay Ventra, especially when CTA celebrates the Apple Pay SmarTrip rollout with another Ventra ‘coming soon’ ad.

All three fare systems are managed by Cubic Transportation Systems who also run the London Oyster and Sydney Opal systems. Cubic systems all use the same MIFARE smartcard technology but the interesting thing about SmarTrip and TAP is: (1) they are the first Cubic managed digital wallet transit cards, (2) neither system has implemented open loop fare payments for tap and go credit cards.

Ventra, Oyster and Opal all have open loop, and as of this writing Cubic has yet to deliver those transit cards on digital wallets. Why?

The SmarTrip/TAP Apple Pay launch gave us the answer that nobody wants to discuss: open loop support adds a layer of complexity and cost that stymies native digital transit card support. Complexity and higher cost means fewer choices, delays, and lousy performance, simple as that.

Steve Jobs explained it best in his last public appearance. A great product or service comes down to focus and choices, either you can focus on making certain technologies work great on your platform versus just okay when you’re spreading yourself too thin. Ventra is spread too thin, that’s why Apple Pay Ventra and Google Pay Ventra are delayed more than a year after being announced.

Open Loop is sold as the cost effective future of transit ticketing but it’s had a surprisingly rocky time in the American market. The failure is pinned on transit companies but I think credit companies are to blame. The arguments for open loop are plastic era constructs that ignore how mobile digital wallet platforms and mobile apps have changed everything. For example the oft cited open loop benefit of plastic smartcard issue cost savings completely overlooks the cost savings of digital transit cards on smartphones.

It’s high time for the credit card industry to rewrite the open loop marketing script for the mobile era, but they don’t want to do that. Expect more of the same. In the meantime, let’s hope the SmarTrip and TAP Apple Pay rollout is a sign that Chicago will be getting Apple Pay Ventra soon.

Farewell FeliCa Octopus, save the last tap for me

During the 2019 Apple Pay Octopus saga one thing was clear: Octopus was living on borrowed time. On the eve of the Apple Pay Octopus launch:

Octopus Cards Limited (OCL) has been slow extending the service to include mobile. Instead of putting early effort into digital wallet support for Apple Pay/Google Pay/Samsung Pay, OCL wasted time and resources developing the niche Mobile SIM product which didn’t pan out. This lag coupled with the rise of AliPay and WeChat Pay QR Code payment empires put enormous pressure on OCL to do something…

With so much traffic and business from the mainland, OCL owner MTR is looking to add QR Code Open Loop transit support (paywalled link)…MTR gates will eventually look like the ones in Guangzhou with PBOC/FeliCa/QR Code readers supporting Octopus, China T-Union, AliPay/WeChat Pay. At which point I say OCL doesn’t have a viable transit platform business anymore.

I hoped the success of Apple Pay Octopus would buy it time, but on August 28 the South China Morning Post published a story where OCL CEO Sunny Cheung says they will join the China T-Union initiative for seamless transit integration between Hong Kong and China. He to goes out of his way a few times in the interview to say how ‘old’ NFC technology is:

Cheung said internet users’ criticism of Octopus being a tech laggard died down in June after people were allowed to add their Octopus account to Apple Wallet on their iPhones. Cheung, who admitted he was stung by the criticism, regarded Octopus’ breakthrough on the iPhone as one of the best times of his stint with the company. “This was one of my biggest challenges,” he said. “The breakthrough helped refresh Octopus’ image even though it is still using NFC technology.”

Hong Kong’s Octopus aims to spread tentacles with contactless card for paying fares in mainland China

Obviously Sunny thinks that QR Codes are cutting edge. He is retiring and doesn’t care about criticism regarding his ineffectual OCL management, or scalping inbound tourists who want to use Apple Pay Octopus.

Hard Reality
China has ruthlessly weeded out MIFARE and FeliCa transit cards and replaced them with the slower PBOC 2.0/3.0 China T-Union standard, aka the supermarket checkout spec. I think Octopus will eventually get the same China T-Union lobotomy.

Doing so means OCL and China transit authorities can replace or retire the Sold Octopus•Lingnan Pass that is plastic only and covers 20 Greater Bay Area cities. Online information is limited but the current Sold Octopus•Lingnan Pass card appears to be 2 separate chips, a NFC-F FeliCa with HKD e-purse and a NFC-A PBOC Lingnan PASS RMB purse. It’s a plastic era solution that cannot work on digital wallets in its current form.

Octopus could be ‘dual mode’: a single card with separate NFC-A/China T-Union RMB purse and NFC-F/Octopus HKD purse. In this scenario Hong Kong Octopus remains on FeliCa while the rest of China gets the benefit of China T-Union with mobile support. Unfortunately OCL would have to create a new dual mode card architecture that works on digital wallets and have somebody design and fabricate IC chips for plastic issue, an expensive undertaking. It would be great if this could happen but I’m not optimistic.

It’s easier and cheaper to create a single protocol China T-Union PBOC 2.0/3.0 card with separate RMB and HKD currency e-purses that works everywhere, and on mobile, for all mainland transit and for mainlander transit in Hong Kong.

There is also the plastic card issue business angle to consider. Read FeliCa Dude’s Octopus on iPhone 7 post paying special attention to the Octopus plastic card issue steps that he outlines. The Hong Kong powers that be would like that profitable franchise sourced locally or in mainland and not from Sony.

We all know ‘one country two systems’ is an illusion and Hong Kong is quickly being force fitted into China. There are no hold outs. It may take a few years, but as MTR transit gates and OCL store readers are gradually replaced with newer models, those readers will all have dual mode FeliCa/PBOC support. And when everything is ready, MTR and OCL will turn off FeliCa. FeliCa based Octopus has had a great run that influenced transit fare system development around the world. Enjoy it while it lasts.

The Apple Pay monopoly debate: are we really comparing Apples with Apples?

Ruimin Yang’s detailed and thoughtful post, “Apple Pay monopoly, are we really comparing ‘Apples’ with ‘Apples?“, outlines the entire Apple Pay system architecture, how it compares to other digital wallet platforms, (Google Pay, Samsung Pay) and what ‘open vs closed’ means in the whole ‘Apple Pay is a monopoly’ debate. I highly recommend it if you have any interest in digital wallet payments.

As Yang explains, ‘open’ is not easily defined and the options are not easily implemented, especially when it comes to Apple’s highly customized and constantly evolving Apple Pay platform built around their A/S series chip Secure Enclave and Embedded Secure Element. Apple has spent a lot of time, money and effort in building the Apple Pay brand as the high benchmark standard for secure, private and easy to use digital wallet transactions and services. It is not your standard off the shelf NFC + Secure Element package.

It is telling that Germany, a country with one of lowest rates of credit card use and whose banks fought to keep Apple Pay out, is pushing for ‘open NFC’ the most. It sounds like an across the board move but it’s really aimed at Apple Pay.

This is European business politics in the age of digital wallet wars: mobile payments and digital wallets have disrupted everything and the traditional players, banks and card companies i.e. the real gatekeepers, are doing everything they can to keep the upper hand by using the open NFC argument to force their own branding on Apple’s platform in place of Apple Pay.

In the European tradition, regulation is invariably the go to strategy for keeping the status quo. I still think Junya Suzuki has it right: the EU would never demand the same thing of Samsung or Huawei that they are demanding from Apple. In other words, politics.

Previous coverage:
What does open Apple Pay NFC really mean? (11-17-2019)
The Apple Pay EU antitrust investigation (6-20-2020)

Apple Pay PASMO and the coming transit IC card rush to mobile

Mobile PASMO was announced in January 2020, launched on Android Osaifu Keitai in March and will land on Apple Pay with the iOS 14 update this fall. As early as April Apple was already dropping hints that Apple Pay PASMO was on the way.

9 months is a quick turnaround for announcing and launching an entirely new mobile transit service across 2 digital wallet platforms: Android (Osaifu Keitai) and Apple Pay. It sure beats Cubic Transportation Systems who have yet to get Apple Pay Ventra out the door more than a year after it was first announced in March 2019 on the far less complex Chicago transit area.

While many Apple Pay users in Japan are happy to have PASMO, there is always that nagging question: if I already have Apple Pay Suica that works nationwide, what’s the point of Apple Pay PASMO? All the major transit cards are cross compatible, the only difference is commuter passes…and reward points. As FeliCa Dude so astutely explained in his excellent Reddit post, Mobile PASMO is a boondoggle, the result of JR East and PASMO Association failing to cooperate and mutually host commute plans…and points.

All Japanese transit cards are slightly different versions of Suica. There could easily be one national transit card and Japanese users absolutely would love having it, but ICOCA, TOICA, manaca, SUGOCA, Kitaca, nimoca and Hayaken want to hang on to commuter passes…and points. The good news is that (1) Mobile PASMO got off the ground in a very short time, (2) JR East is providing Mobile Suica cloud assets. I suspect Mobile Suica is likely hosting Mobile PASMO as well but whatever deal they cut is hush-hush.

Suica growth, the CASHLESS tax rebate effect, COVID and all that
Junya Suzuki beat me to the punch today with an excellent piece that covers the Apple Pay PASMO announcement and several recent Suica trends including the recent addition of Suica to Square. The most important one to me is the July 2020 edition JR East factsheet Suica section: “Number of e-money available shops”. The number of Suica ready stores increased 50% YOY by 324,000 in the March 2019~March 2020 fiscal year with store growth outside of station areas increasing the most.

This is a direct result of the CASHLESS Tax Rebate program which provided merchant subsidies for cashless infrastructure. That program ended June 30 but there is talk in government circles of implementing a similar program to boost the economy and drive cashless use in the COVID era.

JR East factsheet Suica Section

Suzuki san points out what I have said in other posts, Mobile Suica growth from the October 2016 Apple Pay Suica start point is remarkable: 9.3 million users as of March 2020. And the growth rate is accelerating. Smaller and less expensive mobile devices like Apple Watch with Apple Pay Suica and Garmin Suica make the mobile transition attractive for a wider number of users.

JR East factsheet Suica Section

With restricted travel in the COVID era every single transit company in Japan is facing tremendous pressure to reduce costs. Moving away from high cost plastic transit cards with cut and past Mobile Suica IT assets and next generation Suica card architecture will be the easiest way to do that.

The rush to mobile
It starts now. Apple Pay PASMO marks the start point of a transit IC card rush to mobile digital wallets. Mobile PASMO is rebranded Mobile Suica. With next generation aka Super Suica coming in 2021, at the very least I think we’ll see similar arrangements from JR West ICOCA, JR Central TOICA and other major transit IC cards. With the addition of MaaS NFC Tag Suica, we’ll see a faster, wider uptake of Mobile Suica and sister services for payments everywhere.

And for those Open Loop advocates out there Junya Suzuki has some surprising analysis regarding the Japanese transit scene: despite some limited installation such as Okinawa Monorail, he does’t see transit companies going in for Open Loop in any big way. Mag strip paper ticketing will gradually be eliminated as next generation transit gates go into service over the next few years but mobile transit cards and paper QR Codes will be the replacement, not Open Loop.

As I have said before, the whole ‘Open Loop vs Closed Loop aka EMV contactless bank cards vs Native IC transit cards’ debate is pre-mobile plastic era out of date thinking. Mobile wallets and apps have tossed that whole game out the window for good. Why do you think QR Code payments and UWB Touchless are coming to Apple Pay in iOS 14? It’s a whole new crazy game. Better get used to it.