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.

Japan Cashless X-Day

Anybody care to chart the Japanese cashless transformation?

Now that the CASHLESS Rebate program is over with transaction rates reportedly going back to ‘normal’ (an estimated 1% rise over rebate program rates), JP media outlets report that some smaller merchants might go back to cash to keep profit margins intact. Real transaction rates are always hush-hush but QR payment rates recently revealed in connection with the Japan QR (JPQR) unified code scheme give us an idea what goes on behind the curtain:

NTT Data already lowered basic CAFIS transaction rates in response to the stera payment co-venture from SMBC-Visa Japan-GMO. As the JPQR transaction rate chart makes clear, banks and payment players have plenty of transaction rate wiggle room. The Japanese government is pushing cashless. If necessary the push will become shove for lower rates and yet another cashless program but where do things stand right now?

July 2020 is the proverbial “X-Day” crossover point: Japan is cashless now, even though the transformation is uneven, ongoing and very messy. On the customer side cashless is the mindset and survival behavior for many Japanese, even for older folks who under normal circumstances would prefer using cash until they day they die.

Faced with the reality of handing money that carries the risk of infection, people are going cashless instead especially with contactless smartphone payments. Junya Suzuki was right all along: Apple Pay turned out to be “the black ship of payments” catalyst that finally nudged Japan from cash to cashless. That and COVID.

Market analysts will undoubtably demand chart data that clearly explains and quantifies the transformation before declaring a ‘winner’ but they have a long wait. That’s because the cashless transformation is sloppy with huge regional variations, all happening right before us. But all of this is an afterthought and our priorities are different now, getting accurate market survey information of any kind in the current environment is extremely difficult.

The Tokyo Olympics was supposed to be the event heralding the cashless era but the COVID crisis has forced much more change very quickly. Evidence is best found in the countless little rituals of daily life that have evolved and are not going back. Merchants who do go back to cash face the risk of fewer customers: when offered a choice people choose cashless.

This realization hit me yesterday when my partner complained about his Docomo dPAY points taking a hit because the Summit supermarket staffer tapped a wrong payment button on the new POS cashless menu options added on July 1. He wanted to pay with iD. A year ago he never used iD, dPAY or Apple Pay and never wanted to, but life changed.

These days I hear contactless reader sounds everywhere, FeliCa chirps and EMV beeps are common as clear plastic sheeting and foot position floor stickers at checkout. And just when posting this the Ministry of Land, Infrastructure, Transport and Tourism announced that Japanese Expressways will be going cashless only with ETC. If there’s anything that defines this sea change it is this: it’s not a ‘victory’ over cash that the media sometimes depicts, nor does it feel like progress. In the COVID era it merely feels like survival.

iOS 14 App Clips unlock the power of NFC background tags

We first got a taste of iOS 14 App Clips with the slick Titanium Apple Card setup that leverages the NFC background tag reading ability, now called NFC with reader mode, of iPhone XR/XS and later. Jennifer Bailey gave a sneak peek of NFC background tag Apple Pay in May 2019 but the pieces weren’t in place for a WWDC19 rollout.

The first problem was the iPhone lineup. iPhone 8 didn’t fit because only A12 Bionic devices and later support NFC background tag reading. This was solved with the release of A13 Bionic powered iPhone SE and deletion of iPhone 8 from the lineup.

The second problem was the clunky ‘launch an app’ or ‘launch Safari’ to do anything. This has been a problem for NFC tag solution providers like SmartPlate. User interaction needs to reside on a task focused pop-up sheet while the screen is on. The new iOS 14 App Clips framework that works hand in hand with iOS 14 Core NFC to load just what is needed to take care of the NFC tag task at hand, is the right solution.

The pieces appear to fit very nicely now: the NFC background tag sheet pops-up ‘while the screen is on’, the right code snippets load in for a simple focused task, the user can Sign In with Apple ID if needed, and pay with Apple Pay. Simple, uncluttered action; no apps, no Safari launch. And we have background NFC tag reading on every current iPhone model.

There are a few flies in the ointment:

  • Face ID in the face mask era is a lousy unlock and Apple Pay user experience, App Clip powered NFC background tag reading is gonna rock on Touch ID iPhone SE even though it was designed for Face ID.
  • A network connection is required, Apple Pay transactions at the NFC reader work without a network connection but App Clips + Apple Pay transactions need a network connection for the obvious reasons of loading app clip content, and because of this…
  • A weak borderline WiFi connection can jam the entire process even with WiFi Assist turned on.

The NFC advantage over QR Codes here is that background tag reading automatically pulls up the App Clip sheet when the screen is on while QR Code users have to manually pull up the QR reader app and scan a code to join the fun.

The combination of App Clips, NFC tags and Apple Pay will be extremely disruptive in markets where NFC and QR payment players are very competitive. Places like Japan. PayPay and Line Pay lose their edge. Smart QR payment players can adapt and add NFC tag support in their payment apps. And they can bypass Apple Pay if they want to, though it won’t be as slick. Ultimately they are not wedded to QR codes, PayPay and Line Pay have always said they would add NFC if customers want it.

App Clips finally unlocks the power of background NFC tag reading and is the other big WWDC20 Apple Pay development in addition to CarKey and Apple Pay QR Code AliPay payments. App Clips puts NFC tags on equal footing with QR Codes for the first time with the added edge of the ‘when the screen is on’ background tag read sheet pop-ups. This will be huge.


UPDATES

October 22 2020: The first Japanese iOS App Clips for ordering via NFC tags and QR have started at Kitasando Coffee and Tailored Cafe.


UPDATES

Apple Pay Code Payment + App Clip Connection: App Clips and Apple Pay Code Payments belong together
Apple Pay Contactless Payment Adoption 4Q 2020 Outlook: App Clips and App Clip Codes start rolling out in Japan and USA
Using App Clips at Kitasando Coffee

Transit Gate Evolution: tap speed matters more than ever in the COVID era

As COVID restrictions are eased and the world slowly goes back to work, school and hopefully slightly more normal life, avoiding crowds will be key in keeping COVID from becoming resurgent in the months ahead.

For commuters in Japanese metro areas avoiding crowds is no easy matter. Fortunately the Japanese transit gate infrastructure is a great help. FeliCa based IC transit cards (Suica, PASMO, ICOCA, etc.) with fast transaction speeds combined with open gate flap design maximizes people flow: people walk through gates at normal pace. This is very important for Japanese stations that have to make do with large crowds in limited spaces and smaller gate areas.

It’s wrong however, to think that this only applies to Japan. The benefits of fast tap speed combined with intelligent transit gate design are relevant everywhere and very necessary in this day and age: fast gate tap speed is essential in keeping gate crowding at a minimum. It makes things safer not only for train operation, but also addresses crowd control health concerns in the COVID era.

A reader sent a link to a good discussion of NFC protocols and gate tap speeds that was apparently deleted when YouTube comments were turned off. I retyped the comment in the section below from a screenshot with some light editing for clarity. If I find the author I will link to the original. The videos have already appeared in other posts but it’s good have them in one place. A previous installment already covered QR transit code gate issues, this post will focus on NFC tap speeds.


While transit gates and NFC processors are found worldwide, what makes the Japanese gates different from the rest of the world is they don’t use global standard ISO 14443 (never mind Type A which uses Miller bit coding, the least efficient bit coding method) protocol which is common in many transit and bank cards issued worldwide.

The tap time with ISO 14443 Type A (née Philips) and B (née Motorola) varies greatly: from 200 to 500 milliseconds (ms) with 200 ms only achievable with Type B/Calypso. But it never reaches the short as 100 ms which is only achieved with Felica developed by Sony, also designated NFC-F and NFC Tag Type 3 by the NFC Forum and compatible with ISO 18092 which is commonly found in smartphones and NFC wearables since 2013. In this following video passengers maintain their walking pace but never overshoot and trigger a gate closure nor slow down not even a bit:

It may seem like a minor difference but due to the high volume of passengers per gate and to reduce gate maintenance requirements, tap times really matter.

Companies such as JR East have specified tap time of 200 ms but Suica is actually faster and this allows real life speed tolerances: some passengers tap faster than others due to walking pace, the higher speed tolerances are only possible with the 100 ms tap time of FeliCa. A comparison example of large crowds at gates in Malaysia and Japan below:

Open Loop NFC ticketing in its current form is based on EMVCo Contactless specifications adopted in contactless bank cards issued worldwide including China UnionPay QuickPass which is PBOC derived from the EMVCo Contactless spec. All of these use ISO 14443 Type A at 106 kbps only for 500 ms tap time, which is adopted in cities worldwide such as London, New York, Moscow and Rio de Janeiro where normal walking speed is never supported.

But as seen here, transit cards in Japan such as Suica, PASMO and ICOCA are supported for ultra hight speed and precise account verification and fare processing. Transit cards use offline Stored Fare (SF) which includes the amount of funds stored in the card’s IC smart chip data storage, NOT backend on a server like a bank card, and stored commuter passes. Here are walk flow comparisons for Tokyo and London, and MTA OMNY Open Loop performance:

Japanese IT journalist Junya Suzuki tests OMNY transit gate speed…
and reliability

One hopes the NFC Forum works to increase NFC speeds and global specifications to “improve the overall user experience for NFC users.” Improving the NFC user experience is what it is all about. With the addition of Ultra Wideband to Mobile FeliCa and Mobile MIFARE now is the time for the NFC Forum partners to revisit the global NFC ISO 14443 and ISO 18092 specifications.

EMV is payment technology created for leisurely supermarket checkout, not whizzing through transit gates at rush hour. It doesn’t address the needs of transit and never will in it’s current format because it is controlled by credit card companies. NFC Forum partners need create a single faster more reliable NFC standard encompassing NFC A-B-F and other wireless technologies, a new standard that improves and expands the NFC user experience on mobile devices for digital transit, digital keys and payments, while making it all future-proof.

Related
Transit Gate Evolution: Do QR Codes Suck for Transit?

Apple Pay Express Transit Tips

Apple Pay Support doc for Express Transit

As of June 2020, Express Transit can be used with 8 transit networks: Japan (Suica and compatible nationwide), China (Beijing, Shanghai and China T-Union), Hong Kong (Octopus), United Kingdom (Transport for London), New York City (MTA OMNY compatible stations and buses) and Portland (HOP). Here are some Express Transit card tips and other observations for Apple Pay Wallet users that I have learned from years of daily Express Transit Suica use.


1) Face ID Express Transit use with face masks and tight pants

Face ID disables Express Transit after 5 face misreads. Face ID Express Transit users need to be aware of the 5 strikes rule.

The most important thing to remember is that Express Transit only works while Face ID/Touch ID is ‘On’, when Face ID/Touch ID is disabled Express Transit is ‘off’.

Express Transit doesn’t care if you are wearing a face mask. However it is easy to disable Face ID iPhone without realizing it, resulting in a rude passcode request at the transit gate. Face ID face mask users need to be extra careful as five misreads disable Face ID and Express Transit. The passcode is required to re-enable Express Transit.

Users can mitigate some of this by turning off Raise to Wake in option in Settings > Display & Brightness. If you still have problems the last resort is turning off Face ID for unlocking iPhone, be sure leave it on for Apple Pay.

All iPhone users, both Face ID and Touch ID, need to be aware when putting iPhone in tight pants pocket: pressure on the side buttons initiates shutdown/SOS mode which disables Face/Touch ID and Express Transit. This is worse with a case because iPhone in a case is thicker and tighter in pant pockets, with more pressure on the side buttons.


2) Apple Watch Express Transit works for 10 minutes off the wrist

Suica and Octopus on Apple Watch are the ‘killer’ watch app that quickly becomes second nature. Its nice in colder months because Apple Watch works at the gate under layers of clothes, it beats digging iPhone out of a pocket. The biggest complaint I hear is from left wrist Apple Watch users. Most transit gate readers are on the right side so the user has to reach over to the reader. This will be a bigger pain with new JR East transit gates that place a slated reader on the right side. Some commuters migrate Apple Watch to the right wrist to deal with it.

One interesting aspect of Apple Watch Express Transit is that it works for 10 minutes off the wrist. This is by design in case the transit card needs servicing by a station attendant. After 10 minutes, Express Transit turns off and requires the passcode to work again.


3) Multiple Express Transit Cards

Apple Pay Express Transit support doc

The addition of EMV Express Transit in iOS 12.3 introduced the concept of having multiple Express Transit cards, one payment credit/debit card for transit use and one native transit card for each transit network (Suica, Octopus, Beijing, Shanghai, HOP, etc). The fine print tells a different story: if you have a China mainland transit card set for Express Transit, all other NFC-A protocol cards (EMV, MIFARE) are turned off.

There’s more to the story not covered in the Apple support doc: China T-Union Express Transit cards are incompatible with all other Express Transit cards. A set of reader images shows the issue. Turning on Express Transit for China T-Union turns off all other cards, both native and EMV payment cards. China T-Union cards are a bit messy in that older card formats like Beijing City Union are migrating to the new spec that does not support plastic card loading for mobile. Shanghai remains with the old spec with plastic card transfer for now but will also likely migrate in the future.

Shenzhen cards are also migrating from the legacy FeliCa (blue and orange) cards to the new China T-Union (red and green) cards. This is probably one immediate reason behind the ‘one at a time’ Express Card issue that Apple will hopefully fix it in a future iOS version. It’s not a problem as most users only use one Express Transit card at a time and can turn them on and off as needed. It’s interesting to developers because it reveals some current architectural limits of iOS 13 Apple Pay.