Transit IC only JR East Shinkansen eTicket reservations start today

The new JR East Shinkansen eTicket service debuts March 14, but 30 day advance ticket reservations mean it kinda starts today. The best explanation, Japanese only at this point, is the Eki-net online guide that outlines the new reservation, purchase and seat assignment process for PC and smartphone web pages. I find the smartphone online version more streamlined than the PC one but they are straight forward if you are familiar with Eki-net. The basic Eki-net process is the same until step 7, the section where you assign the eTicket (s) to your registered transit IC card (s). The differences from smartEX are interesting:

  • You can register up to 6 different transit IC cards to a single Eki-net account: Suica, Mobile Suica, PASMO, Kitaca, ICOCA, TOICA, manaca, PiTaPa, nimoca, SUGOCA, Hayaken
  • A single Eki-net account can reserve/purchase up to 6 Shinkansen eTickets then assign tickets and seats to registered transit IC cards

JR East Shinkansen eTickets are geared for family travel in a way that smartEX, EX-Press and the old Mobile Suica Shinkansen eTickets ending March 13 are not. Other systems can only attach a single IC transit card per account. The flexibility opens up some interesting possibilities, since Apple Pay Suica is just another transit IC card, one person can buy and assign eTickets up to 6 difference Apple Pay Suica devices. The downside is that transit card linking is completely manual and up to the user to update information when a new card is issued or the Apple Pay Suica ID number changes (less common than before but still happens). There are bound to be some very short trips that end with a transit gate error. Some other observations:

  • eTickets require a Transit IC card (paper tickets can be issued in the event of a lost transit card)
  • eTicket reservations are currently limited to Eki-net online but Eki-net app will gain eTicket support when the service launches March 14
  • As Suica App is tied to Apple ID and the Mobile Suica cards registered to it, I don’t see Shinkansen eTickets being integrated back into Suica App anytime soon
  • I don’t see QR Code ticketing support coming until after the transit IC eTicket system is complete and necessary gate infrastructure in place, a few years down the road at best

Eki-net eTickets are limited to JR East operated Tohoku, Yamagata, Akita, Hokkaido, Joetsu, Hokuriku Shinkansen lines. The next obvious question is when will other ticketing be migrated to Transit IC, and what kind of discounts will be offered?

Discounts, incentives and ticket system silos
Most Japanese don’t buy express train or Shinkansen tickets at regular prices. The whole point of Eki-net, smartEx, and all the other account based ticketing systems are the discounts and incentives to get people out of the ticket office line and online. Each operator has their own complex set of discount schedules which they guard and control carefully because it is their business engine.

For this reason I am not optimistic we will see an all-in-one train ticket app. Sure, there is some integration of JR East eTicket and JR West e5489 because they share Hokuriku Shinkansen operations, and there might even be an app than integrates many different ticket systems, but I don’t see it offering all the discounts of stand alone apps like Eki-net, EX, Odekake-net, etc. I also don’t see multi-lingual support in the mix, at least not in time for Tokyo Olympics. The fun starts March 14 with many things still coming down the pipe, from next generation Suica to new transit gates. It will be an interesting time.

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MTA OMNY Apple Pay Express Transit real life funnies

Apple’s decision to offer Apple Pay EMV style Express Transit as a default iOS 13 feature on the work-in-progress that is MTA OMNY may not have been a smart idea after all. Those manual swipe MetroCards will be around for a few years, and with Cubic Transportation running the show it is anybody’s guess when OMNY, the system and the MIFARE MetroCard replacement, will completely in place and running smoothly.

For every tweet saying Express Transit is great, there are plenty of complaints of unwanted OMNY charges because iPhone users didn’t know Express Transit was turned on. The thing is iPhone and Apple Watch have to be damn close for a read. Unless the device is in a pants or coat pocket that brushes on the OMNY reader, I don’t see how accidental reads can happen. Nevertheless Apple would have happier New York City customers leaving Express Transit off by default…at least until OMNY is completed and running smoothly everywhere…whenever that is.

5G Contactless Payments Part 1: Fast QR vs Ultra Wide Band enhanced FeliCa and MIFARE

Payment empire players envision a brave new world of 5G enhanced contactless payment solutions, seen in recent moves by JR East and other major Japanese transit companies to replace expensive legacy mag strip ticketing with lower cost QR Code ticketing. 5G flavored QR Code and ‘Touchless’ Ultra Wide Band (UWB) Mobile FeliCa solutions were also on display at last months Docomo Open House 2020. How can it be that Docomo is developing Ultra Wide Band Mobile FeliCa and QR Code solutions?

The endless push pull of ‘this contactless payment works great for me’ that drives somebody else crazy is endless fascinating. We have more choices than ever: digital wallets, plastic cards, face recognition, NFC, QR Codes, etc. 5G and UWB promise to mix things up even more.

Ultra Wide Band enhanced FeliCa and MIFARE Apple CarKey?
The evolution of EMV, FeliCa, MIFARE and other similar protocols as they transition from plastic smartcards to digital wallets devices opens up opportunities to include other radio technologies like Ultra Wide Band and Bluetooth in addition to NFC. Ultra Wide Band Touchless FeliCa on display at the Docomo Open House was all about cars, not Touchless walkthrough transit gates that will appear in a few years.

Touchless FeliCa makes great sense as a ‘NFC car key’ that utilizes UWB for operation at greater distance and better accuracy when needed. Touchless makes even more sense as a ‘keep phone in pocket’ touchless payment method for drive thru purchases. The addition of UWB into the mix makes smartcard protocols much more useful than just NFC. I would certainly welcome a smartphone UWB powered Touchless FeliCa replacement that ditches the need for automobile ETC cards and readers on Japanese expressways.

How UWB enhanced FeliCa would fit with Apple’s new CarKey feature said to be coming with iOS 13.4 is unknown but iPhone already supports FeliCa. UWB touchless support for iPhone 11 and later models is a logical evolution. Sony and Docomo are developing the technology with NXP which certainly means that MIFARE will also support UWB enhancements. The long history of FeliCa and MIFARE as keycard solution providers is a natural fit with Apple CarKey. NFC is the only protocol that has been discovered in iOS 13.4 beta CarKey framework so far but I would not be surprised if UWB code references turn up at some point.

5G Cloud vs Local Processing
The Docomo Open House also showcased a QR Code transit gate with 200 millisecond (ms) transaction processing but the real star was the speed of 5G. 5G powered cloud processing promises to upend the current advantage of locally processed prepaid stored value cards…cards like Suica.

The basic promise of 5G is that IT system designers finally achieve a nirvana of everywhere, always available, big pipe central processing without wires, the big cloud. The original Suica card design effort back in the 1980’s had to leverage local processing because central processing wasn’t up to the task of handling massive transaction volumes of a Tokyo-Shinjuku-Ikebukuro station at peak rush hour. This is why Suica cards are stored value by design, the FeliCa technology behind the card design delivers 200 ms and faster transaction times for local processing at the transit gate. What happens when 5G promises, in theory, to deliver 200 ms central processing?

Kill mag strip paper tickets first then Suica?
As Junya Suzuki points out in his article ‘Is QR the future of Suica?‘, transit QR Codes on the complex Japanese transit network only need be a unique local passkey with everything else, verification, transaction, etc., done in the 5G cloud. The same concept applies for facial recognition systems where the registered face is the unique local passkey. With the power and speed of 5G, Suzuki san argues that the need for Suica-like local processing falls away. In his scenario all Suica needs to be is a unique passkey that can lose stored value functions.

I understand his point, Suzuki san comes from an IT system background, as a journalist he has covered JP transit payment system developments for a long time. For low traffic stations a Suica-lite 5G cloud based network makes sense and does away with the expensive hard wired transit gates. Just one year ago JR East said they are building a cloud networked Suica to cover all non-Suica areas.

However the old Tokyo-Shinjuku-Ikebukuro station peak rush hour central processing crunch problem remains. I’m not convinced super fast 5G enabled cloud processing is going to solve that problem any better or cheaper than Suica does now, and reliability is a complete unknown. We also have the next generation ‘Super Suica’ format and FeliCa OS coming in the next 12 months, the design goals here include a flexible, modular cloud friendly architecture and lower costs. Next generation Suica coupled with a flexible local processing~cloud processing backend may be a compelling solution that finally delivers a practical inexpensive Suica infrastructure to the little end of the line station which only gets a few trains or buses a day.

New JR East Suica / QR Code transit gate for Takanawa Gateway station

JR East, Hanshin and Osaka Metro are testing QR Codes and facial recognition ID ticketing to replace mag strip paper. As Junya Suzuki points out, mechanical paper ticket transit gates are more expensive to install and maintain than IC transit card gates but the real expense is mag strip paper recycling costs. Mundane but not surprising. The more important long term question is this: do transit companies keep the current more expensive cash base paper ticket fare vs less expensive IC card fare structures in place, or do away with it when QR Codes replace mag strip tickets? I don’t think we’ll see an answer to that question for a few years.

There is no doubt that 5G will enable new payment possibilities, and a lot of debate. But I don’t see 5G cloud completely upending and replacing the need for local processing and stored value cards. Both are evolving, both have their place. It doesn’t have to be, and should not be a one size fits all solution. Each approach has strengths that can be complementary and build a better stronger system.

For me it comes down to one simple thing. My Apple Watch can be buried under multiple sleeve layers but Apple Pay Suica works great going through rush hour transit gates every time. It’s the best argument for UWB enhanced FeliCa and MIFARE touchless transit gates and stored value local processing I can think of. QR can never match that, nor can face recognition…think face masks during an epidemic or pollen season.

In the next installment I hope to explore 5G and the evolution of digital wallets.

Assumptions

Social media is great for exchanging bits of information but terrible when it comes to conveying context. ‘Most of my friends’ and ‘outside of greater Tokyo’ are poor generalizations and not very useful because they belong to specific, and unexplained, use cases. I often find that people coming to Japan from large continents assume the country is small, which it’s not, and that all Japanese do everything the same, which they don’t.

It’s probably true that I place too much importance on Suica, but that’s because I use it so much. I live in Tokyo, my workplace sponsored commute pass is Suica, most of my daily purchases are with Suica, most of my points and Cashless rebates are Suica. I am plugged into Apple Pay Suica with a View/JCB card setup with auto-charge.

My Suica life is good but what about people living outside the Suica commute region, or inbound longer-than-short-term visitors without Apple Pay cards? The Apple Pay country list is short with many Latin America and Asia Pacific regions still missing, Mexico and India for example. No Apple Pay credit/debit card means Apple Pay Suica is a side grade because it’s still tethered to cash only station recharge kiosks and 7 Eleven ATMs.

Credit card recharge makes all the difference. A true upgrade from plastic Suica that is strictly one way. Once there you never want to going back. It’s the upgrade that will free users from huge lines at station recharge kiosks during the Olympics, and just plain common sense at huge crowd events like Tokyo Comic Con. The Suica + Rakuten alliance and Super Suica will bring massive changes to Japanese transit card universe but the majority of benefits will only apply to mobile use.

I don’t care if people stick with plastic Suica or migrate to Mobile Suica on Apple Pay/Google Pay/Osaifu Keitai. Plastic transit cards are small, convenient, don’t require a battery, but they come with limitations and issuance is a major cost factor for operators. All I care about is that people have hardware choices and the opportunity to go mobile with their local region transit card. Having options is a good thing, let people decide for themselves.

What will Apple do about the 10% iPhone sales drop in Japan?

The writing was on the wall when Docomo dropped the price of iPhone XR shortly after it went on sale. Shortly after that Tim Cook explained the Japanese market situation in the 1Q 2019 earnings call:

In Japan, iPhone purchases were traditionally subsidized, bundled with carrier contracts. Today, local regulations have significantly restricted those subsidies as well as related competition. We estimate less than half of iPhones sold in Japan in Q1 this year were sold via subsidy.

One year later Apple announced record earnings for Q1 2020 but Japan iPhone sales with down 10% y/y. Luca Maestri only explained the situation at the end of the earnings call, answering the very last analyst question:

So Japan was down 10 percent during the December quarter. It was primarily due to iPhone performance, which was challenged because there were some regulatory changes that took effect on the 1st of October, where essentially the regulators decoupled the mobile phone pricing from the two year contracts and they’re capping the maximum amount of carrier discounts that can can be made. At the same time, I would say that within a more difficult macro environment, iPhone did incredibly well during the quarter. Six of the top seven selling smartphone models in Japan during the December quarter were iPhones. So it was a very strong performance by iPhone in a difficult environment. Also in Japan, we had very strong double digit growth from services, stronger than company average, and very strong double digit growth in wearables, also stronger than company average. So we feel very good. You know, Japan is is a country where historically we’ve had great success. The customers are very loyal and very engaged. And we have a very strong position there and we feel we have a very good momentum.

Six Colors

I don’t think Japanese iPhone customers will stay loyal and engaged if Apple sticks with the same old sales strategies now that the era of carrier bundling is over. A new approach is needed. Maestri alluded to one clear advantage remaining for Apple in the Japanese market: Apple Pay Suica on Apple Watch, an advantage no other device manufacturer has matched yet. That advantage along with the golden opportunity of the Tokyo Olympics this year are market opportunities which Apple is not taking advantage of.

I said it before: Apple Pay Suica on global NFC iPhone/Apple Watch is a great way for inbound visitors to get around town during the Tokyo Olympic games this summer and Google Pay Suica is still not available for inbound Android users. It’s weird Apple isn’t marketing that.