iOS 13 and the Transition to Global NFC

Crowd Cast president Takashi Hoshikawa updated his Japan Cashless map introduced back in January, the cacophony of QR Code payment platforms continues to grow. Just like any gold rush, QR will crash and burn at some point. Big players will gobble up the smaller ones and things will settle down.

But something else is going on. There’s a small but important difference, so small that Takashi Hoshikawa is not aware of it: he labeled the FeliCa section in the upper left corner as NFC.

This is the result of using Apple Pay on a global NFC iPhone where all the necessary hardware and software is seamlessly unified. The old plastic card mentality of different walled off technologies: contactless credit card (EMV), transit card (FeliCa, MIFARE), ID card (ISO 7816), NFC A/B or F, etc. slips away and becomes one seamless NFC Wallet in the mind. This mindset is also on display in SearchMan co-founder Naoki Shibata’s recent article on Rakuten Pay Suica: no mention of FeliCa anymore, it’s just one NFC thing.

This is an important and natural, but quiet progression that will accelerate with the enhanced NFC support in iOS 13 and expansion of new services like Apple Pay Octopus. iOS 13 Apple Pay Wallet will set the standard for global NFC that just works, a standard that Google Pay will struggle to match because of Android hardware fragmentation.

Players that leverage the advantages of global NFC and offer new services based on them, like JR East (Inbound Apple Pay Suica), and Mastercard (NFC switching dual mode bank card services) will gain, while companies that stick with the old ‘one thing’ contactless plastic card mentality, like Visa, will lose. It’s that simple.

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Apple Pay Octopus and the future of the Octopus Transit Platform

UPDATE: Hong Kong OCL officially announced Apple Pay Octopus

One downside of breaking a tech story on the internet is news aggregator sites. Responsible tech news sites like MacRumors and AppleInsider post outside sourced news that serves their readership and sends traffic to the original source. And then there are not so nice aggregator operations posing as news sites like The Verge, TechCrunch and 9to5Mac who craft crappy posts, lifting whole chunks from outside stories, or simply lifting without attribution, minimizing any outside contribution to keep traffic on their own site.

So it’s a bummer that SC Yeung’s excellent EJ Insight story “Why Hong Kong can expect Apple Pay support for Octopus Card,” quotes the 9to5Mac ripoff of my piece instead of the original, but it’s an interesting read with good analysis. Yeung makes the same point I did a few months ago that the expansion of Octopus to Apple Pay is an important step forward for the platform. But it can’t stop there: Octopus Cards Limited needs to continue digital wallet expansion and create new business opportunities. Unfortunately it has to accomplish this while parent company MRT Corporation is opening up its transit gates to QR Code and EMV payments which will compete with the subsidiary OCL Octopus card business:

MTR will begin accepting QR code payment starting from next year and the rail operator will also add more contactless payment systems on its gates in future. For commuters, Octopus Card will no longer be the only choice for MTR payments…

<It> is becoming clear that <OCL> needs a new business model to maintain its market-leading position. Using a specific card for payment is no longer a modern way of payment. The core issue for Octopus is transform into something bigger, moving beyond the current payment functions and offer a lot more, perhaps even a mobile banking service, to retain users.

Why HK can expect Apple Pay support for Octopus card

JR East has taken a very different approach. Suica is a central business pillar and JR East will be expanding it with the next generation Super Suica in April 2021. Suica will gain the ability to virtually host other transit card under the same Suica umbrella on plastic and on mobile. Think of it as a national transit and payment card with Express Transit anywhere, anytime. How fascinating it would be if Octopus had a similar kind of opportunity to expand outside of Hong Kong.

Even from the short vantage point of 2.5 years since the launch of Apple Pay Suica, it’s already easy to see the charges that it has brought to the Japanese payments market. It will be interesting to watch the changes that Apple Pay Octopus brings to Hong Kong.

Apple Pay Suica Recharge Performance in iOS 12.4 b4 and the Apple Card Connection

Okay A12 Bionic and FeliCa fans, try this on iPhone XS/XR with Apple Pay Suica on iOS 12.4 b4:

  • Initiate a Suica Recharge
  • While the recharge is processing swipe up and you will feel the haptic feedback bump indicating the recharge process has been cancelled, the Apple Pay ‘ka-ching’ all done sound and checkmark never happens
  • On the Suica Recharge screen tap cancel and go back to the main Suica card screen where the recharge is processing and updates the Suica balance
Apple Pay Suica recharge just keeps on going even after cancellation

So, the Suica Recharge process barrels along without giving feedback. iOS didn’t do this before, is it a bug or a feature, and what’s happening? It’s related to what I observed in the previous post where the Suica FeliCa prepaid transaction and EMV Apple Pay postpay processing happened simultaneously because the A12 Bionic Secure Enclave processes FeliCa transactions directly without iOS.

We now have an explanation why EMV Express Transit went missing in the first few iOS 12.4 beta releases: Apple was doing lots of heavy duty Wallet optimization to make the prepaid recharge process fast and bulletproof.

But why? We have an explanation for that too: Apple wants the Apple Card EMV postpay to prepaid Apple Cash card recharge performance to be fast and absolutely bulletproof. The Apple Cash connection with Apple Card is a huge selling point, and Apple is making damn sure that people are going to love it for the reliable Apple Cash e-money recharge performance, even if that means breaking Suica recharge a little to do it.

This kind of aggressive optimization is a good ‘problem’ for Suica to have, and because all things Suica, from the UI changes to the Express Transit performance improvements since iOS 12.2 have been a testing ground for Apple Card, unavoidable. After all, Apple Pay Suica is the closest thing to Apple Card with Apple Cash that Apple has going, making Suica a great test environment for new Apple Pay development. Hopefully Apple will fine tune and fix remaining Suica recharge issues before the final release and Apple Card debut.

Apple Pay Suica Shinkansen 2019

Suica is the only transit card in the world on mobile that covers both high-speed rail and regular transit. Apple Pay Suica can be used for eTicket Shinkansen travel on all Shinkansen lines and ticketless travel in designated regions on JR East Shinkansen lines. However, Shinkansen eTickets are more about convenience over price: paper tickets usually have better discounts unless you dig deeper into the system.

There are big changes on the horizon. JR East announced that the current Mobile Suica Shinkansen eTicket service will end March 30, 2020. It will be replaced with a completely new eTicket system and a new, likely multilingual, version of Suica App. JR Central/JR West are sure to be making changes at the same time. And this is just the run-up to the huge changes coming with Super Suica in April 2021.

The current eTicket system is a evolutionary mix of 2 different ticketing systems built by the separate JR company groups that operate the Shinkansen lines:

  • JR East created and uses Mobile Suica eTickets downloaded to Apple Pay Suica, Google Pay Suica and Osaifu Keitai for travel on Tohoku, Yamagata, Akita, Hokkaido, Joestsu, Hokuriku Shinkansen.
  • JR Central/JR West created and uses the EX system (smartEx and Express Reserve) that links a online eTicket to a preregistered plastic transit smartcard number for travel on Tokaido (Tokyo~Osaka) Sanyo (Osaka~Hakata) Shinkansen. It is not ticketing for mobile devices because JR Central/JR West don’t have a Mobile Suica-like transit card system. In this case Apple Pay Suica is just another linked transit card number, EX doesn’t know or care if it’s a real card or not.

JR East also offers ticketless Shinkansen travel for any Touch and Go service registered Apple Pay Suica or plastic transit IC card. Just like EX, the Touch and Go system doesn’t know or care if it’s a real card or not.

Changes in 2020

Nothing has been announced but here are some expected changes coming in April 2020.

  • New JR East eTicket system covering both Shinkansen and regular express trains for both Mobile Suica (Apple Pay Suica, Google Pay Suica, Osaifu Keitai) and registered plastic transit cards of all colors (ICOCA, PASMO, etc.). In some ways it will resemble EX with a new JR East banded eTicket app and matching online site, but it will also be Mobile Suica savvy.
  • New Suica App that will be highly integrated the new e-Ticket service and finally multi-lingual. I hope that EX service will be integrated into the new Suica App as well, but this might a feature that will have to wait until Super Suica in April 2021.

JR East has said that they hope to expand the ticketless Touch and Go Shinkansen travel region, but I suspect this is another feature that will have to wait for Super Suica when the current ¥20,000 Suica SF balance limit will likely be raised, or even doubled.

In any event, Shinkansen eTicket services will greatly improve in 2020 and beyond. It will be fun.

Deep Secrets of Apple Pay Express Transit

Apple Pay Suica on A12 Bionic iPhone XS/XR works even in the middle of a recharge

Apple Pay Suica on A12 Bionic iPhone XS/XR is different from other devices because basic FeliCa transactions bypass iOS and go directly to the Secure Enclave. You can see this in action with Express Transit power reserve, but if you observe carefully you can catch it in other ways.

I caught a glimpse today buying ice coffee at a JR station NewDays shop (supplied by Doutor btw). I was recharging Suica with Apple Pay and forgot it was still processing when I touched iPhone XS to the reader. The payment went through without a problem, the recharge completed a few seconds later.

Is this a iOS 12.4 beta thing or did A12 Bionic iPhone do this all along? I suspect it did all along and makes sense: the payment transaction bypassed iOS which was busy processing the Apple Pay recharge and wasn’t ready to post a balance update to the Secure Enclave. Prepaid and postpay processing at the same time…very interesting.

Most people think all Express Transit is the same, but Suica Express Transit prepaid is very different from EMV Express Transit postpay. Suica settles the transit bill in less than 200 milliseconds (ms) locally right at the transit gate, while EMV Express Transit leisurely (500 ms) tells the gate, ‘I am bank card XXX, put it on the bill’ for settlement later between the bank and the transit agency. For EMV there is a lot of backend system work to make that happen, and even then the user sometimes has to tap twice: