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 the support of native digital transit cards. Complexity and higher cost means fewer choices and delays, it’s as simple as that.

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 real soon.

Why is MTA OMNY asking Apple to fix Face ID?

MTA is asking Apple to fix Face ID. We all know that using Face ID with face masks sucks but the MTA situation is special. It’s a perfect storm of 2 separate issues, the Face ID with face mask problem and the OMNY rollout problem combined in a COVID crucible.

The MTA OMNY rollout started in May 2019 with Apple Pay EMV Express Transit support, aka Open Loop. This means regular credit and debit Apple Pay cards work for transit on new OMNY readers. It sounds great but there are downsides: open loop doesn’t support the full set of MTA transit fare options so many users have to stick with the good old MetroCard swipe until the native OMNY smartcard arrives.

Lately we don’t hear much about the OMNY card. It seems delayed along with the rest of the OMNY rollout. And because the rollout is delayed, open loop isn’t really useful because the entire system doesn’t support it. The old chicken or egg problem.

One outcome of this mixed mode is the long running complaint of unwanted Express Transit fare charges that has been constant with OMNY transit gates since the very beginning. Many users who still use MetroCard may not be aware that Express Transit is on when going through an OMNY gate. If iPhone gets close enough to the reader, bingo.

This should not be happening, so the stock advice is ‘turn off Express Transit’. The mixed mode MetroCard/OMNY open loop rollout seemed like a nice idea but implementing Express Transit before the system was completed turned out to be a bad call compounded by the COVID crisis, a victim of poor gate design, poor planning and execution.

The irony here is that iPhone users riding MTA end up turning off Express Transit, the very thing that helps keep face masks on. MTA is asking Apple to help but a ‘how to use Face ID with face masks’ ad campaign courtesy of Apple isn’t going to fix anything.

Until the OMNY rollout on MTA is completed and Apple comes up with something better than the iOS 13.5 Face ID tweak, New Yorkers will have to deal with it and use passcodes. After all, commuters with Face ID iPhones in Japan, Hong Kong, Singapore and China have been wrangling with face masks for years and Apple never lifted a finger. Get used to it.

The Apple Pay Octopus Inbound Gouge

Good old William S. Burroughs hit the nail on the head explaining what the title of Naked Lunch really meant: that awkward frozen moment when everybody in the restaurant sees exactly what is on their fork. iOS developers staring at the thing stuck on the tip of the App Store fork don’t like what they see: an Apple platform that’s supposed to be a level playing field, where the reality is that Apple plays favorites and cuts side deals, a losing game of lowering standards.

People far smarter than me already editorialized Tim Cook’s opening statement at the Congressional antitrust hearing. I won’t go into it here except to say, what did they expect? The whole affair, on all sides, was a bad lip read parody, an awkward Handsome Anthony moment without the humor.

Octopus Cards Limited (OCL) released an iOS Octopus app for tourists last week that perfectly illustrates what’s at stake in Apple’s losing game of lowering standards. The long delayed Apple Pay Octopus launch in June was very successful but OCL shut inbound visitors out by limiting the Apple Pay Octopus service to Hong Kong issue bank payment cards.

This is something that Apple Pay Suica has never done. All Apple Pay cards and iPhone users from around the world are welcome to use Suica. This is why Suica remains the gold standard of what a transit card on mobile should be.

Instead of following the Suica example, OCL took the low road for inbound iPhone users. Octopus Tourist app adds an Octopus card to Apple Pay Wallet with a non-Hong Kong issue card. However the currency charged to the users Apple Pay cannot be in local HKD currency. OCL forces users to choose another currency as the default currency for the life of the card. This adds an invisible surcharge over local currency transactions, 4% or more on average, which is OCL taking their cut.

This is called forced Dynamic Currency Conversion (DCC) and is a credit card compliance violation. Visa, Mastercard and all stipulate that merchants cannot impose any requirements on the cardholder to use a non-local currency. Why OCL is so brazenly breaking these rules, and why Apple is allowing this level of gouging in a major app from a major Apple Pay payment provider is not good at all. As FeliCa Dude says, “Apple should swiftly rebuke this kind of grasping banditry lest it poison their platform.”

If Apple does nothing, I think we have the answer Tim Cook didn’t give at the Congressional hearings, and many more embarrassing awful Handsome Anthony moments to follow. Okaaaay?

JRE POINT and Ekinet finally connect in 2021

In case you ever wondered what the QR Code reader on JR East station tickets machines is for: picking up online preordered JR East commuter passes, and nothing else. This will change in the Super Suica summer of 2021 along with a ‘renewed’ Ekinet service. Instead of entering a PIN code, users can flash a QR Code in the Ekinet App at station kiosks to pickup reserved paper tickets or pay for tickets at an ATM.

The biggest change is that Ekinet points are morphing into JRE POINT…finally. Just like you use JRE POINT for a free Suica recharge, you can use JRE POINT for ticket purchases, updates to reserved seats, Green Car seats, etc. The expanded Ekinet will support more Shinkansen eTicket discount options and Business Ekinet will be gaining Shinkansen eTickets for the first time. The press release says that the inbound only JR-EAST Train Reservation system will be getting an overhaul at the same time.

Let’s hope the renewed Ekinet is easier to use than the current one.

Road to Super Suica: cloud integration and the transit card push to mobile

Mobile Suica Shinkansen eTicket service via Suica App ended in March 2020, replaced by the cloud based JR East Eki-net Shinkansen eTicket service. Since Mobile Suica Shinkansen is gone and Ekinet eTickets live on the cloud, I assumed that iOS 14 PassKit would remove the Mobile Suica Shinkansen related (isInShinkansenStation) call because there’s no need for it anymore.

A reader pointed out that I was wrong. iOS still uses the PassKit Suica Shinkansen call with Eki-net eTickets and Notification Center throws out the same ‘Shinkansen’ Suica Notification when the user goes through a JR East Shinkansen gate with a cloud based eTicket.

The eTicket cloud service interaction with the local Apple Pay Suica card on iPhone offers some insight into what JR East (JRE) is up to as it closes in on the next generation ‘2 in 1’ Suica architecture due for release in spring 2021. JRE has said many times and in many ways that the future of the Suica platform will combine cloud services with the fast local processing of the FeliCa powered Suica architecture. However, details are few, with different pieces dribbled out in bits.

What’s the overall vision and goal of next generation Suica, which I call Super Suica? There’s a lot of ground to cover so let’s examine things in 2 basic categories: the card architecture (offline and local) and the platform (cloud) even as those distinctions are increasingly blurred. Here is my take based on what JRE has announced so far.

Super Suica: the Transit Card

Next Generation Suica “2 cards in 1” architecture, new FeliCa OS, new IC card format announced by Sony, JR East, JR East Mechatronics (JREM) in September 2018 for release in spring 2021. Ultra Wideband Touchless support will likely be in place on the mobile side though it will be a few years before Touchless transit gates are in service.

The next generation ‘2 cards in 1’ Suica architecture hosts partner transit cards and services on Suica infrastructure, effectively extending the Suica system to non-JRE transit companies. 2 in 1 partner transit cards gain the benefit of Suica hardware and Mobile Suica infrastructure with considerable cost savings related to plastic card issue and management. The heart of Super Suica remains the offline stored fare. JRE hopes to grow Mobile Suica cloud services as much as possible with the lower cost next generation Super Suica architecture.

Stored Value Update, Region expansion and Commuter Pass Changes
Starting with the basics, it’s a no-brainer that Super Suica will raise the current ¥20,000 stored value limit, likely doubling it to ¥40,000. This would put it in line with other eMoney prepaid cards like WAON and nanaco, also similar to the recent Hong Kong Octopus stored value update. The increase would have broad appeal to tourists, business travelers and shoppers everywhere and extend the JR East ‘Touch ‘n Go” ticketless Shinkansen service area.

Transit cards cover wide areas but transit card commuter pass areas are currently limited to sub-regions hard-wired for IC transit card support. Source JR East fact sheet Suica section

A long standing hurdle for Super Suica to clear is the transit IC card region limitation. The current transit card architecture assigns cards to a unique areas and the stored value doesn’t work across regions. Transit systems within the same card region such as JR East and PASMO have their fare systems connected so that a user’s transit card can enter a JR East station then exit a PASMO member station with the fare instantly calculated and deducted from the offline card balance.

This region limitation is a real problem for transit users in fringe areas. In order to use an IC transit card they have to exit and re-enter separate transit company gates at specific transfer station points. There is a Japanese word for this: matagaru which means ‘dismounting the saddle’. The only viable options are mag strip commuter passes or paper tickets.

2 in 1 Commuter Passes
In September 2019 JR East, JR Central and JR West announced new cross region commuter pass rules going into effect in spring of 2021, exactly when Super Suica arrives. Superficially the changes are about making cross region local to Shinkansen transfers easier for commuters, but the timing suggests other changes are coming.

The ‘2 in 1’ Super Suica concept has special meaning for commuter passes. The current Suica only supports 2 basic patterns via a card id commuter pass account number: JR East only lines, and connected commuter passes covering JR East and connecting lines. 2 in 1 Super Suica will support commuter passes on non-JR East lines and bus lines.


Super Suica: the Platform

File:ICCard Connection en.svg
Japan Transit IC Map

One primary aim of Super Suica is extending the platform reach with shared infrastructure to rural areas too small to establish their own local transit cards. Pay close attention to the transit cards outside the pink area, with the exception of PiTaPa. These are 2nd tier local area transit cards currently orphaned from eMoney or transit interoperability. There are also ‘off the map’ areas such as Utsunomiya Light Rail and Iwate Transit Co. Ltd. who have announced Super Suica agreements with JRE. These are the initial target areas.

Super Suica enlarges the pink area to include those 2nd tier and off the map cards. Those who sign on join the common interpretability area for transit and eMoney, and also gain access to Mobile Suica hosted Apple Pay Suica, Google Pay Suica and Osaifu Keitai. This is a real boon for smaller areas who, up to now, couldn’t afford to launch their own card operations. I suspect it will be very attractive to all transit card operators who run on shoe string budgets, they can save money by offloading card operations to JRE and get the mobile goodies.

What does Super Suica mean for the major transit cards like JR West (ICOCA), JR Central (TOICA) and others? It depends on what kind of deal JRE offers them. Even if the majors don’t sign on directly I see them getting access to the new Suica card format and Mobile Suica IT assets.

2 in 1 Reward Points and Auto-Charge
In addition to the 2 in 1 commuter passes, Super Suica also supports different reward point systems. ‘2 in 1’ partner Super Suica users will be able to exchange points for a Super Suica recharge just like they do now with JRE POINT and Rakuten Pay points. Auto-Charge for 2 in 1 partner branded credit cards will certainly be supported as well. Points and Auto-Charge may seem mundane but they are very important to customers and transit companies, a vital part of luring foot traffic, new businesses and visitors to local areas in an era of shrinking passenger traffic.

Expanding and leveraging the Recharge Backend
The ever expanding Mobile Suica recharge backend is a fascinating development mostly ignored by the media even though it’s where the action is. Suica and the other transit cards are a huge green pasture full of cash (less) cows waiting to be milked by card companies and payment platforms. JRE lets them milk Mobile Suica cows for a cut. Up until Apple Pay Suica came along in 2016, JRE was the only recharge backend. As of July 2020 there are 5: JRE, Apple Pay, Google Pay, Mizuho, Rakuten. 2 in 1 partners will have the ability to add their own recharge backends with apps, if they so choose.

Other points to remember: the recharge backend only works on iOS and Android platforms, point rewards can be used for Suica recharge. Currently that only works with JRE POINT and Rakuten Points but this will be extended to the ‘2 in 1’ partner point systems.

JR East plans to grow Suica financial services and has invested in crypto coin ventures

MaaS NFC Tag Suica
It’s clear that the really big Super Suica changes will be on the cloud side. Transit card eMoney has been a huge success, but Suica has to evolve to remain a viable payment platform in today’s hyper competitive world of mobile payments.

That next step is Suica NFC Tag payments. Think of it as Suica transactions without a reader, where your smartphone is both Suica card and Suica reader and let’s call it MaaS Suica. JRE joined the MaaS alliance in November 2019 closely followed by an December 2019 press release announcing NFC Tag tests with 4 partners: JRE (Suica), DNP (NFC Tags), Sony (FeliCa) and AquaBit Spirals (NFC Tag SmartPlate payments software).

JRE & us (AquaBit Spirals) have announced to conduct technical verification for the use of NFC tags focusing on transportation and ‘payments’, and that the role of Sony is to investigate technical specs as part of promoting a lifestyle through ‘FeliCa’ tech. You may know what we mean😉

AquaBit Spirals CEO Tomohiro Hagiwara

It’s clearly implied by the diagram and by comments from AquaBit Spirals CEO Tomohiro Hagiwara that Suica powers the NFC Tag payments middle section via the cloud. This means the Suica card balance on a device works ‘over the cloud’. Suica is unchained from the NFC reader infrastructure and can be used to pay for any kind of NFC Tag linked service or item.

JRE has been testing MaaS solutions using QR Codes instead of NFC Tags with their Ringo Pass app for Saitama. The pilot project is covered in the NFC Forum article JR East Railway And NFC Propelling The MaaS Revolution. A 2nd MaaS pilot project has been announced for Sendai. An interesting side note here is that the old card reader+Windows+plastic Suica card Suica Internet web shopping service is going away this year, the final plug is due to be pulled by September 2020. We should be hearing about NFC Tag Suica in 2021.

NFC Tags and App Clips level the playing field with QR
One of the ways PayPay and other QR Code players disrupted the Japanese market so quickly was leveraging the low entry point bar of static QR codes combined with mobile smartphone apps. All stores need is an official QR Code sticker. Small merchants are freed from having to invest in POS hardware to go cashless.

NFC Tags eliminate the cost advantage of QR and level the playing field. Combined with the capabilities of iOS 14 App Clips, they become a killer app:

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.

MaaS Suica wrapped up in new technologies like App Clips and background tag reading iPhone has the potential to take the Suica eMoney payment platform to a whole new level. Success depends on how aggressively JRE promotes the service and how they license it to sister transit card operators. It would be great if we got MasS Suica, MaaS ICOCA etc. working seamlessly as a single mobile payment just like transit cards do now.

Summary: The Rush to Mobile

Super Suica, the card, and Mobile Suica aim to deliver more services, such as the renewed and expanded Ekinet coming in summer 2021, with a lower cost internet based cloud infrastructure while keeping the great thing about Suica: super fast secure offline transactions and interoperability.

Based on what JRE has said over the past 2 years in the press and in recent company announcements, it seems we’ll have 4 basic versions of Suica: (1) Hard-wire Suica (what we have now) for major stations and stores, (2) Wireless Suica, a simplified low cost cloud based gate terminals to cover rural stations not currently on the Suica map, (3) MaaS NFC Tag Suica without dedicated hardware for anywhere, anytime App Clips-like mobile payments, (4) Licensed Mobile Suica assets and card architecture for PASMO, ICOCA

There will be 2 kinds of Super Suica partners:

  • Direct 2 in 1 partners host cards on Super Suica with all the benefits of Mobile Suica.
  • Indirect partners get the new Suica card architecture, New FeliCa OS improvements, Mobile Suica IT assets and wireless Suica gate system technology. The arrangement will be similar Mobile PASMO who licensed Mobile Suica IT assets but run their own cloud service with their own backend mobile recharge, commuter passes and reward points.
Apple Pay PASMO will be coming to Apple Pay with the iOS 14 update

Mobile PASMO was first announced in January 2020, launched on Android Osaifu Keitai in March and Apple Pay PASMO with arrive with the iOS 14 update this fall. 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 iOS/watchOS Apple Pay. This speedy rollout was possible because Mobile PASMO is rebranded Mobile Suica cloud assets.

Think of Mobile PASMO as a trial run for the major transit card players following the same strategy and launching Mobile ICOCA, Mobile TOICA, etc., starting in 2021. Next generation Super Suica won’t be a slam dunk national transit card that does it all, but it will be start line towards that goal in a race that has already started: a new foundation of shared infrastructure and services with transit companies working toward a cohesive de facto standard that has lots of mobile potential.

In these COVID challenged times all transit companies are under enormous pressure to reduce redundant infrastructure, streamline and bury old grudges. The current situation will drive Super Suica and mobile uptake as the payoff is more mobile services with reduced operating costs. Another case of COVID driven ‘unfortunate success’. I remain hopeful that, in the end, we’ll be pleasantly surprised.