2021 Outlook: Apple Pay Code Payments and Multi-Payment Wallet Cards

A happy new year to everybody. When reading Junya Suzuki’s year end Apple Pay and contactless history in Japan article, I was irritated by its ‘rah rah for open loop’ ending that seemed to conclude EMV isn’t very slow and tap speed differences don’t really matter. After reading followup tweets with other IT journalists I realized that wasn’t his point at all. What Suzuki san was really saying was the total transit gate experience counts more than any particular technology package (MIFARE, FeliCa, EMV Open Loop, etc.).

Steve Jobs said the same thing about technology and products in the famous, “you have to start with the customer experience and work backwards to the technology,” 1997 WWDC video. In other words, the whole (the product) has to be larger than sum of the parts (the technology pieces that make up the product) to be a success. It’s all about how they integrate as a product into the larger whole ‘vision’ thing. JR East transit gates are great because the total experience is greater than sum of FeliCa, Suica, JREM reader and gate design technology parts added together.

When it comes to payments however it’s not just about technology, it’s also the raw power plays going on behind the scenes. In the same article Suzuki san nonchalantly mentions that NTT Docomo dCard, which SMBC has issued and operated since the very beginning but in open warfare with Docomo these past few years, is dumping SMBC for UC Card group (Mizuho) this year.

There is also constant pressure to eliminate Japanese FeliCa contactless payment networks in favor EMV using the old bait and switch tactic of promoting a proprietary industry standard when the real end game is eliminating local competitors. These are issues that few journalists bother to analyze deeply and also what got Jack Ma in trouble when he blasted the Basel Accords, the traditional banking system, as an exclusive old men’s club that stifles innovation.

Power games in the world’s greatest free-for-all payments market
I’ve said this many times but one of the great things about Japan many western journalists completely miss, is that Japan is the world best guinea pig test market. Especially useful for observing new payment trends at work. The market is a perfect not too big not too small size, super cohesive, and it has a long history of Osaifu Keitai mobile payments with a wide foundation of payment technologies encompassing FeliCa, EMV and QR. And there is lots of money sitting in bank accounts. This unique mix affords the careful observer a virtual front seat on the power games playing out right now after the introduction of QR based payment services like Line Pay, PayPay and dBarai (dPay).

When Docomo unveiled their dBarai app service it confused many users. What was the point of using code payments when Docomo already had dCard and the whole Mobile FeliCa iD network in place for promoting contactless payments? But it wasn’t long before Docomo linked the 2 payment services together. dBarai users can pay using 3 different backend payment choices: direct dCard billing, monthly Docomo billing, a rechargeable stored value dBarai account with cash recharge options via ATM or linked bank account.

From the user point of view it doesn’t matter when they pay with a Docomo code payment app tied and charged to their dCard on the backend, it’s the same monthly bill. But to Docomo it is very different: instead of using the iD or SMBC VISA/MC payment network on the front end, it’s the Docomo dBarai payment network. I suspect Docomo pays less of a transaction cut to the bank because they have the cash flow to assume some of the risk that banks usually assume in establied credit card network transactions. Docomo likely also leverages the daily transaction float. In short the AliPay model. The next logical step for Docomo dBarai will be P2P payments that leverage Docomo’s Mercari connection.

The value of code payments in dBarai isn’t the technology, it’s a expedient tool that Docomo leverages to circumvent the limitations and fee structure of banks and card networks to create their own flexible payment network. This wiggle room is the essential margin that drives QR Code payment empire cashbacks, point giveaways and new services. This is the epicenter of the cashless payment turf wars that pits new mobile payment players against established card and bank networks. And Apple is about to dump delicious chunk bait into this shark tank.

The Toyota Wallet multi-payment model
In the Apple Pay 2020 wrap-up I mentioned Toyota Wallet as the most important trend: a Wallet app that lets users pay with a QR code or with NFC via an instant issue prepaid Apple Pay Wallet card. The Toyota Wallet iD/Mastercard has 2 Apple Pay device account numbers, one for the iD payment network and one for the Mastercard payment network. This is common for most Japanese issue payment cards on Apple Pay but it is less about NFC protocols (FeliCa, EMV) and all about dual payment network support in a single payment card. And it is not limited to Japan. In Australia there are dual payment Apple Pay cards that support both Mastercard and EFTPOS payment networks in a single card.

With Apple Pay Code Payments on the way, possibly with iOS 14.4, we have another option for multi-payment network cards: code payment and NFC payment. Apple Pay Code Payments are thought of as being only for AliPay and WeChat Pay support in China, but they are much more than that.

Apple Pay Code Payments gives mobile payment players the ability to move QR/barcode payments from an outside app and integrate them directly into an Apple Pay Wallet card. In the Toyota Wallet example below, Toyota could simply add another device account number for the QR Code payment network:

This might seem trivial but it’s important to remember some key differences of Wallet payment cards:

  • Direct side button Wallet activation with automatic Face/Touch ID authentication and payment at the reader.
  • Device payment transactions handled by the eSE without a network connection.
  • Ability to set a default main card for Apple Pay use.

If Apple Pay Code Payments are equal with Apple Pay NFC payments, and by all indications from beta screen shots they are and use the same ‘card’ UI metaphor, I think we are in for another wave of Apple Pay market disruption. Instead of NFC vs QR Codes, or Apple Pay/Google Pay vs apps, all of it just red herring fake debate, we can focus on what’s real: the payment network turf wars.

In the Japan market Line Pay, PayPay, dBarai, Rakuten and all other new players will have the tools to create better services tightly integrated in a Apple Pay Wallet card. Docomo for example could incorporate dBarai into dCard with an additional device account number. Mix and match payment networking in one card.

In the payment network world where market share is all, card networks have held too much power for too long, exactly what Jack Ma was complaining about. I see competition as a good thing that encourages innovation and choice, mobile payments are doing that.

Looping back to the open loop beginning of this piece I think it makes sense now to realign the debate points away from focusing on technology (EMV vs FeliCa, NFC vs QR, etc.), i.e. things that can change and evolve, and focus on payment network turf wars, i.e. things that are hard to change until you see the battles lines clearly enough to create a better strategy and get where you want to go.

In the public transit arena it always comes down to this. Moving people quickly and safely by transit, managed wisely, is licensed cash flow from the fare gates. A transit company can keep control of that license to build something of greater long term value for the users and businesses of the transit card region, which can cover the nation. A transit company can give control away to someone else and let them take their cut, but just like Jack Ma pointed out before he disappeared, will there be innovation when going all in with traditional card and bank payment networks?

I still say a transit platform, especially in the mobile era of chaotic opportunity, is the best approach if a company wants to achieve the former: a system where the whole is greater than the sum of the parts. Start with the best customer experience you want to deliver and work backwards to the technology.

The Great Big Nankai VISA Touch Transit Boutique

VISA Japan has been busy this year marketing VISA Touch contactless cards with the SMBC group, leveraging the SMBC-GMO-VISA co-venture stera payment platform that launched on July 6. We have already seen a few VISA Touch stera powered ‘transit boutiques’: smallish inbound tourist centric transit companies that don’t support Transit IC cards like Suica and PASMO. This could be changing.

Nankai Electric Railway along with VISA Japan, SMBC and QUADRAC Co., Ltd., a SoftBank and hedge funded systems company that develops VISA Touch and QR fare systems among other things, announced a co-venture test of VISA Touch and QR Code open loop fares for ‘inbound tourists’ on Nankai transit gates in 2021. ‘Test’ not ‘rollout’. The wording of the press announcement is vague with photo ‘images’ of what it might look like. It reads more like a VISA PR release than a Nankai one.

To understand why Nankai is testing this it helps to know a few things. Nankai lines service Kansai International Airport that up until COVID hit had a lot of inbound tourists from China visiting Universal Studio Japan in Osaka, amoung other things, the AliPay thing being the most important.

The other thing to know is that Kansai area transit companies (Hankyu, Keihan, Nankai, Hanshin) never developed a PASMO like transit card for non-JR group transit companies. PiTaPa is a failure because it’s a post-pay transit card, a SMBC managed credit card with credit card checks and unsuitable for the commuter pass masses without credit cards. This is why Hankyu ‘borrows’ the JR West ICOCA card for issuing commuter passes. It’s a mess. But it also means that transit companies in the PiTaPa SMBC orbit are in a weaker position, open to SMBC pressure and loan incentives to try VISA Touch open loop (not really open loop when it’s an exclusive VISA Touch arrangement and nothing else right?).

The Japan Transit IC map. Post-pay PiTaPa based transit cards are in a weaker position than regular prepaid transit cards

It also helps to know that stera Panasonic JT-C60 NFC readers are the slowest transit Suica compatible readers I have every used. These same readers are used in VISA Touch transit boutiques and we all know that EMV contactless is slower than FeliCa.

So what is Nankai testing exactly?

(1) Transit gate friction. Transit IC card tap speed is less than 200 milliseconds (ms) while legacy mag strip paper ticketing is 600 ms. The stera Panasonic readers are far slower than 600 ms, if that’s what they end up using for the test…it’s hilarious to imagine Nankai retrofitting a bulky slow Android based NFC reader on a Omron transit gate.

(2) Fare system overhead. How much does the centralized fare processing and linking to VISA and AliPay cost and how does it perform versus local stored value transit IC cards.

The eventual rollout plan will be based on hardware and system cost balanced against the estimate of capturing more inbound transit revenue. There are also transit gate layout issues to consider, is it better to go with slow and fast lane transit gate layout, or retrofit every gate as cheaply as possible. Does any of this make sense in the COVID era when tap speed is more important than ever?

The Real Friction Point: Inbound
We’ll see how it works out but since the advertised point of this effort is for the benefit of inbound tourists, I’ll come out and say it: one of the best things about COVID is the elimination of inbound tourists and their luggage on commuter trains in heavily trafficked areas like JR East Yamanote.

Large groups of people with lots of luggage riding commuter trains during rush hours without following common sense etiquette is a huge stress point for regular commuters. When doors are blocked by luggage and tourists who don’t know, or don’t care about other people using the train, it’s trouble in the making.

The hallmark of any good transit system is safety and reliability, a finely tuned balance of servicing all customers and wisely investing in infrastructure. All too often the grab for inbound tourists ignores this balance at the expense of daily riders. Nankai must keep this in mind. If they do not it will end up being a ‘do less with more’ money losing proposition for Nankai, but not for VISA, SMBC and QUARDRAC.

Apple Pay Japan 2020 Wrap Up Wish List

A two word summary for people in a hurry: COVID and PASMO. As everybody in Japan knows at this point, COVID drove cashless payment use more than any government program could, or anything else for that matter. Cashless went from being the perennial ‘next big thing’ to first choice at checkout in a surprisingly short time with a growing number of ‘cashless only’ places. Here’s a short recap of the best and worst all things Apple Pay Japan in 2020.

The Worst: Face ID Apple Pay
COVID meant mandatory face mask wear outside the home. iPhone Face ID users outside of Asia quickly learned that Face ID and especially Face ID Apple Pay really sucks with face masks. Apple tweaked Face ID slightly to alleviate the issue but this is a long term problem with no short term workaround. Apple had the foresight to resurrect Touch ID in iPhone SE 2, the right device coming at the right time. For the time being it will hold up the middle and lower range iPhone user base in Japan. Face ID is such a marketing embarrassment right now that Apple only features Touch ID recharge on the Apple Pay PASMO page. The real short term future proof Face ID Apple Pay fix is Apple Watch.

The Biggest: Apple Pay PASMO
Mobile PASMO finally joined Mobile Suica, first on Osaifu Keitai Android then Apple Pay, the biggest and most important launch for Apple Pay Japan in 2020. Suica and PASMO combined represent 80% of the entire transit IC card market. In terms of pure usability, a large and diverse installed base, with Express Transit powered transit and purchases on iPhone and Apple Watch, PASMO easily beat all other Apple Pay service rollouts this year. Apple had VIP execs and foreign media on hand at the press event, something they haven’t done since the Apple Pay Japan launch in 2016.

The Most Influential: Toyota Wallet
The Toyota Wallet App rollout I wrote about a year ago turned out to be the model everybody is doing now: ‘XX Pay’ or ‘XX Wallet’ app consisting of a user account linked to a bank or credit card with a flexible payment dual mode front end offering QR Code payment via the app and a ‘instant issue’ prepaid card in Apple Pay Wallet. The Apple Pay Line Pay card launched on December 22 is the exact same model. Instant app issue debit and prepaid Wallet cards do away with plastic issue costs and lower the user entry bar, amount other things. Expect more of this in 2021, actually expect everybody to do this in 2021.

The WildCard: App Clips
iOS 14.3 App Clip Code support completed the picture for App Clip developers, but it will take time to see how they play out in a market overcrowded with mobile payment options. I think there is always a chance for a low cost high quality service which intelligently designed App Clips can deliver. The key will be solving the Japanese Softcream Cashless Index (SCI) Challenge: can App Clip cashless do a faster more reliable job than good old food ticket vending machines, without an app and without an account? How streamlined can it be and still be an App Clip? I hope we can find the answers to those questions in 2021… but there’s one more thing.

The Missing: Apple Pay Code Payments
The iOS 14 Apple Pay AliPay/Apple Pay Code Payment has been in open secret test mode for nearly a year with no firm release in sight. If screenshots are anything to go by, Apple Pay Code Payments are done with a virtual Wallet ‘card’ like any other and Apple Pay Wallet cards have certain properties:

  • Direct side button Wallet activation with automatic Face/Touch ID authentication and payment at the reader.
  • Device transactions handled by the eSE without a network connection.
  • Ability to set a default main card for Apple Pay use.

Supporting QR Code payments with an Apple Pay Wallet ‘card’ moves QR payments out of the app and removes some, but not all, of the QR payment friction points. It makes App Clips a better user experience too when all payments can be accomplished with Apple Pay.

Ultimately I hope the Apple Pay Wallet card model moves away from single mode technology and evolves to multimode awareness that encompasses NFC, Ultra Wideband, QR, etc. It has too. Our smartphones must be smart and take care of any payment technology for us. They have to because things are only going to get more complicated. People ridicule the Japanese payments landscape but that will be everywhere. Card companies and banks push EMV as a ‘global standard’ but EMV already comes in different flavors like PBOC, so does NFC (NFC A-B-F-V), and Ultra Wideband is joining the mix.

That’s what digital payments are all about: combining complex things into ‘it just works’ simplicity. Anybody can create or load a Suica, Octopus or PASMO into Apple Pay, without signing up or creating a new account, and start using it for lots of different instant payments. That’s how simple it should always be. That’s my 2021 Apple Pay wish.

Best wishes for a happy and safe 2021.

UPDATE: Reader Apple Pay Wishes for 2021

>Mine would be for VISA Japan to support Apple Pay.

>Mine are resurrecting #FeliCa-based @VisaJP TOUCH (can be rebranded), @id_credit re-attempts @ #FeliCa network expansion overseas starting w/ equipping end-users w/ the technology in new card distribution (via digital & physical), & @JCB_CARD expands @QUICPay_PR network overseas.

Contactless Payment Turf Wars: EMV closed loop transit dumb cards

  1. Contactless Payment Turf Wars: Transit Platforms
  2. Contactless Payment Turf Wars: PiTaPa Pitfalls
  3. Contactless Payment Turf Wars: Why Oyster is missing from mobile
  4. Contactless Payment Turf Wars: Tapping the potential of TAP
  5. Contactless Payment Turf Wars: Apple Card and the Prepaid Innovation of Apple Pay Suica
  6. >Contactless Payment Turf Wars: EMV closed loop transit dumb cards

Prepaid transit smart cards are micro bank accounts on a card. What started as plastic in the mid 1990’s first transitioned to the cloud based mobile digital card era with Mobile Suica in 2006. Transit cards on mobile digital wallets are much more powerful and malleable than their plastic forebears, and occupy a coveted position in the mobile payments market. Credit card companies and banks spend enormous resources and effort to capture this transit fare business.

Background
Many smart cards use FeliCa and MIFARE. The technology has been on the market since 1994 and one of the reasons for platform popularity and longevity are the rich application development environments they offer (Calypso is also popular but limited to transit applications).

Developers can design a card architecture as ‘smart’ (like Suica) or as ‘dumb’ (like iD) but they are all smart cards because they contain an IC chip. In Japan FeliCa powers not only company ID cards, but also transit cards (Suica, PASMO, etc.), bank payment cards (iD, QUICPay) and rechargeable prepaid eMoney cards that anybody can buy and recharge at convenience stores (WAON, nanaco, Edy). Mobile FeliCa has been in place since 2004.

Smart/Dumb card architecture depends on use case, system processing cost efficiency and need. In a transit fare system, a dumb card use case is slower centralized processing, like waiting at the store checkout for card verification to clear. A transit smart card use case is instant locally processed stored value to keep people moving through the gates because centralized processing isn’t up to the task. This is why transit cards have used the stored value local processing model…until now.

Open Loop 1.0
EMV contactless credit cards arrived on the payments scene starting in 2007 but uptake was slow. Since EMV contactless uses the same NFC A as MIFARE based transit cards, the big EMVCo members (VISA, Mastercard, American Express) came up with a great marketing idea: use EMV contactless credit cards as a transit card. Thus EMV open loop transit was born.

EMV Open Loop 1.0 transit that debuted on Transport for London (TfL) Oyster system in 2014 filled mutual needs for TfL and bank card companies. Despite the success of Oyster, TfL wanted to reduce plastic card issue and management costs:

The current Oyster system, though very popular, is expensive and complex to administer. Contactless bank cards use existing technology, responsibility for issuing cards would lie with the banks rather than TfL, and the operating costs should be lower.

The Future of Ticketing London Assembly (2011)

In 2017 there was a push to nudge people away from their Oyster cards and towards contactless. One announcement rang out all over London’s tube stations: Why not use your contactless bank card today? Never top up again, and it’s the same fare as Oyster.

How Long Does The Oyster Card Have Left? Londonist (2018)

Using bank cards in place of MIFARE Oyster cards accomplished that and because MIFARE was late to the mobile party TfL management decided decided their mobile strategy would be Apple Pay and Android Pay EMV card support. Meanwhile the bank card companies captured transaction fees from mundane transit fares at the gate, got the benefit of using the float instead of TfL, and got people into the habit of using credit cards for tiny purchase amounts. Our parents thought buying coffee with a credit card instead of small change was ridiculous because credit cards were reserved for ‘serious purchases’. Not anymore.

TfL Open Loop was judged a big success and got rave reviews from tech journalists around the world who hailed it as the future of transit ticketing: time to dump those proprietary transit smart cards and go all in with ‘open standard’ EMV open loop if you want the latest and greatest transit fare system. This gave transit agencies and the governments that run them the wrong idea that EMV is a cure all transit fare system solution.

1.0 shortcomings
The problem is that EMV is not an open standard, it is owned and managed by the proprietary EMVCo that is wholly owned by the major credit card companies. EMV is a ‘one size fits all’ payments technology created for the needs of credit card companies and banks. It was never designed as a transit fare solution and will never evolve to incorporate transit needs. Experts agree:

A universal truth is that each transport market is highly unique. While EMV may be the best solution for some, the reality is that a standardized deployment of this model is not best suited to everyone.

Transit systems shouldn’t confuse open loop pay with EMV

The U.S. has been a tough market for transit agencies to deliver successful open-loop systems into, as banks have not been in step with these ambitions.

Is now the time for open-loop transit in the United States?

There is no escaping the basic reality that EMV is a slow dumb smart card. It works well for what it was designed for: store purchases where card transaction latency is not a problem while the checkout terminal communicates with the bank system that has your account information.

Transit fare systems don’t have your bank account information on file, and there are limits with what the backend transit fare system can do when an anonymous bank card number appears on gate reader where long transaction latency is unacceptable. There are tradeoffs: the card gets verified but the transit bill gets settled long after the transit. This is why EMV open loop 1.0 only works for simple or flat fare structures. The result was a 2 layer fare system on London Oyster, Sydney Opal and Chicago Ventra:

  • Plastic and digital EMV open loop dumb card with basic fare transit for users with approved bank cards
  • Plastic transit MIFARE smart cards covering all fares including special fare discounts, commuter passes, etc., for everybody else

Oyster, Opal and Ventra wanted to add mobile support across the board but this meant supporting EMV and MIFARE. All of these are managed by Cubic Transportation Systems who worked with the bank card companies and came up with a new product to solve the dilemma: EMV closed loop transit dumb cards.

Open Loop 2.0
Apple Pay Ventra is this new EMV closed loop mobile transit card product, the launch gave us a first glimpse of the 3 layer fare system:

  • Plastic and digital EMV open loop dumb cards with basic fare transit for users with approved bank cards
  • Digital EMV closed loop dumb cards that cover regular fares and commute passes with special fares to be added later
  • Legacy plastic MIFARE transit cards for everybody else

It’s still a mixed EMV and MIFARE environment but MIFARE is limited to legacy plastic transit cards that can be bought with cash at station kiosks. But we can be sure that MIFARE will be phased out at some point.

The Apple Pay Ventra model is being used for digital Opal trials on Apple Pay and Samsung Pay, and is on tap for digital Oyster and digital OMNY. A basic outline:

  • The transit card is actually a EMV Mastercard prepaid debit card issued by 3rd party bank
  • The Mastercard as transit card is ‘closed loop’ and can only be used for transit and nothing else
  • The user must create an account to use the digital card. The transit account and prepaid/debit information is centralized and managed by the card issuer, nothing is stored value
  • All digital transit card management and housekeeping (adding or transferring cards, recharge, checking the balance, etc.) must be done in a separate app (Ventra App, Opal App, etc.), nothing can be done directly in Wallet
  • Express Transit is not part of the native EMV card architecture and has to be added as part of broader open loop support on the backend fare system by the operator and Apple, this is why Express Transit is missing in the initial test phase of digital Opal: the current Opal fare system does not support it

As this is an EMV bank card dressed up as a transit card, it is still limited by EMV card architecture and bank card network protocol. In place of local stored value it uses the bank card account model. On mobile this means all card housekeeping is in the app, users can’t create, transfer or recharge transit cards directly in Wallet like Suica, PASMO, SmarTrip or TAP. Apple Watch users can’t recharge EMV transit cards without the iPhone app. And like all cloud dependent services everything stops when networks goes down.

Mobile Suica does an excellent job of balancing and combining the strengths of local processed stored value performance, usability and reliability with the power of cloud attached services. It’s the gold standard of what a transit payment platform on mobile can achieve: leveraging transit card micro accounts to attach services and build business instead of giving it away to banks. Digital Opal testers familiar with Suica notice the difference and missing features:

Open Loop 3.0?
For centralized cloud proponents, including Junya Suzuki, the ultimate dream is having one cloud based account using facial recognition for all payment and transit needs. Cubic and centralized account proponents are already looking to speed up London transit gates beyond slow EMV card technology with barrier free face recognition transit gates:

according to CUBIC…their ‘fastrack gateless gateline’ concept, which is currently conducting small user testing, eliminates physical barriers to form an extended corridor-like gateway that between 65 and 75 users can walk through in a minute, whilst their faces are being scanned and synced for payment with their smartphones

Facial recognition to be your future ticket on the London Underground

The joke here is that, (1) JR East achieved those over 60 people per minute walk through levels with FeliCa based Suica cards and open barrier transit gates long ago, (2) the COVID face mask era is a huge challenge for face recognition systems, (3) Touchless transit, Express Transit on steroids, is already in the works.

Personally I think the Ultra Wideband Touchless approach that leverages personal biometric authentication from the user’s smartphone secure enclave instead of having it hosted on somebody else’s cloud system is the safer and more practical way to go. Privacy advocates will agree.

Speed is safety
Tap speed matters more than even in the COVID era

The next installment of the Contactless Payment Turf Wars
If nothing else closed loop EMV transit dumb cards reveal how bankrupt the ‘open loop is open’ argument really is. All Cubic and the card companies did was swap MIFARE for EMV, neither of which are open. And tap speeds are slower than ever with EMV the supermarket checkout protocol, so now we need Face ID transit gates to speed things up.

It’s fake debate. The real debate is online centralization for fare processing where everybody is forced to have a mobile account whether they need it or want it or not. And once everybody is forced to have an account to use transit the next step is forcing facial recognition.

The short term lesson here is that when transit agencies let banks and card companies run the transit fare concession they will never be free of them: there’s too much private money to be made off of running the backend services attached to public infrastructure. The long term lesson is that the mobile digital wallet solutions for Ventra, Opal, Oyster and OMNY are not about transit user convenience and all about convenience for misguided transit operators and their subcontractors.


Reader Questions
Instead of answering questions or comments via Twitter etc., I’ll answer here for the benefit of all readers.

Q: Not being able to recharge within Apple Pay has nothing to do with EMV vs. stored value though, right? If anything, that should be easier (just move money between accounts).

A: It’s true that MIFARE stored value transit cards such as HOP Fastpass force users to recharge via the app. The point of the piece is that EMV transit card features are defined by the EMV format, bank card protocols and how it’s all implemented on digital wallet platforms. In short, bank issuers control the feature set on the backend. I have yet to see a recharge button on any EMV prepaid card in Apple Pay Wallet, I suspect we’ll always see most operations limited to bank issuer apps, even for transit.

C: The open loathing of banks and credit card companies is honestly quite nauseating (but understandable, considering what Japanese banks are like, apart from the credit card companies).

A: Banks and card companies have an important place in transit, but card company ‘one size solves all’ open loop marketing is misleading and profitable mischief. A good transit fare system is all about balance, flexibility and incorporating innovation such as mobile wallets, for the benefit of transit users and safe operations. Bank cards for example are a wonderfully convenient recharge backend, this is where they shine and add real value to the transit user experience.

But swapping out a native transit fare system with an outsourced bank card account system and tech package that the transit company doesn’t ‘own’ is asking for trouble. How much is the long term cost when it doesn’t solve everything as promised? Who really benefits: the transit user, the transit company, or the system partners and consultants?

These are the questions I think people should be asking and discussing. Hopefully my posts outline the issues clearly so people can discuss them to find the best fit long term solution based on local transit region conditions.

Opal digital transit card trial for Apple Pay and Samsung Pay

NSW announced a public beta test for Opal digital card in October and rolled it out today for Apple Pay and Samsung Pay. Trial users can register, and if one of the lucky chosen ones, install and use Opal digital on their device. iPhone trial users will need to download the Opal digital app via Apple’s TestFlight developer app.

As this is a trial there are limitations and the one for Apple Pay transit users is huge: no Express Transit. Hopefully this will be fixed before the official launch as Opal digital is a very awkward service without it: users have to authenticate Apple Pay at each transit gate, a real drag for Face ID users with face masks, users also have to be careful of EMV card clash.

Other limitations will not be fixed because of system design. This means there is no ‘add money’ button in Wallet and all card house keeping tasks from recharge to checking the balance can only be done in Opal digital app. This is a pain for iPhone users but a huge pain for Apple Watch users. For some it will mean digital Opal is unusable: Apple Pay Suica • PASMO work without an iPhone app and can be recharged on the go, not so for digital Opal.

The overall service seems to be what I predicted at the Apple Pay Ventra launch: a closed open loop prepaid/debit Mastercard disguised as a digital transit card with the backend account managed by the Mastercard issuer, in this case EML Payments.

Transport for NSW says they expect to officially launch digital Opal in 2021. I will update this post as field report details trickle in from trial users.