H.I.S. Mobile Strange SIM Shocks Japanese

Junya Ishino’s report on H.I.S. Mobile’s “Hen na SIM” (Strange SIM) has raised a few eyebrows and comments on Twitter. Comments like how is Apple OK with this brazen hijacking of iOS Enterprise certificates and iOS Enterprise App distribution for profit?

Hen na SIM appears to be a global SIM sticker package for overseas use that is bundled and sold by H.I.S. Mobile along with an iOS “app” that customers download not from the Apple App Store but from the H.I.S. site. H.I.S. sidesteps Japanese regulations with the Overseas use only label and seems to be sidestepping Apple rules as well by misusing enterprise iOS app distribution.

H.I.S. is a Japanese discount travel company with a less than stellar reputation. I used them 10 years ago and knew some people who worked there. The water cooler stories were vicious “black company” yakuza stuff. A normal person didn’t last long in such a deranged corporate culture. I would never consider giving them my business again, or my iPhone.

It will be interesting to see if Apple pulls the H.I.S. developer enterprise account for rule violations.

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Dead HCE-F, Global NFC ≠ Global FeliCa, and Other NFC Confusion

Apple Pay Stacks Explained
A simplified look at the major parts of a NFC contactless payment system like Apple Pay

NFC is a confusing name. It’s an upside down umbrella that catches every single naming convention connected with it: Type A, Type F, EMV, FeliCa, MIFARE, etc.  There are also all those smartphone platform and credit card company brand names built on NFC technology: Apple Pay, Google Pay, NFC Pay, Mastercard Contactless, etc. Companies have greatly added to the confusion changing brand names on a whim: Visa PayWave is now Visa Contactless, Google Pay was Android Pay and Google Wallet before that.

The confusion is perfectly captured by the ever-growing collection of acceptance marks cluttering up Japanese cash register counters.

How do you keep it straight? It helps to remember that NFC is just hardware.

NFC Certification = Global NFC
NFC-A and NFC-F support is required for NFC Forum certification for a device. NFC means NFC-A + NFC-F. NFC-B is optional. All NFC smart devices are Global NFC devices capable of supporting all NFC based payment systems. The street reality is they don’t because smart device manufacturers pick and choose what middleware they support. Everybody supports EMV but manufacturers pick and choose different middleware stacks for different models and different countries.

Global NFC ≠ Global FeliCa
Google’s Pixel 2 a perfect example of a Global NFC device that doesn’t do FeliCa because Google did not choose to license FeliCa middleware. Google also muddied the Android water considerably with the Google Pay Japan rollout that proves HCE-F is dead: Google Pay Japan is just an alternative front end sprinkled on top of existing Osaifu-Keitai middleware. We’ll see what Google cooks up for Pixel 3 but I suspect Google wants to have cake and eat it too: something like Real Google Pay for Pixel 3, Google Pay Lite for everybody else.

Apple on the other hand sells Global FeliCa iPhone 8, iPhone X and Apple Watch 3 worldwide. Inbound visitors to Japan with those devices can add a Suica card with all the benefits to Apple Pay. Inbound Android users are left in the cold feeling confused which is a shame.

It would be much better for customers if smart device manufacturers bundled all the major middleware stacks (EMV, FeliCa, MIFARE, China Transit, CEPAS) and simply called it Global NFC. Real Global NFC.

Until the industry does a better job of integrating NFC hardware and the various middleware pieces into a virtual whole, NFC confusion will continue to be a problem.

Apple Pay Suica Inbound #7: No Foreign Transaction Fees

Apple Watch Suica

A reader comment after using Apple Pay Suica on his iPhone X:

My trip is half over, and we’ve found Suica to be a huge advantage over the old method of converting currency when we use our “no foreign transaction fee” card  to recharge it. So we use it heavily every day.

Since I live in Japan this important Apple Pay Suica advantage never crossed my mind. There are plenty of “No Foreign Transaction Fee” credit cards available in America. As long as they work with Apple Pay they are good to work for Suica Recharge. As long as you have a Global FeliCa model iPhone or Apple Watch you are good to add Suica. For the purchases you make with Suica kiss foreign transaction fees goodbye.

Unfortunately for inbound Android users the recent rollout of Google Pay Suica does not let them into the Global FeliCa smartphone party.

JCB J/Speedy Apple Pay Lands in Taiwan

JCB Apple Pay in Taiwan

JCB announced J/Speedy Apple Pay service for Taiwan today. This means any Taiwanese customers with JCB cards can add them to Apple Pay. More importantly this means all those Japanese tourists that Taiwan has been advertising to can now spend money with Apple Pay JCB cards in Taiwan. In short iOS 11 NFC switching for FeliCa QUICPay at home and EMV J/Speedy in Taiwan.

Who says you can’t have it both ways?

Market Risks when Problems aren’t Fixed

Transit cards have one job: get the user through the ticket gate quickly and reliably every time, no questions asked. Because they are bullet proof, fast, highly reliable and also used for e-money purchases, transit cards like Suica and Octopus have evolved beyond transit smartcard systems into transit platforms.

A transit platform becomes even more powerful, flexible, essential and transformative when it is deployed on smartphone digital wallet platforms like Apple Pay, Samsung Pay and Google Pay. When economies of scale and masses of moving people with transit card loaded smartphones come together all kinds of exciting new business possibilities and synergies open up: for transit companies, for local area economies, for merchants, for the digital wallet platforms and for customers.

But this can only happen if the basic transit card job and performance on the smartphone matches the plastic one. It has to be as fast and reliable as a plastic transit smartcard every time. It has to be bullet proof. This is essential. When the smartphone transit card performance is not up to the plastic one, people simply don’t use it and stay with plastic or reach for something else. Ask any daily commuter.

The iPhone X Suica Problem
This is exactly what is happening to iPhone X in the Japanese market, perfectly captured in the following tweet of which you can find plenty more. Apple has not fixed the long running iPhone X Suica problem, 7 months and counting, and for customers who depend on Suica iPhone X is a poorly designed piece of expensive junk. A spec problem. The risk of Apple doing nothing has damaged Apple’s brand value in the Japanese market. A small thing can have big implications and Japan is not the only market where this is happening.

Japanese complaints of iPhone X Suica performance
Japanese complaints of iPhone X Suica performance have been constant

Apple Pay≠Apple Pay Transit
The iOS 11.4 update was originally slated to expand Apple Pay Transit cards beyond Beijing and Shanghai to include Jiangsu, Shenzhen, Wuhan and Chongqing but didn’t make the cut. Why not? China Apple Pay Express Transit cards are all the same spec right? The answer is on the Apple Pay Transit page and in Chinese discussion forums: Apple Pay China transit cards are a glitchy unreliable beta product. Chinese smartphones from Huawei, Xiaomi, Oppo don’t have these problems. Transit cards are different from credit cards because the spec is much higher with tight tolerances, they have to work perfectly every time. Apple Pay≠Apple Pay Transit.

Maybe the beefed up Core NFC changes rumored to be coming with iOS 12 will help Apple fix Apple Pay Transit card problems in the long run but fixing the current problems ASAP should be top priority if Apple wants to protect Apple brand value in the China and Japan markets.

Other Risks
This market risk applies not only to smartphone vendors, it applies to transit companies too. Especially those who are switching from fast, reliable ‘closed’ stored value (SV) systems to ‘open’ slow, glitchy EMV contactless.

People think contactless cards are all the same. They are not: a credit card is not a transit card, it’s not yours. Credit cards are subject to the whims and idiosyncrasies of the issuing bank who can deactivate any card at a moments notice without bothering to tell you. This is a problem when using a credit card as a transit card. Singapore transit users are complaining of fried plastic contactless credit cards and of card issuers deactivating cards mid-transit for being over limit. A stored value transit card is yours with your money stored on it. Locally ‘off line’ processed stored value transit cards will always be faster and safer than credit cards because the FeliCa, MIFARE and CEPAS technology behind them was tailored for transit needs.

The risk to transit companies going ‘open loop’ is that every glitch and problem gets blamed on the transit company, never the payment network or credit card company because people have zero expectations for credit card companies and banks. The transit company ‘brand value’ is damaged by the management whims of other companies.

The other downside it that all the exciting business possibilities and synergies of a transit platform + digital wallet are lost. In this case everybody loses: the transit company, transit area merchants, digital platform vendors and most of all, transit customers.

UPDATE: I incorrectly stated that China Express Transit Beijing and Shanghai cards use MIFARE technology. They used to be MIFARE but migrated to something similar to PBOC 2.0 ED/EP and T-Union cards are a further development but the Apple Pay Express Transit flavor is different.