NFC Goods on Tap for September 12 Apple Event

Apple is using the September 12 event to show off the new NFC Wallet Pass feature of iOS 12 and watchOS 5 to invited journalists and guests running the iOS 12 beta. The NFC feature was unveiled at WWDC and will be used for Student ID Cards in Wallet. Here’s an overview of NFC related news expected for September 12.

NFC Passes
Apple clearly wants to promote NFC Passes in Wallet over clunky QR Codes. Apple also wants to promote NFC Passes on Apple Watch over iPhone: NFC Passes are gorgeously displayed exclusively on the watchOS 5 page so expect them during the Apple Watch segment. Assa Abloy and Blackboard are working with Apple to make those happen. You might remember Assa Abloy from The Information rumor piece about door locks and ID Passes coming to Wallet.

Temple University’s OWLCard and John Hopkins J-Card offer some clues how they will work in Wallet:

  1. Contactless student ID cards are Stored Value (SV)
  2. Because they are SV cards, they can be recharged

Since they will reside in Apple Pay Wallet this means NFC Student ID Cards can be ‘recharged’ with Apple Pay credit cards instead of running to the nearest ‘refill/recharge’ station. Anytime, Anywhere Recharge.

Sound familiar? My goodness it’s just like Apple Pay Suica that you can recharge on the go and use for Suica coin lockers. The only real difference is that Apple Pay Student ID Cards cannot be used for transit. At least not yet.

An interesting aspect of implementing NFC Passes in Wallet is the PassKit NFC Certificate requirement issued by Apple to the developer and strictly controlled for security purposes. If Apple wants to open up NFC access to more developers, wider NFC Certificate distribution should be the ticket for developers to gain NFC access that was not possible up to now. The Apple Pay Developer page seems to back this up: “discover how to create contactless passes for rewards cards, gift cards, tickets, and more.”

NFC Reward Cards, Gift Cards, Tickets and more?
It would be in line with expectations if Apple announces NFC reward cards and gift cards alongside NFC Passes and Student IDs. It would be beyond expectations, but not far-fetched, if Apple also announces Apple Pay Transit for MIFARE based Taiwan transit cards, FeliCa based Octopus Hong Kong transit cards or perhaps something else…like Apple Pay PASMO. We won’t know until the event as Apple certainly cut code references out of the iOS 12 beta mix to keep code spelunkers at bay.

More Global FeliCa iPhone
The new iPhone models and Apple Watch Series 4 will certainly have Global FeliCa, hopefully free of the NFC hardware issues that plagued iPhone X production. The more important question for the Japanese market however is not the top-tier models but the iPhone 7 replacement aka iPhone SE 2 as tweeted by Guilherme Rambo.

SE 2 should have Global FeliCa as well and will make a great entry-level Apple Pay Suica device, not only for Japanese students on a budget but older Japanese who don’t need or want the latest bells and whistles. An entry level Global FeliCa iPhone has been missing from the JP lineup and will certainly help Apple hold onto Japanese market share. It will certainly help too if Apple throws in important Apple Pay Transit additions such as Apple Pay PASMO.

Long term I think Apple Watch will be next revolution thing for transit but only when transit cards and credit cards can be loaded directly to Apple Watch without an iPhone. When that happens, and it eventually will, watch out.

Enjoy the show.

Welcome to the new era of A12 Bionic NFC and iOS 12

Guilherme Rambo SE2 Tweet



The Big Implications of Apple Pay Mizuho Suica Branding

Apple Pay Branding Model
A diagram of how Mizuho plugs into Suica and how it could work with branding schemes like PASMO

Mizuho Suica for Apple Pay raises questions and fascinating possibilities way beyond yesterday’s announcement. Why now and why only Apple Pay? Is this the first of many Suica branded cards coming to Apple Pay?

The announcement was short, small and caught Japanese IT journalists off guard. Nobody anticipated Apple Pay Suica branding just appearing and working with a wallet app update. It’s slick and in true Apple fashion ‘just works’, but journalists missed important points with huge ramifications:

  • Mizuho Suica only exists as a virtual card hosted on the Mobile Suica Cloud, there is no plastic equivalent
  • DNP provides the Mizuho Wallet app backend

Put together this means the Apple Pay Suica branding vehicle is complete and ready to roll. Almost exactly the model outlined earlier.

The only remaining question is how many other transit companies and banks are going to get on? It’s tempting to think that with another Apple Event approaching, Suica’s eight sisters will join the Apple Pay branding parade: PASMO, ICOCA, TOICA, manaca, Kitaka, SUGOCA, HAYAKAKEN, nimoca. That’s probably a long shot but the vehicle is ready and waiting if they decide to join and time is running out if other transit areas want to benefit from the flood of inbound visitors anticipated for the 2020 Tokyo Olympics.

The Apple Pay Japan strategy of focusing on the stored value Suica transit card more than credit cards has been a tremendous success. Transit truly is the golden uptake path for contactless payments, exactly as the recent and widely regurgitated Juniper Research piece pointed out but everybody seemed to miss that point.

None of the other Japanese transit cards are on mobile but everybody building their own cloud infrastructure is out of the question. If JR East, DNP and Apple can coax the other Japanese transit cards to join the Suica branding scheme that finally offers commuter plans and more for everywhere and not just Tokyo, Apple Pay will easily become the de facto mobile wallet for Japan.

UPDATE 1: the Apple Pay Suica branding program is underway, sources say ‘stay tuned’ for more Apple Pay Japan payments and apps in the near future, September and October are the usual suspects.

UPDATE 2: I think one reason why Japanese journalists missed the virtual only Mizuho Suica point is because the Android Mizuho Wallet App release earlier this year also had virtual cards with one very important difference. Android Mizuho Wallet creates virtual Mizuho QUICPay JCB Debit cards not Suica. Mizuho Debit cards are hosted on the Mizuho system just like their credit cards. Virtual Suica branded cards are hosted on the JR East Mobile Suica Cloud, a completely different system with completely different implications.

UPDATE 3: I hate the blog title and am utterly clueless trying to find a better one that exactly captures why this is an important development.

Intriguing Pieces

It’s very odd when you consider that global FeliCa iPhone 8 is the only smartphone in the world that you can use out of the box to add a Suica card and use SmartEX to ride the Shinkansen with just iPhone 8 and Apple Pay Suica. You do not need a Mobile Suica account like any other smartphone because Apple built Suica functions and connectivity into Apple Pay.

That is unique and interesting but why did JR Central go out of its way and devote resources to support JR East and Apple Pay Suica when their own TOICA transit card only exists as a plastic one? It doesn’t make sense: all the elite EX-PRESS business travelers who use the JR Central Shinkansen regularly will dump TOICA and go all in with Apple Pay Suica. Companies invest resources for a reason, something is going on.

It is also very odd that PASMO registered the Mobile PASMO trademark on Apple Keynote day as the first step before anything else including, it seems, creating a plan. Clearly a branding trademark is on PASMO’s mind. Let’s look at these intriguing pieces from a branding perspective.

The Apple Pay Suica diagram looks like this:Apple Pay Suica Diagram

Apple invested a lot of time and effort to add global FeliCa and emulate all the Suica FeliCa functions in Apple Pay and on iPhone hardware. As Japanese IT journalist Junya Suzuki pointed out in his Mobile PASMO piece, all the Japanese transit cards are compatible on the outside but on the inside there are differences in how they use the FeliCa chip and add service extras.

Implementing all those differences and service extras in Apple Pay and on iPhone hardware is a lot of work for Apple. There is also the problem of a PASMO building their own mobile service with limited financial resources. And there is very little time until the 2020 Tokyo Olympics.

PASMO’s trademark move suggests the solution is simply going to be a branding one:

Apple Pay PASMO Diagram
PASMO would have to host commuter pass and credit card accounts on the JR East Mobile Suica cloud. Apple and JR East would simply brand the PASMO information.

Start with a basic service that offers the 2 big things Japanese users want most:

  • Commuter passes
  • Credit card loyalty points

JR East started simple by dropping EX-PRESS Shinkansen options from the Suica App until JR Central had iPhone Apple Pay Suica interoperability in place. JR Central is doing the same with the browser only simplistic SmartEX JP registration process.

This model can work for iOS apps too. JR East could host a PASMO app in addition to their Suica app:Apple Pay Apps Diagram

The evidence so far suggests this is how Mobile PASMO will play out. It provides an easy model for PASMO and the other transit cards to get on board Apple Pay quickly then add back service extras over time. JR Central cooperation with JR East and Apple Pay Suica is another sign that things are warming up on several fronts.


The Mobile PASMO Front Line

Junya Suzuki digs into the technical and financial challenges facing PASMO bringing Mobile PASMO to market. He was kind and tweeted me right after meeting with PASMO-Seibu Railway officials that the trademark registration was just that. I suspect plans are farther along than a trademark application but for now, let’s take PASMO’s word.

The most fascinating thing to me is the numbers. As of March 2017 (6 months after the Apple Pay Suica launch) the breakdown for Suica cards is:

  • 64 million total Suica (plastic and mobile)
  • 4.4 million Mobile Suica, about 7%

Even though the Japanese market is just reaching the 1 year mark of Apple Pay Suica, and 11 years of Mobile Suica service on other mobile phone, there is a long way to go.

PASMO is far smaller, the last reported figure from 2014 was about 20 million. Current estimates are 25 million. At the Mobile Suica rate that translates to a little over 1 million potential Mobile PASMO users.

The financial challenges of building a viable mobile service infrastructure from a far smaller user base are clear. The obvious solution, and likely outcome is a service deal with Mobile Suica. But this has technical challenges as well.

Suzuki san lays out all the FeliCa details that I will only outline. All the major IC Transit cards are compatible with each other through the Congress of Japan Railway Cybernetics (fancy name for a committee of the Japan Railway Engineers’ Association). However there are differences in the way each transit card uses the Secure Element and Application layer of the IC card FeliCa chip. These are basically the extra services offered by different transit cards. PiTaPa for example offers both pre-paid and post-pay fare transaction services the other transit cards do not.

In short PASMO would have to lose the service extras they offer customers to work on Apple Pay via JR East’s Mobile Suica backend. Any service start window depends on how much PASMO is willing to give up to get on Apple Pay. The one feature that customers really want for Mobile PASMO is commuter passes. Fortunately this appears to be the easiest feature to port.

My vote is going the SmartEX way of starting as quickly as possible with a barebones service then build up from there. Suzuki san thinks Mobile PASMO is cannot start in 2017 and 2018 is highly unlikely. I am a little more optimistic and think we could see Mobile PASMO in 2018.

Let’s face it, 2019 is cutting it awfully close if PASMO wants mobile service in place for the 2020 Tokyo Olympics.

Apple Pay PASMO Possibility (U)


The Mobile PASMO trademark registration made on Apple event day is very interesting. PASMO is on record with Japanese IT journalist Junya Suzuki saying that they do not have any budget to build a service like Mobile Suica. This means that if they have a trademark registered, they also have a partner lined up to provide such a service. In Tokyo town that means JR East.

There is something else. The iOS 11.1 beta breaks Apple Pay Suica. This suggests Apple is changing or modifying code that controls NFC functions. There is also the major Apple Pay and Mobile Suica service downtime in late August~early September that suggests serious reconfiguration.

This is a long shot but I am putting it out there: we might see Mobile PASMO service debut on Apple Pay with iOS 11.1 and iPhone X.

PASMO is clearly planning something. Better sooner than later.

Update: Japanese twitter users digging into the Mobile PASMO filing uncover mention of a mobile (LTE/4G) watch. What kind of watch might that be? 😜

Update 2: IT Journalist Junya Suzuki contacted PASMO (Seibu Railway) this morning, October 4. PASMO confirmed the application but had no details for a service launch. Translation: plans are in place but they are not ready to say anything more. If it doesn’t happen with iOS 11.1, March 2018 is the next target window.

Update 3: More Mobile PASMO coverage here and here.