iOS 14 App Clips unlock the power of NFC background tags

We first got of taste of iOS 14 App Clips with the slick Titanium Apple Card setup that leverages the background NFC background tag read ability of iPhone XR/XS and later. Jennifer Bailey gave a sneak peek of NFC background tag Apple Pay in May 2019 but the pieces weren’t in place for a rollout.

The first problem was the iPhone lineup. iPhone 8 didn’t fit because only A12 Bionic and later support NFC background tag reading. This was solved with the release iPhone SE with A13 Bionic and the deletion of iPhone 8 from the lineup.

The second problem was the clunky ‘launch an app’ or ‘launch Safari’ problem. This has been a problem for NFC tag solution providers like SmartPlate. User interaction needs to reside on the pop-up sheet on the unlocked screen. The new iOS 14 App Clips framework that works hand in hand with iOS 14 Core NFC to load just what is needed to take care of the NFC tag transaction at hand, is the right solution.

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 the sheet, 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.

There are a few flies in the ointment:

  • (1) Face ID in the face mask era is not a great unlock or Apple Pay user experience, App Clip powered NFC background tag reading is gonna rock on iPhone SE with Touch ID.
  • (2) a network connection is required, Apple Pay transactions at the NFC reader works without a network connection but App Clips + Apple Pay transactions need a network connection for the obvious reasons of loading app clip content, and because of this…
  • (3) a weak borderline WiFi connection can jam the above process even with WiFi Assist turned on.

The NFC advantage over QR Codes here is that background tag reading automatically pulls up the App Clip sheet ‘while the screen is on’ while QR Code users have to manually pull up the QR reader app to join the fun.

The combination of App Clips, NFC tags and Apple Pay will be extremely disruptive in markets where NFC and QR payment players are very competitive. Places like Japan. PayPay and Line Pay will lose their edge. If they are smart, they can add NFC tag support in their payment apps. And they can bypass Apple Pay if they want to, though it won’t be as slick. Ultimately they are not wedded to QR codes and have always said they would add NFC if customers want it.

App Clips finally unlocks the power of background NFC tag reading and is the other big Apple Pay development, in addition to CarKey, announced at WWDC20. App Clips puts NFC tags on equal footing with QR Codes for the first time with the added edge of the ‘when the screen is on’ background tag read sheet pop-ups. This will be huge.

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Dear Starbucks, please give us a NFC Starbucks rewards card

The Starbuck app server was down this morning. Fortunately my daily Starbucks has Suica payments and the staff kindly stamped customer receipts so everybody could get the Starbucks Card refill discount. I posted a silly throwaway tweet about it but received some thoughtful reader feedback that put things in perspective.

On the surface it’s true that Apple controls Wallet NFC card access with PassKit NCF Certificates. However, the Mobile Starbucks Card for Osaifu Keitai came out in March 2014, two years before FeliCa made it into iPhone 7. The mobile card was put out by Starbucks Japan which was not majority owned by Starbucks USA. USA corporate bought out the Japanese business partner at the end of 2014 and brought it under full control. Up until then Starbucks Japan stock was a popular item for the free coffee ticket goodies that came with it. The food was better too. Mobile Starbucks is a relic that will likely be ditched at some point, like the free coffee tickets and good food.

Starbucks USA has never shown any real interest in creating a NFC rewards card. They chose the barcode app route that supports direct bank card registration and recharge. Eventually they added in-app Apple Pay and Google Pay support. Silly market analysts announced that Starbucks app was ‘bigger than Apple Pay’, until they decided that Apple Pay was bigger than apps after all.

Starbucks has put real effort into protecting staff and customers during the COVID crisis. It’s an amazing effort that doesn’t get much attention. Despite this, physical Starbucks Cards are still mag strip cards handed over to staff and swiped at checkout. If Starbucks put out a digital wallet Starbucks Card, how should they do it?

The easiest way on iOS would be an Apple VAS NFC contactless pass. In Japan this is what PONTA and d POINT cards are. Apple VAS is NFC A but it works in combination with any Apple Pay payment protocol, EMV, FeliCa, PBOC, etc. Smart Tap is a similar rewards card NFC method for Google Pay.

This is what customers get when they pay with ‘Apple Pay’ on the Lawsons JP POS system: the reader polls the Wallet default payment card and rewards card, the payment transaction occurs and points are automatically added to the rewards card.

This flexible ‘2 in 1’ contactless payment + rewards package would be very nice to have with Starbucks Card. For app users it would eliminates the ‘open app, pull up barcode, make sure card has enough balance’ nonsense that happens far too often and is easily thwarted by a weak WiFi signal. It would also reduce handling physical cards at checkout.

Unfortunately this requires a POS system that supports NFC contactless, and Starbucks in Japan only supports popular contactless payment cards like Suica and PASMO when the store location is in a station retail area. Starbucks has demonstrated a lot of forward looking business sense in the COVID era so far. I hope they rethink their Japanese POS strategy and incorporate contactless payments and reward cards as standard at all store locations.

Transit Gate Evolution: why tap speed matters

As COVID restrictions are eased and the world slowly goes back to work, school and hopefully slightly more normal life, avoiding crowds will be key in keeping COVID from becoming resurgent in the months ahead.

For commuters in Japanese metro areas avoiding crowds is no easy matter. Fortunately the Japanese transit gate infrastructure is a great help. FeliCa based IC transit cards (Suica, PASMO, ICOCA, etc.) with fast transaction speeds combined with open gate flap design maximizes people flow: people walk through gates at normal pace. This is very important for Japanese stations that have to make do with large crowds in limited spaces and smaller gate areas.

It’s wrong however, to think that this only applies to Japan. The benefits of fast tap speed combined with intelligent transit gate design are relevant everywhere and very necessary in this day and age: fast gate tap speed is essential in keeping gate crowding at a minimum. It makes things safer not only for train operation, but also addresses crowd control health concerns in the COVID era.

A reader sent a link to a good discussion of NFC protocols and gate tap speeds that was apparently deleted when YouTube comments were turned off. I retyped the comment below from a screenshot with some light editing for clarity. If I find the author I’ll link to the original. The videos have already appeared in other posts but it’s good have them in one place. A previous installment already covered QR transit code gate issues, this post will focus on NFC.


While transit gates and NFC processors are found worldwide, what makes the Japanese gates different from the rest of the world is they don’t use global standard ISO 14443 (never mind Type A which uses Miller bit coding, the least efficient bit coding method) protocol which is common in many transit and bank cards issued worldwide.

The tap time with ISO 14443 Type A (née Philips) and B (née Motorola) varies greatly: from 200 to 500 milliseconds (ms) with 200 ms only achievable with Type B/Calypso. But it never reaches the short as 100 ms which is only achieved with Felica developed by Sony, also designated NFC-F and NFC Tag Type 3 by the NFC Forum and compatible with ISO 18092 which is commonly found in smartphones and NFC wearables since 2013. In this following video passengers maintain their walking pace but never overshoot and trigger a gate closure nor slow down not even a bit:

It may seem like a minor difference but due to the high volume of passengers per gate and to reduce gate maintenance requirements, tap times really matter.

Companies such as JR East have specified tap time of 200 ms but Suica is actually faster and this allows real life speed tolerances: some passengers tap faster than others due to walking pace, the higher speed tolerances are only possible with the 100 ms tap time of FeliCa. A comparison example of large crowds at gates in Malaysia and Japan below:

Open Loop NFC ticketing in its current form is based on EMVCo Contactless specifications adopted in contactless bank cards issued worldwide including China UnionPay QuickPass which is PBOC derived from the EMVCo Contactless spec. All of these use ISO 14443 Type A at 106 kbps only for 500 ms tap time, which is adopted in cities worldwide such as London, New York, Moscow and Rio de Janeiro where normal walking speed is never supported.

But as seen here, transit cards in Japan such as Suica, PASMO and ICOCA are supported for ultra hight speed and precise account verification and fare processing. Transit cards use offline Stored Fare (SF) which includes the amount of funds stored in the card’s IC smart chip data storage, NOT backend on a server like a bank card, and stored commuter passes. Here are walk flow comparisons for Tokyo and London, and MTA OMNY Open Loop performance:

Japanese IT journalist Junya Suzuki tests OMNY transit gate speed…
and reliability

One hopes the NFC Forum works to increase NFC speeds and global specifications to “improve the overall user experience for NFC users.” We shall see.

With the exception of any Apple Pay news from WWDC20, this will be my last big post for a while. Stay healthy, stay safe and have a great summer.

Out of Time

Is this the last time? Just a few thoughts as iOS 13.5 closes in on what hopefully will be a late May delivery, also rumored to be the launch iOS for Apple Pay Octopus. Recent beta test feedback says the minimal system for using Apple Pay Octopus was raised from iOS 13.2 to iOS 13.4.5 (rebranded by Apple to iOS 13.5). Also a new Schedule of Fees and Guidelines is due May 20. The Hong Kong Economic Times eZone site has taken this to mean that both iOS 13.5 and Apple Pay Octopus will launch on the May 20 Octopus Fees and Guideline update day.

The enthusiasm is understandable, but a similar situation happened in December with no launch. You might remember that Apple Pay Octopus was announced in July 2019, promised to launch “as soon as possible within the year,” in September, then delayed to “later in 2020” on December 19.

In short, hope for the best but don’t get your hopes up. We’ve been down this road before, but time is running out. If Apple Pay Octopus doesn’t launch in the iOS 13.5 timeframe, it’s not launching at all.

There aren’t any technical reasons for the delay; after all the Smart Octopus mobile service on Samsung Pay has been operating since December 2017 with Mobile SIM service before that. I believe it’s a result of the pressure politics facing Hong Kong, pressures both economic and governmental.

Octopus was the world’s first transit platform business that extended the transit smartcard to include payments and many other services but Octopus Cards Limited (OCL) has been slow extending the service to include mobile. Instead of putting early effort into digital wallet support for Apple Pay/Google Pay/Samsung Pay, OCL wasted time and resources developing the niche Mobile SIM product which really didn’t pan out.

This lag coupled with the rise of AliPay and WeChat Pay QR Code payment empires put enormous pressure on OCL to do something comprehensively mobile which it did with the O! ePay service in early 2019. But it’s not the only pressure: with so much traffic and business from the mainland, OCL owner MTR is looking to add QR Code Open Loop transit support (paywalled link) at some point. There is also the pressure of creating a Greater Bay Area transit card, and pressure from credit cards and banks. Every player wants a piece of the action.

Perhaps MTR gates will eventually look like the ones in Guangzhou with PBOC/FeliCa/QR Code readers supporting Octopus, China T-Union, AliPay/WeChat Pay, perhaps even EMV contactless bank cards:

At which point I say OCL doesn’t have a viable transit platform business anymore. Mainland China dumped the MIFARE based Beijing and Shanghai card architecture for their own slower PBOC 2.3/3.0 China T-Union standard, I don’t think it’s a stretch to see the same thing happening to Hong Kong Octopus at some point.

Supporters will undoubtably point out the technical merits of China using a single transit standard but that’s just a red herring. Smart devices and digital wallets handle all protocols and will continue to incorporate new technologies. The deciding factors will be good old money and politics: is it more profitable to keep Octopus in place or junk it in favor of QR and China T-Union, and who benefits from it all?

Octopus is living on borrowed time. If it doesn’t aggressively expand services on digital wallet platforms, it doesn’t have a future. Apple Pay Suica turned things around for Suica, let’s hope the Apple Pay Octopus launch can do the same for Octopus.


Apple Pay Suica had a huge impact on Mobile Suica use
Modern digital wallets like Apple Pay seamlessly support multiple payment technology protocols

UPDATE: on May 18 at 4:30 PM, an Octopus system glitch temporarily showed an option to add Apple Pay Octopus cards to Wallet to some iOS Octopus app users, but the feature not functional on the Apple Pay Wallet end. The glitch was quickly fixed but could be a sign that a service launch is imminent (edit: post glitch rumors say June 2).

The latest word from beta tester code leakers is that virtual Octopus creation and recharge in Apple Pay Wallet is limited to Hong Kong issue Mastercard, Union Pay and VISA. The May 20 Schedule of Fees and Guidelines update should show any changes for Smart Octopus (edit: “new restriction, 21 (cb), blocks the transfer of money from a Smart Octopus to O! ePay, probably to prevent the abuse of credit card cashbacks since service fees are waived for Apple Pay”).

PS: Barring the Apple Pay Octopus launch or official announcement, this is my last post on the subject.

The Transit Platform Argument

A reader asked some very good questions regarding the Suica Transit Platform model and Open Loop:

1) Thinking about this recently – is there a non-techie argument for introducing Suica-type cards in the current day in places with preexisting open-loop infrastructure, wide debit card adoption (even kids), and little overcrowding at ticket gates due to lower volumes?

2) As a tech & transit nerd, I obviously love them, but what could be a convincing, economically sound pitch to a transit operator for creating/adopting an integrated transit&e-money system, given the significant expense and questionable added value?

3) Answers to possible q’s about EMV contactless: 1. 定期券 (commuter passes) & discounts can be tied to card no.; 2. solution for visitors: in-app/paper/multi-trip tickets (like in SG). Obv., Suica has superior privacy & speed, but where speed is not an issue, what’s the killer argument?

I tweeted a response but Twitter is a terrible vehicle for long form discussion. I have many posts on the subject scattered over 2 years, it might be convenient to summarize a few things here.

Any argument for building a Transit Platform or going all in with Open Loop transit comes down to transit company priorities for safe operation, better customer service and long term business goals. A few crucial points to consider.

Whose customer?
A vital point that many people miss in the Open Loop debate is that transit users end up as the bank card customer, not the transit company customer. That might seem like an insignificant difference but ‘owning the customer’ is the whole game and key to growing any kind of business, in our era or any era. Which brings us to the next point because the best way to own the transit customer is…

Cards
Cards are the delivery vehicle for all kinds of service goodies from transit, to points, rewards and all kinds of services. The beauty of a non-bank transit pre-paid card is its flexibility, it can be a simple ticket that customers buy with cash from a station kiosk, it can be linked to an online account with credit cards, extended transit services and beyond. Cards are convenient but not transformative however, until they land on a smartphone…

Digital Wallets
The most powerful card incarnation is the digital wallet transit card with a flexible recharge backend, where any bank card can used, or even cash, and a flexible front-end that can be any flavor of NFC, UWB Touchless or even QR. I say it’s better for the transit operator to decide what payment technology works best for their needs and how to deliver better customer service with new payment technologies, not banks.

Value Capture
Value Capture applies to rail and transit operators with the rights to develop the land around their stations, I include station retail development and operations. Owning a transit + payment card like Suica or Octopus combined with retail opens up a whole new levels of value creation and capture.

It’s also important to remember a few other dynamics, (1) Transit is the golden uptake path for contactless payments, (2) Contactless payments are most successful when a transit payment platform, like Suica, is matched with a mobile wallet platform, like Apple Pay. The key is building better services tied to transit cards that benefit customers and businesses of the entire transit region.

Other Details
Regarding detail questions such as attaching commuter passes to EMV cards and special ticketing, I am no systems design expert but a few things come to mind. First of all we have not seen Open Loop commuter passes because the EMV spec doesn’t store anything locally and there are always security and performance issues to consider when everything is done in the cloud with soft-linked registration to system outside numbers.

The classic catch 22 here is that when the soft-linked number changes on one system, everything attached to it on the other system stops working. This is a constant weakness of the SmartEx and new JR East Shinkansen eTicket service. And what happens if the bank pulls a card mid-transit? These things happen. They are endless headaches when linking to any outside system, for this reason Open Loop sticks with the simple stuff while transit operators keep the more complex stuff in-house. In general the more complicated the fare configuration, the less likely it can be synced with an outside system or be hosted on Open Loop.

For low volume specialty ticketing QR Codes are the easiest step up from paper but they can be printed on ordinary paper for transit users without smartphones and needs to be there. This is why JR East is deploying QR code readers in some gates as they prepare to end mag strip ticketing.

NFC Contactless Passes might sound like a good idea but Apple Pay VAS and Google Pay Smart Tap were designed more for retail in mind, and the transit gate reader system would have to juggle a different protocol that isn’t EMV, FeliCa or MIFARE. It could be done, but judging from my experience of using Apple Pay VAS PONTA and dPOINT cards, QR Codes are faster and likely easier to implement.

In the long run there are no easy solutions. The risk of Open Loop is that it is sold as a general easy ‘fix all’ and mobile solution, which it’s not. This lulls transit operators into complacency instead of improving Closed Loop ticketing systems and extending them to the mobile digital wallets. The bigger and more complex the transit system, the less Open Loop can accomplish.

Relevant Core Posts
The Contactless Payment Turf Wars: Transit Platforms (an intro)
Transit Gate Evolution: Do QR Codes Really Suck for Transit? (a deeper dive into transit cards, gates and technology)
Value Capture and the Ecosystem of Transit Platforms (the bigger picture)
The Japanese Transit Platform Business Model (an outside perspective)