Final Piece of the Puzzle

TfL has been trying to get rid of Oyster card for years. Sydney has been following London’s lead and just finished their rollout of EMV transit service with a press statement announcing that the, “final piece of the puzzle” is in place, Sydney can now kiss Opal goodbye.

But wait, what about EMV Express Transit for Apple Pay users, there is nothing about that. There’s also fine print saying that commuters still need Opal for concession discounts. And there is a surprise: getting Opal on Apple Pay and Google Pay appears to be on the NSW ‘to do’ list. London steadfastly refuses to add Oyster to mobile devices. It would be surreal if the Opal system gets the whole enchilada on mobile while TfL does not.

Advertisements

Sydney Opal expands EMV coverage, next stop: Apple Pay Express Transit

Transport for NSW is expanding open loop EMV bank card support on the Opal transit fare system to include buses next month in addition to implementing Opal fare caps and discounts on bank cards. The agency is encouraging transit users to move away from faster Opal cards (the woman zipping through the transit gate in the video clip 7 second mark is using an Opal card btw) to slower EMV on bank cards and smartphones that reduce in-house card operation expenses.

It’s exactly what Transport for London (TfL) has been doing for years to ween users away from Oyster. Both card fare systems are operated by Cubic, currently none of the Cubic operated transit card systems are natively hosted on Apple Pay, Chicago Ventra will be the first.

With the expansion of EMV support, Sydney should soon be joining the “Where you can use Apple Pay for transit without Express Transit mode” Apple Pay support list, with EMV Express Transit support coming sometime later.

iOS 12.3 Update and Apple Pay Transit Improvements

The iOS 12.3 update (currently 12.3.1 16F203) has important improvements for iPhone users in Japan and Apple Pay Transit users everywhere:

Reiwa Era Calendar Support
Reiwa Era is also supported in watchOS 5.2.1 and macOS 10.14.5

Improved Apple Pay Suica and Express Transit Performance
iOS 12.3 is the best iOS version for Apple Pay Suica and Express Transit cards that Apple has produced, period. This is the single most important feature for users in Japan. Previous Suica iOS performance issues are all gone: Suica balance not updating, unresponsive Suica UI, unresponsive Suica Recharge, etc. Longtime iPhone Suica users will be pleasantly surprised, as will Apple Pay HOP users. If for no other reason, update to iOS 12.3 for fast trouble free Apple Pay Express Transit performance.

EMV Express Transit Support
This is a new Apple Pay Wallet option for payment cards (bank cards) to be set for Express Transit on open loop transit systems that support the feature, only on Portland TriMet for now. The new Apple Express Transit support page explains payment card support. Reader feedback suggests payment card support is the usual mixed bag of bank card services limited by region issuers and issues. EMV transit is always slower at the gate than native transit cards, both plastic and virtual, and only supports standard fares.

The low key nature of this service addition is rather unusual. Lots of under the hood changes have been made in iOS 12.3 Wallet in advance of the Apple Card launch: EMV Express Transit support, the removal of long term beta status for Beijing and Shanghai Transit Cards, the huge leap in Express Transit performance, and much more. We’ll hear all about these developments along with new NFC features to be announced for iOS 13 Apple Pay Wallet at WWDC19.

Apple Pay Transit Support Page

Wallet UI Changes
Suica UI Wallet changes have been ongoing since iOS 12.2 and are still hit and miss. The UI has improved some from iOS 12.2: transaction detail running order has changed slightly to avoid long strings that are easy clipped in English. Unfortunately, important Suica settings are still too easy to miss. Users still have to dig around to find them. I hope Apple continues to improve the Wallet card UI in iOS 13. Here’s a look:

Other Stuff

Apple TV: the iTunes Japan Store does not offer TV content so the revamped TV App is just for playing downloaded movies and nothing more, at least until Apple TV+ service launches in Japan. Amazon Prime and Netflix are way ahead of Apple here and remain the top video streaming providers. It will be interesting to see what Apple comes up with.


Update: the iOS 12.4 update provides the same Express Transit performance and fixes as iOS 12.3

iOS 12.3 brings EMV Express Transit support to Apple Pay

*(Note: iOS 12.3 EMV Express Transit is only for Portland TriMet, updates and details here)

The short story
Text strings added in pass.json files enable new card options in the new Apple Card/Wallet UI to be unveiled at WWDC19. New PassKit functions to add Wallet card options directly instead of using apps, are some of the new Apple Pay features that Apple will promote at WWDC. Some new options such as EMV Express Transit also work on iOS 12.3 Wallet which has lots of new changes under the hood for Express Transit and Apple Card.

The long story
iOS 12.3 is an interesting Apple Pay update, an important one for Apple Pay Suica users and we have the new Apple Card and Wallet UI. The Tap Down Under site recently discovered an EMV Express Transit option as well. Beau Giles who runs Tap Down Under reported:

New strings discovered within the pass.json files of Apple Pay card files make mention of new ‘Transit Network Identifiers’ options, as well as new passUpgrades/open loop options – which would provide an equivalent solution for Apple Pay customers…
You’d be able to set your preferred EMV card (again, Visa, Mastercard or American Express) to use for ‘Express Transit’ – no need to authenticate, just tap your iPhone or Watch at an Opal reader.

Tap Down Under iOS 12.3 to bring EMV Express Transit support to Apple Pay

Nice find Beau!

The “equivalent solution” he mentions is the recently added Samsung Pay Transit Card feature for Sydney area Opal transit fare system. The user can select a regular EMV Samsung Pay bank card to use for transit without having to unlock the device or authenticate the card at an Opal transit gate.

What it is and what it isn’t

Let’s get this out of the way: this is not Suica Express Transit. As the new iOS 12.3 Wallet option explanation makes clear, there are transit cards and there are payment cards. It does not work like Suica or other transit cards whose entire transaction architecture is built on instantaneous prepaid self contained secure express transit settlement without network connections.

Apple Pay Suica works the same everywhere, while Samsung Transit Card is a special mode only for transit through Opal gates with regular old EMV everywhere else. It’s a workaround hack for a EMV weakness on smartphones that mimics transit smartcard operation, though it is much slower at the gate than native FeliCa and MIFARE smartcards (watch the video), and because EMV is not a smartcard, does not support different kinds of fare structures (commuter, senior, student, point to point, etc1).

The hack itself is less software technology than special arrangements between card companies, Transport for NSW and Samsung, that waive CVS checks for Samsung Pay designated Transit Cards at Opal transit gates. In some ways it’s a merchant arrangement like VISA, Mastercard, American Express letting poor old J.C. Penney keep mag strip card settlements on life support in exchange for switching off contactless payments. And just like J.C. Penney switched off Apple Pay, card companies can switch off EMV transit card support at any time without telling users.

Samsung’s strategy for Samsung Pay in Asia Pacific is an interesting one, using transit to gain ground where Apple Pay has not: Hong Kong Smart Octopus, Taiwan EasyPass, and EMV Transit Card for Opal. The Apple Pay Transit story picked up momentum with the Apple Pay HOP and Ventra Express Transit announcements in March, and Tim Cook’s recent mention of Apple Pay coming to MTA OMNY in early summer.

The strings that Beau found appeared on indicated that backend system support was already in place with card providers and Apple Pay iCloud servers in early May. The strings list iOS 12.3 and watchOS 5.2.1 as the minimal system requirements.

iOS 12.3 is out and both Apple Pay HOP transit card and EMV Express Transit is live for all Apple Pay users, but can only be used on Portland TriMet. That must sting for Sydney Opal transit users who were expecting to use the EMV service there, but it’s not surprising as Sydney transit isn’t listed in the Apple Pay Transit support page. Nevertheless it is an oddly low key rollout for a new Apple Pay service, Apple Pay support pages are the only place it is mentioned. My take is that we will get the full story at WWDC19 with the iOS 13 announcement, the new Apple Pay Wallet Card UI and other new PassKit functions for developers.

Downsides

A low key approach makes sense for Apple because EMV Express Transit is a service that bank card companies can switch it off at will. They ultimately control it, Apple does not. The feature does not magically work on any ‘open’ transit system because many moving pieces have to be tied down and in place before it can work: agreements between card companies, Apple and transit agencies, along with transit fare backend system support that in western countries is usually outsourced to large companies like Cubic or Thales.

iPhone XR/XS Express Transit with power reserve works with EMV transit but is a potentially confusing user experience: users will want to use it like a plastic payment card and forget that it’s only for transit. And because it removes a layer of security for cards tied to bank accounts, with no safety net like a transit prepaid card, EMV Express Transit will be a security concern for some users.

Summary

I have doubts how Apple can successfully market EMV Express Transit when it completely depends on various outside companies in various regions to work successfully. If anything goes wrong at the transit gate, and it will, Apple catches the blame, never the bank card company. What’s the marketing angle when even Samsung is not heavily promoting EMV Transit Card and how far can the service be extended to other transit systems?

I see this as just another round in the contactless payment turf wars so that card companies can extend their power and reach into transit, and sabotage the ISO/IEC 10373-6 specification, and GSMA/GCF (Global Certification Forum) TS. 26, TS. 27 specifications created by the NFC Forum and transit partners specifically for NFC transit settlements.

Personally I agree with @elevtechlift that EMV Express Transit is a ‘nice, but’ option. It sounds nice, but distracts everybody from the real job of improving transit service with better gates and innovating transit payment technology. Better for Apple to focus on innovating things they control: move Apple Pay forward with features like Express Card with power reserve on Apple Watch, and get developers to add more options and all kinds of NFC enabled cards to iOS 13 Wallet. Hacks that hide EMV weak points and play market politics by sabotaging ISO/IEC 10373-6, hacks that card companies can switch off at any moment, are a waste of time and resources. Improving EMV on transit is a job for EMVCo, not Apple.

At any rate, WWDC19 is shaping up to be an interesting show for all things Apple Pay.

UPDATE
Instead of writing a new post I rewrote this one a few times. EMV Express Transit is just one more Wallet card option. The heavy reworking of Wallet to make new options possible along with new Apple Pay features and Wallet UI for iOS 13 are the real story.

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.