One week in

Apple Pay Octopus has been in service for a week so I asked for some Apple Watch field impressions on Twitter. Overall, users seem pretty impressed:

I am using it daily and it is really out of this world. I use it on my watch and now I can literally go out for a jog or hike with just wearing the watch.

It works perfectly on my AW so far. But from I’ve heard on LIHKG, there some users facing the difficulties on the express mode. Mostly are requiring passcode when going through the gate.

It’s mostly positive. However there’re times where the reader isn’t sensitive enough and need to linger the watch longer. Also going to work first thing in the morning but forgetting to enter pass code in the apple watch is frustrating since it doesn’t inform you need to unlock.

Been using AW Octopus everyday. Use cases include MTR, tram, ferry, 7-11, eating meals at all sorts of restaurants like Tai Hing, Ki’s Roasted Goose, Pret etc. Octopus on Apple Pay drastically improved HK’s cashless experience. It’s definitely okay for me to go out with only AW. Not even with my phone. Feels really good. The speed of payment is also very remarkable. However, the reader in Tai Hing seems to need an extra second to detect my AW, not sure why. Plus AW users might want to wear it on the right wrist, which makes passing MTR gates easier.

Using it everywhere. All good and same speed as physical card, expect bus and some small shops were like a heartbeat slower. Also twice there was no “ping” confirmation sound. Tried AW on my right for mtr, its only good for that, imo left is more comfy for other occasions…

… after so many years of waiting, finally an apple pay suica experience in HK.

You can follow the Twitter thread here. I have noticed a few small gate lag hiccups on my Apple Watch Suica since upgrading to watchOS 6.2.5/6.2.6. The lag is especially noticeable if a workout is in progress. The passcode request at the gate could indicate that Express Transit is deactivated somewhere along the way, either by a loose band activating the wrist detector into thinking Apple Watch was taken off the wrist, or it could be something else.

My Apple Watch insisted that I create a 6 digit passcode recently and disabled the 4 digit passcode option for a few days. Who knows, the passcode requests that some HK users are seeing could be a watchOS bug or an Octopus reader side issue that can be addressed with a firmware update.

Apple Watch is still prone to OS version performance issues that disappeared from iPhone with A12 Bionic and Express Transit with power reserve. Apple Pay transactions on A12 Bionic and later bypass most of the iOS layer and are directly handled in the A12/A13 Bionic Secure Enclave and Secure Element. It makes a big performance difference for Suica and Octopus.

Hopefully the next watchOS update will improve Suica and Octopus performance. Better yet let’s hope that Apple Watch 6 introduces a Apple S6 chip with Express Transit with power reserve. That would solve the watchOS version NFC performance issues for good, just like it did for iPhone.

A12/A13 Bionic makes a big difference in NFC performance,
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Next Up: Google Pay Octopus or Garmin Pay Octopus?

Apple Pay Octopus launch day was a big success, so successful that Octopus apologized for their servers buckling under the demand. What’s next for Octopus, Google Pay? There are some possibilities but when it comes to Android there is the matter of the Secure Element (SE), where it resides and what transaction protocols are supported.

From the NFC hardware angle everything has been ready to go on all smartphone hardware for years, NFC A-B-F is required for NFC certification. The problem has been on the SE side, the black box where all the transaction magic happens. From Global Platform the SE certification organization:

A SE is a tamper-resistant platform (typically a one chip secure microcontroller) capable of securely hosting applications and their confidential and cryptographic data (for example cryptographic keys) in accordance with the rules and security requirements set by well-identified trusted authorities.

There are different form factors of SE: embedded and integrated SEs, SIM/UICC, smart microSD as well as smart cards. SEs exist in different form factors to address the requirements of different business implementations and market needs.

Global Platform Introduction to Secure Elements

SE Wars and Google HCE ‘SE Pie in the Sky’
In the pre-Apple Pay mobile carrier hardware era, carriers used SE SIM or embedded Secure Elements (eSE) + SIM combos that chained customers to service contracts for the privilege of using mobile payments. This is the classic Osaifu-Keitai textbook maneuver pioneered by NTT Docomo: leave those pesky SIM Free whiners in the cold world of plastic cards and hard cash, or crippled digital wallets until they give up and buy an overpriced carrier SIM. This brain dead approach is one reason why Mobile FeliCa ended up being ridiculed as ‘galapagos technology’ even though everybody copied it with inferior crappy me-too products.

This carrier SE hostage situation, i.e. the Mobile Wallet SE Wars, led Apple and Google to follow different strategies to address the problem.

The Apple Pay Way
Apple’s answer of course was Apple Pay. A unique in house strategy of putting a Global Platform certified Secure Element in their A Series/S Series chips then building it out from there. Most eSE go on the NFC controller, but doing it the Apple in-house way has advantages over a NFC chip vendor bundle: control of the eSE applets and ability to update them and the Apple eSE for new protocols in iOS updates. We saw this in action with the addition of FeliCa in 2016, PBOC in 2017 and MIFARE in 2018. We may even see the addition of Ultra Wideband (UWB) Touchless in iOS 14.

What iOS 14 could look like with QR and UWB support

The Google Pay Way
Google’s answer to the carrier owned SE problem was the more convoluted evolution from Google Wallet (2011) to Android Pay (2015) and finally Google Pay (2018). Google first salvo was Host Card Emulation (HCE): “NFC card emulation without a secure element” hosted on Google’s cloud. Later on Google attempted to do the same for FeliCa with HCE-F.

But then something happened that put an end to all this: Google decided to get into the hardware business. And now we have Google Pay and Google Pixel with it’s own embedded Secure Element (eSE). With Pixel, Google decided they didn’t want to be the Secure Element cloud provider for every Android OEM out there especially when the Chinese OEMS are all rolling their own eSE based digital wallet services anyway, completely ignoring HCE. Sure, HCE/HCE-F is still there in the Android developer documentation but it’s a dying vestigial relic of the SE wars.

But Google Pixel depends on vendor bundled eSE + NFC controllers and this makes global NFC support more complicated because Google doesn’t ‘own’ the eSE, at least not in the Apple sense of making their own all in one design. This is one reason why Pixel 3/4 only support FeliCa in Japanese models even though all worldwide models have the same NFC A-B-F hardware.

The end result of all this is the Android market is a very fragmented landscape, there are no global NFC Android smartphones: a device that supports EMV, FeliCa, MIFARE, PBOC out of the box in one globally available package.

Google Pay Octopus and the Android Global NFC Installed Base
Back to our original question, can Google Pay Octopus happen? We already have Google Pay Suica right? Let’s assume that Octopus Cards Limited (OCL) has everything in place for it to happen. Here we run into the problem just described: there are’t any global NFC Android smartphones available globally. Samsung sells them in Japan and Hong Kong, Google only sells them in Japan along with Huawei, Oppo, Sharp, etc.

For OCL this means the potential Google Pay installed base that can support Hong Kong Octopus consists of Samsung Galaxy smartphones that are already using Smart Octopus in Samsung Pay; not exactly a mouth watering business opportunity worth the support expense. If Google Pixel 5 goes deep instead of cheap Hong Kong would have a potential Octopus non-Samsung Android device, but that’s only one new device not an installed base. I only see Google Pay Octopus happening if Google foots the entire support expense.

There is a way forward however for OCL: Garmin Pay Suica. The same Garmin APAC models that support Suica can also support Octopus, the recharge backend is entirely Google Pay. Garmin smartwatches work with any Android 5 and higher smartphone, a much larger installed base that bypasses the fragmented Android landscape. Garmin Pay Octopus would offer Android users a way in, who want to use Octopus on a mobile device but who don’t want to use Samsung or Apple devices.

The conclusion: forget Google Pay Octopus for the time being. Hong Kong is a golden opportunity for Gamin Pay Octopus….if Garmin can get Garmin Pay clearance from Hong Kong authorities and banks, and cut a deal with OCL. It’s certainly in Octopus’ best interest for OCL to help turn the negotiation wheels. It’s also in Google’s interest as Google Pay would supply the recharge backend as it does for Garmin Suica. Big hurdles all, but I hope it happens.

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.

Hands Free Suica

After iOS 13.2 hit the final beta I migrated my Suica from iPhone to Apple Watch to give watchOS 6 Apple Pay Suica a proper shake down. Even after only a few days I can already say that Apple Pay Suica performance on watchOS 6 is far better than any version of watchOS 5. Not only does it feel more responsive, Suica Express Transit seems more sensitive further away from the gate reader hit area, crazy as that sounds.

Going back to Apple Pay Suica on Apple Watch also brings back a great feature I missed on iPhone: hands free Suica. Incredible as it sounds, Apple Watch is still the only wearable device for Suica, the only choice for hands free Suica. Once you get used to hands free Suica Express Transit with Suica Auto Recharge, it spoils you for any other kind of cashless payment. Hands free shopping and transit is a breeze that makes everything else feel like a huge step backwards.

Apple should be marketing the hell out of it in Japan but don’t. What a waste of a huge and exclusive marketing opportunity. When Apple Pay Octopus finally, finally, finally launches, I expect Hong Kong Apple Watch users will really appreciate hands free Octopus.

Suica and Octopus Compared

Hong Kong’s Octopus is coming to Apple Pay soon, it shares the same FeliCa technology base with Suica but there are some interesting differences.

Branding
The mobile version of Suica is Mobile Suica across 3 different payment platforms: Osaifu Keitai, Apple Pay and Google Pay. The current mobile version of Octopus is called Smart Octopus in Samsung Pay but it’s not clear yet if the Smart Octopus branding will stay with Samsung Pay or be set free.

Deposits
Mobile Suica does not have deposits. Plastic Suica cards have a ¥500 deposit but is automatically returned to the stored value (SV) balance when transferred to Apple Pay or Google Pay. Octopus has a HK$50 deposit on both plastic and mobile versions. An interesting difference is that the Octopus deposit will be used temporarily if the SV balance is insufficient to pay transit fare at the exit gate.

Stored Value Balance Limits
Suica has a SV balance limit of ¥20,000. Octopus Cards Limited (OCL) just raised the Octopus SV balance limit for cards issued after October 1, 2019 from HK$1,000 to HK$3,000. In JPY this is roughly double the current Suica limit, about ¥40,000 which puts it inline with other Japanese e-money card balance limits like WAON. Suica balance limits will likely be doubled when the next generation ‘Super Suica’ card architecture arrives in April 2021.

Number of Cards
Smart Octopus is limited to a single card per Samsung Pay user account. Mobile Suica/Apple Pay Suica can have the multiple Suica cards up to the device Wallet limit.

Recharge Fees
One of the many innovations that Apple Pay Suica brought was elimination of the annual Mobile Suica ¥1,050 ‘membership fee’, Google Pay got the same deal and Mobile Suica membership fees are disappearing altogether next year. Mobile Suica does not charge any upfront fee for recharges, but Smart Octopus does: 2.5% a pop for the luxury of recharging in Samsung Pay with Visa and Mastercard card brands although Union Pay cards are apparently free.

The differences in this last section are interesting. JR East charges nothing for recharging Mobile Suica, while OCL does for Smart Octopus. Mobile Suica has been around far longer and JR East has many more online services, such as EkiNet, to offset cloud expenses. Smart Octopus only started in December 2017 and the footprint of Samsung Pay devices compared with everything else is probably small and doesn’t drive enough transaction volume to offset Smart Octopus cloud startup costs. Apple Pay will growth the transaction size of Smart Octopus considerably, hopefully enough for OCL to reduce or eliminate the Add Value Service Fee at some point.

I look forward to digging through service details when Octopus finally launches on Apple Pay.