The mobile wallet chokepoint

I ran across an untidy but interesting Twitter thread that mentioned Apple Pay Suica in the larger context of evolving NFC smartphone services.

Suica (Metro card / digital money in Japan) now lets you transfer the card to Apple Pay. Some thoughts about the future of FOBs, cards, and wallets…You use NFC to transfer your Suica by tapping the card with your iPhone, the same way you’d tap to use Apple Pay.

Devices support some kinds of NFC but not others. Until now, you couldn’t tap to use credit cards — it was blocked by the device.

But this is changing! Apple will support card payments now, in an app that IT will make & provide to vendors. This lets Apple compete in new hardware markets: first phones, now point-of-sale, payments, inventory mgmt, etc.

Physical cards are on the way out. But not everyone is on-board. FOBs, subway cards, ID cards, drivers licenses, and building security cards have been slow adopters of mobile. I’d love to copy my building FOB to my phone 😁 There’s nothing stopping me other than that I can’t.

Apple is moving into those markets….Airports, Driver licenses (in 30 / 50 US states). How far this tech goes & the speed of adoption depends on iOS, Android, and the people at ID / security / FOB / card companies adopting the change. They may need help! And there may be startup potential in that space… if anybody is interested!

Twitter thread

The intention was discussing the implications of Apple’s recent Tap to Pay on iPhone announcement, but it stumbled over a rarely discussed but vital point about the extremely slow migration of various physical card services to mobile devices. Why can’t we just load these in Wallet…all the technology is in place right?

The mobile chokepoint is not technology but the backend systems to seamlessly deliver, verify and securely manage individual ‘card’ services (payment cards, transit cards, ID cards, keys, etc.) in digital wallets. Those systems are not up to the job. You can be sure that Apple wants to get iOS 15 ID in Wallet driver licenses out quickly as possible but corralling all those state run systems into a coherent user friendly whole that holds up to the high expectations and massive base of iPhone users eagerly waiting to use it, is a very big challenge. It’s a similar challenge behind every kind of digital wallet service.

This backend weakness is easy to see with transit cards, there are relatively few on mobile with most of the cards exclusive or limited to certain digital wallets like Apple Pay and Samsung Pay. There are special challenges too as a mobile transit card service hosts all the functions of ye olde station kiosk card machine (card issue, adding money, pass renewal, etc.) and more, on the cloud, pushing it out to apps and connecting to digital wallet platforms like Apple Pay.

Despite the challenges, the rewards for going mobile are clear. If there is one lesson Apple Pay proved in Japan with Suica it is that building a mobile foundation early on is key to future success. Mobile laggards like Hong Kong Octopus have paid a heavy price. Unfortunately for regions where transit is operated as a public service instead of a sustainable business, spending money building transit card mobile service systems is often considered an extravagance.

This is why open loop is popular as means to get out of the plastic smartcard issue business and get mobile transit service for free using EMV contactless VISA-mastercard-AMEX payment networks. Like many things in life, free is never free.

Banks have had an easier path to mobile thanks to the strength of EMV payment networks, but only on the payment transaction end. Mobile card issue is another matter up to individual banks. Look at the Apple Pay participating bank list for the United States. The long list didn’t happen overnight. It has taken years for mobile backend systems to be put in place to make this happen.

It’s all about the backend
A sadly overlooked aspect of the Japanese market is the crazy collection of contactless payment options: Suica, iD, QUICPay, WAON, nanaco, Edy, PayPay, LinePay, dBarai, VISA-mastercard-AMEX Touch payments and more. The reason for this is Japan’s early lead in creating the first mobile payment platform, Osaifu Keitai, in 2004.

Not everybody used Osaifu Keitai early on, but it grew the mobile payments foundation so the market was ready for new mobile payment platforms when Apple Pay launched in 2016. More importantly, the early lead also meant that bank card issuers, payment networks and transit companies had backend systems firmly in place servicing a large installed base of various digital wallet capable handsets (Symbian) and smartphones (Android) that quickly extended to Apple Pay and Google Pay.

The backend flexibility is easy to see on the Mobile Suica page that shows all the different Mobile Suica flavors: Android (Osaifu Keitai), Apple Pay, Google Pay, Rakuten Pay. Mobile Suica is also on Garmin Pay, Fitbit Pay and is coming to Wear OS.

Mobile issue and verification
Adding a ‘card’ to a mobile wallet is sometimes called ‘onboarding’, but this is really a banking term: “digital onboarding is an online process to bring in new customers,” as in setting up a payment account and getting an instant issue debit or prepaid card to use in Wallet with an app, or using the app for QR Code payments (like PayPay or Toyota Wallet).

Success or failure for any mobile wallet card service depends on reliability, simplicity and the speed for adding cards and using them. From VISA:

When it comes to digital onboarding, the average amount of time after which customers abandon their application is 14 minutes and 20 seconds. Any longer than this, and 55 percent of customers leave the process.

How to boost your customer’s onboarding experience

There is also context. Futzing for 14 minutes might apply for people setting up a bank app, but a transit app user trying to get through a ticket gate at rush hour is a completely different matter. Judging from the large number of negative Suica App user reviews and complaints on twitter, Japanese transit users probably give it 2 minutes before giving up and calling it all crap. Speed is the key.

How long does it take?
The speed of adding a card to Wallet depends on a number of factors, what kind of wallet service are we dealing with (car key, hotel key, home key, office key, payment, transit, ID), does the user need an account first, can a physical card be transferred, what kind of user verification is required.

User verification with digital credentials is still in its infancy which is why driver’s licenses and state IDs in Apple Wallet is fascinating and important. How does one authenticate their own ID card? Apple explains the process but doesn’t say how long verification takes or reveal backend details:

Similar to how customers add new credit cards and transit passes to Wallet today, they can simply tap the + button at the top of the screen in Wallet on their iPhone to begin adding their license or ID… The customer will then be asked to use their iPhone to scan their physical driver’s license or state ID card and take a selfie, which will be securely provided to the issuing state for verification. As an additional security step, users will also be prompted to complete a series of facial and head movements during the setup process. Once verified by the issuing state, the customer’s ID or driver’s license will be added to Wallet.

The verification process is similar to the recent addition of Mobile Suica student commuter pass purchases where students take a picture of their student ID and upload it. Online verification takes ‘up to 2 business days’ because Mobile Suica has to manually verify the ID information with the school. Hopefully the Face ID setup-like ‘additional security step’ is the magic iPhone ingredient for instant verification by the state issuer. However notice that Apple doesn’t spell out where the face and head movements are stored. Hopefully it will stay in the Secure Enclave and never be stored on a server. We shall see when ID in Wallet launches with the iOS 15.4 update.

As you can see from the table below, the journey from backend system to Wallet varies widely by the type of service. The easier additions are the ones done in Wallet app: card scans for payment cards and ID or simply tapping to add transit cards.

Physical card scans are the primary way to add payment cards but this is changing, apps will replace plastic card scans over time. In Japan there are a growing number of ‘instant issue’ credit/debit digital cards from top tier banks that can only be added to Wallet with an app and account. Digital onboarding is the direction banks are going, where everybody has to go to an app first to add a card to Wallet. This leaves transit cards as the only card that can be added without an app or account.

Who owns the thing in Wallet?
Physical keys, fobs and plastic cards may seem inconvenient at times but they are personal property we carry on our person. One downside of digital wallets is that convenience carries a risk that the thing in Wallet isn’t necessarily ours. What is added with a simple tap can also be taken away by a technical glitch, or in a worst case scenario, without our consent. As backend systems improve and integrate, more services will migrate to our digital wallets. Without doubt much of this will be convenient but read the fine print and always keep your eyes open to the tradeoffs and risks. In other words don’t let your digital wallet be a potential chokepoint of your life.

The digital wallet endgame should never be like this

The truth is in the tap

The Nankai Visa Touch test launch launched endless Twitter discussions about slow EMV contactless tap speeds and performance issues compared with Suica and other Transit IC cards. EMV contactless transit in Japan is novel so this is expected. But suddenly people are also referencing Junya Suzuki’s 2016 pre-Apple Pay Suica launch era ‘Is Suica Over-spec?’ piece. This has long been a favorite theme in Japanese tech media: Suica is more than we need, EMV contactless is ‘good enough’ so let’s do everything with one card, life is more convenient that way. Be careful what you wish for.

The 2016 launch of Apple Pay Suica was a great success of course, that changed the Japanese payments market and opened the door for the proliferation of QR payment services you see everywhere now. The one card must do it all concept is old hat but Tokyo Olympics sponsors Visa Japan and SMBC are trying very hard to convince Japan that Visa Touch cards are the transit future.

My position was and remains that one size never fits all. It doesn’t have to be a EMV or nothing choice portrayed in tech media, nor should it. Different technologies complement each other for a better user experience. Apple Pay Suica/Mobile Suica combines the convenience of EMV cards on the recharge backend with the speed and reliability of FeliCa based Suica cards on the NFC front-end, for a best of breed closed loop transit user experience. One interesting thing I pointed out in my retweet of Suzuki san’s Nakai open loop launch piece was that QR Nankai Digital Ticket gate performance in the his video is faster than Visa Touch because it’s closed loop.

The comment touched off an odd but interesting set of tweets from Suzuki san and his followers about gate design, reader performance and walk flow that boils down to this: if the reader transaction speed is slow, increase the distance between the reader and gate flap to keep people walking instead of stopping.

His follow up piece deconstructs ‘FeliCa is faster’ as half misunderstanding transit gate antenna design and RF communication distance because EMVCo reader certification dictates a smaller RF distance, the result of using the EMV contactless supermarket checkout spec on transit gates it was never intended for. All I can say is the truth is in the tap. In theory all NFC flavors and protocols offer the same performance but in real transit use they don’t. Better to get next generation Ultra Wideband Touchless gates in service and dispense with the ‘redesign transit gates for slow EMV contactless/QR transit’ debate nonsense. Design things for the future not the past.

The current Transit IC local stored fare model does have weak points as suggested in FeliCa Dude’s tweet: discount ticketing, rebates and refunds. If you purchase a Mobile Suica commuter pass, you can easily get a refund back to the bank payment card used to purchase the commuter pass. This is because Suica extras like commuter passes and Green Seat upgrades are supplemental attached services that don’t use the SF purse.

Rebates and refunds via the SF (stored fare) purse are a bottleneck. Suica App has a mechanism for dealing with some of this called ‘Suica Pocket’ for JRE POINT exchanges and refunds back to the SF purse. Mobile Suica card refunds are another matter and can only be refunded to a Japanese bank account. Octopus Cards Ltd. (OCL) has a special Octopus App for Tourists that refunds a card balance back to original credit card used for the initial digital card issue. OCL also charges tourist users an arm and a leg for Octopus Wallet recharge and refunding. It would be nice if JR East could do the same…without the outrageous OCL surcharges.

For inbound discount ticketing JR East has adopted a similar approach they use for Eki-Net Shinkansen eTickets: discount plans attached to plastic Suica cards. This is the whole purpose of the Welcome Suica + reference paper proving validity for inbound discount plan purchases at station kiosks. It would be great if JR East figures out a way to do the same thing on Mobile Suica.

Domestic discount ticketing and passes are still the glorious, mostly paper ticket maze that is Eki-Net and similar services. Eki-Net itself is still in a slow motion transition towards a Transit IC/Mobile Suica orbit with some things transitioning to QR paper ticketing that replaces expensive mag-strip paper. Eki-Net App is still limited to Shinkansen eTickets and ticketless express train seat purchases. The Eki-Net web site is where you access all the bells and whistles although the experience feels like navigating the Transit IC interoperability chart. Discounts are starting to change somewhat with Suica 2 in 1, totra is the first Suica for disabled users but exclusive to the totra fare region. Hopefully Extended Overlap will see wider use not only for Suica but across all Transit IC cards for more special, and interoperable, discount services.

What’s next for PiTaPa?

Now that Nankai Railway Visa Touch and QR Code transit tests have started (April 2), it’s helpful to take a look at Surutto Kansai, the association of Kansai area non-JR transit companies that issue and operate PiTaPa. I covered PiTaPa problems previously but in addition to the Nakai Visa Touch and QR tests, there have been a few other developments among PiTaPa group members:

  • Nankai Visa Touch and QR Code Transit: the Nakai, VISA Japan, SMBC and QUADRAC Co., Ltd venture started in April for Visa Touch and Nankai Digital Touch QR, QR tickets are purchased and used via the Nakai App and can only be purchased with Visa brand credit cards.
  • Osaka Metro ICOCA: Osaka Metro started selling ICOCA commuter passes and regular cards from November available at all station kiosks. They are the last major PiTaPa member to add ICOCA commuter passes, other major members (Keihan, Hankyu, Hanshin, etc.) added them years ago and have finally retired mag-strip commuter passes. One clarification regarding TOICA: it’s sold at Shin-Osaka station by JR West not Osaka Metro. An interesting aside is that when you use TOICA on Osaka Metro the system recognizes it as ICOCA. In a separate development Osaka Metro wants to implement face recognition transit gates for the 2025 Osaka Expo that dump cards altogether.
  • Keihan ICOCA: Started offering ICOCA Points at the end of 2020 (discount fares for repeat transits in the same month).

In the Transit IC card 2020 ranking by issue/holder numbers PiTaPa was 6th at 3.3 million cards with the slowest growth. It will likely drop to 7th place in 2021.

Suica, PASMO and ICOCA represent 90% of transit IC card issue

Nankai Open Loop Tests
As expected the Visa Touch and QR gates are limited to certain stations and exits. From the on-site media presentation pictures it’s clear that Nanaki is doing open loop transit gates the right way by keeping EMV/ QR only gates separate and off to the side wherever possible (bolt-on jobs are used in narrow areas). If there is one thing we have seen these past few years it’s that all-in-one gates with multi-protocol readers are slow and error prone. They just doesn’t work well for transit.

Target users are inbound travelers from Kansai International airport and plastic contactless Visa brand cards as it does not support Apple Pay Express Transit or similar services on Google Pay, Samsung Pay, etc. The inbound angle is a tough sell in the travel restricted COVID era now that Kansai area hotels are closing and laying off staff. A few interesting inbound points: Mainland China visitors use Union Pay not Visa, QR tickets have to be bought with a Visa card, and Nankai Digital Touch QR tickets are faster at the gate than Visa Touch because they are closed loop.

Fellow transit otaku in Osaka run loops around the Visa Touch open loop gate at Nankai Namba station
Nankai Digital Touch QR tickets are faster at the gate than Visa Touch because they are closed loop

Taken altogether it’s mayhem. As FeliCa Dude says in his tweet, Surutto Kansai is done for. The interesting thing is that PiTaPa is a very similar to the digital Opal Mastercard debit with specific merchants allowed scheme: a closed loop credit card account instead of the closed loop digital Opal Mastercard debit account. Where PiTaPa failed was that Surutto never provided a plain old prepaid transit card option so that users could buy a commuter or regular one for cash and recharge it at any station kiosk. Opal of course still sells the good old Opal MIFARE prepaid card and they would be smart to keep it around. There will always be a need for cash based transit cards.

Why can’t Surutto Kansai to come up with this simple solution for PiTaPa? In a word, SMBC bank group. They are behind the PiTaPa card creation, and now they are pushing Visa Touch transit. It’s an unfortunate and awkward situation: transit companies forced to issue and use an ‘outside’ transit card like ICOCA instead of their ‘in-house’ PiTaPa brand. I suspect the impasse will continue until SMBC gives in and let Surutto create a prepaid card and own the float, or the major Surutto Kansai members stage a real revolt. Until something gives Mobile PiTaPa will be impossible. The pressure to do something will only grow as the Mobile ICOCA 2023 launch approaches.

The Suica 2 in 1 Region Affiliate Transit Card

The Suica 2 in 1 Region Affiliate transit card ‘totra’ launches today, the first card based on the September 2018 joint JR East/Sony Imaging Products & Solutions/JR East Mechatronics announcement. The joint roles are defined as: (1) JR East for promotion, coordinating and supporting the implementation process with local transit companies, (2) Sony for developing new FeliCa additions necessary for 2 in 1 and supporting ICT (Information Communication Technology) transit card developments, (3) JREM for issue, testing and qualification of 2 in 1 cards.

Based on information released by the totra partners, the end product closely aligns with the 2018 announcement:

  • 2 in 1 Commuter Passes: a JR East Suica commuter pass and a region affiliate commuter pass
  • 2 in 1 Points: JRE POINT and region affiliate transit points
  • Other region affiliate services: a totra card for disabled users with special discount fares/subsidies, welfare points (starting April 2021) for elder and disabled transit users

…all in one Suica card. This is more important that it seems and solves some long standing problems. Let’s look at the situation with the wonderfully useful Transit IC card chart created by Wiki user ButuCC.

Transit IC interoperability chart

The core square contains the 10 mutual use ‘Transit IC’ cards with many IC arrows pointing to region transit cards outside of the square. This means the core Transit IC cards work on those local transit systems but only one way. There are no IC arrows pointing in towards the core region because there are no regional transit cards mutually compatible with all core Transit IC cards…until now: totra Suica is the first region transit card that works nationwide.

2 in 1 Suica combines the ‘outside the square’ region card with the core Suica card. totra is a Suica card, mutually compatible with all Transit IC, but also a local transit card with new services built on Suica infrastructure. One example: the first transit IC card for disabled users that automatically gives them the local region discount fare and subsidy, but only for the totra fare region, not outside it. Disabled fares are highly regional with local prefecture and city governments providing transit services and fare discounts. It’s a trade off but it does provide a transit IC card option for disabled users instead of paper tickets with a ID card for the first time.

Super Suica or something else?
So is this Super Suica or not? Simply put, Suica 2 in 1 is the core technology for the JR East MaaS strategy, it offers the benefits of Suica infrastructure to link local transit agencies within the JR East area who don’t have the resources to launch or maintain their own transit IC card system. Plugging orphaned regions into the wider transit network and leveraging the established infrastructure in new ways is the sensible thing to do.

The totra Suica logo explains some of what is going on inside the card. There is a ‘+’ mark which indicates ‘Suica plus affiliate’ that combines Suica with an attached financial service like credit card recharge. This is the Suica plus mark you see on all Mobile Suica cards including Mizuho Suica (iOS) and Rakuten Suica (Android).

There is also a ‘••’ mark which indicates FeliCa Pocket services, FeliCa applets on a physical card or Osaifu Keitai card that provide different services in a single card (transit, points, ID, etc.). You can see the ‘••’ Suica logo on Rinkai Suica and Monorail Suica and both marks on the Suica + VIEW combo cards. The Rinkai Suica design also looks like totra with a similar blue trapezoid.

FeliCa Dude points out in an interesting Twitter thread with treastrain that 2 in 1 is a new kind of Suica plus affiliate card issued outside of JR East with no financial service attached to it. As treastrain notes, it’s weird that Suica plus is being used for a rechargeable Â¥500 deposit Suica with no attached credit card, but we are in uncharted territory with new features to come.

Suica 2 in 1 is the first Suica based on the new FeliCa Standard SD2 card. We can’t see exactly how FeliCa SD2 is used to deliver 2 in 1 functionality but FeliCa Dude gives us an excellent rundown of 2 important additions: Extended Overlap Service (points and passes) and Value Limited Purse Service (purse). These are tools for JR East and the other Transit IC operators to integrate services in new ways, implement their own version of 2 in 1, raise the balance limit and more. The new FeliCa SD2 features have big implications. Like all things the Super part of Super Suica depends on what JR East and the other CJRC members (Congress of Japanese Railway Cybernetics) mutually accomplish using these new FeliCa and Suica parts. The more region transit cards that migrate and merge inside the Transit IC square while addressing regional needs, the better.

totra Suica 2 in 1 has 2 issue numbers for JR East and the region transit card operator. JR East owns the SF (stored fare) purse, which means they own the float.
Suica 2 in 1 extensively uses the new FeliCa Standard SD2 Extended Overlap Service

What about mobile?
It’s important to remember that 2 in 1 Suica extends Transit IC coverage, including Mobile Suica and Mobile PASMO, into new transit areas. 2 in 1 Suica is limited to plastic issue at this point so those users do not have a mobile option. 2 in 1 Mobile Suica service depends on resolving 4 things:

  • Will Mobile FeliCa be upgraded with the new FeliCa SD2 functions?
  • Will Mobile FeliCa be updated on Osaifu Keitai and Apple devices?
  • Will JR East manage Mobile Suica card issue for outside transit companies
  • Is there an (local 2 in 1 Suica transit card) app for that?

Mobile Suica already hosts Suica ‘+’ cards (Mizuho Suica and Rakuten Suica) and FeliCa Pocket services are designed for physical cards and mobile. 2 in 1 is a new card so the first hurdle is upgrading Mobile FeliCa to support SD2 card features and pushing that update to devices.

FeliCa Dude posted some tweets that suggest Mobile FeliCa 4.x on Android devices can be updated but industry practice on the Android side so far has been doing a pre-install and leaving it at that. If users want newer Mobile FeliCa features, get a new device. Apple can certainly update Mobile FeliCa on their custom embedded secure element, but will they?If nothing else I think the recent addition of Garmin Pay Suica and Fitbit Pay Suica indicates that FeliCa Networks is getting better at pushing new services from Mobile FeliCa Cloud.

The app question is another hurdle and a bit complicated. The whole 2 in 1 concept means 2 different managed services are bundled in a single card. Who manages what? While it makes sense to add 2 in 1 Suica non-JR East local commuter routes for purchase and renewal in Mobile Suica and Suica App, local area transit point account management needs to be handled in a separate app. Does each 2 in 1 Suica locale handle that? That approach makes sense but JR East could certainly help with coordinating support and leveraging common resources and infrastructure to eliminate redundancy.

Summary
2021 is only the start line for 2 in 1 Suica with totra and Iwate Green Card. 2022 will see 6 more 2 in1 Suica cards, probably more, it will be the real coming out year. By then Mobile ICOCA will be on the horizon, I think we’ll know if 2 in 1 is the start of Super Suica…or not. If the other Transit IC partners simply copy what JR East is doing with 2 in 1 region cards, that will be super enough for the people who live, work and go to school in those regions.

Abandoned Tokaido Line

Suit Train posted a wonderful video with his patented narration style. For a college guy he’s already way more professional, and much better than many TV announcers, and has that rare talent of talking with a instantly prepared script in his head.

This particular video covers a section of the Tokaido line between Shizuoka and Yaizu, very close to where I lived from 1987 to 1997, and a section of history I was completely unaware of. The original Shinkansen plan from 1940 bored the famous Nihonzaka tunnel between Shizuoka and Yaizu, through the steep Ōkuzure seacoast. The Tokaido line was then realigned through the unused Shinkansen Nihonzaka tunnel and abandoned the older dangerous Meiji era Sekibe Tunnel route which skirted along the shoreline.

When the Shinkansen plan was revived and built, the Tokaido line was realigned again through a newer tunnel in 1962 which it uses today. Suit Train follows the 1943 alignment, the 1962 alignment and ends with a spectacular hike to the Sekibe tunnel ruins. In all the time that I lived there I wanted to see it but never knew there was a trail. Lost opportunity. Suit Train’s video is the next best thing.