NFC VAS done right: Pi-xcels NFC background tag read powered e-receipts

In the traditional Buddhist cosmos there are sub-human hells of suffering: fighting demons, hungry ghosts, terrifying animals and so on. In the human realm we create our own hells. QR code payment app checkout stress, is one of them.

We’ve all experienced checkout stress, that unfunny comedy routine when someone at the head of the line launches a QR code app in a store network challenged environment, digging around for a discount coupon that they have to login for, of course. Finally ready to pay, the Frankenstein QR code + NFC combo reader spits out a read error…the checkout staffer says, “You’re holding it wrong,” and so it goes.

As much as QR + NFC all in one readers have evolved, the integrated POS systems that drive the entire checkout experience for merchant and customer alike are less than ideal. Checkout stress never goes away. But why QR when we have all those NFC based payment solutions, didn’t NFC supposedly win the contactless payment wars?

It comes down to VAS, Value Added Services, the catch all phrase for post payment goodies: time limited store coupons, store reward points, cash-back rebates and so on. Easy VAS is one of the big reasons why QR code payment apps (PayPay, Rakuten Pay, dPay, etc.) took off in Japan despite all the faster card payment NFC infrastructure. When it comes to store checkout, people care less about speed, more about rewards and coupons. It’s cheaper and easier to do VAS customization when it doesn’t dependent on card company payment networks. Smaller merchants using prepackaged POS systems (AirPay, RakutenPay, Square, etc) don’t have an easy way to incorporate customized NFC VAS services.

NFC Failures
The industry is littered with failed attempts to extend NFC functionality beyond its core success with smart-cards and payments: NFC peer to peer never took off, NFC VAS never took off, Apple’s App Clips attempt to leverage NFC background tag reading into a easy ‘tap, order, pay’ experience has also been a spectacular failure.

Apple VAS Developer page
Apple VAS in action at LAWSON where all receipts are paper and usually tossed.

NFC VAS has a very high bar to achieve what’s illustrated on the Apple VAS Developer page for a POS system like LAWSON self-checkout in the above video. There is POS system software integration, hardware certification, and Apple Pay contactless pass development. These are the choke points of NFC VAS: the high level of integration required to make it work. Only stores with deep IT pockets can afford this level of resources which is why LAWSON is the only Japanese store chain to support Apple VAS for dPoint and PONTA point cards when paying with Apple Pay.

Fortunately there is an NFC solution for easy entry level VAS: Pi-xcels NFC digital e-receipts. You might be asking yourself, e-receipts, are you serious? Don’t laugh, it’s hard to create a fast and easy user experience that works seamlessly across different devices. Pi-xcels Founder Daniel Lim and Co-founder Chua Zhen Rong demonstrated their NFC e-receipt solution to me recently. It was impressive. Fast performance and a simple ‘it just works’ user experience. The only thing they needed for the demo was 2 mobile devices, an iPhone and an Android OS based mobile Ingenico AXIUM DX8000 NFC reader.

One of the easiest ways to do VAS is paper receipts with QR coupon store specials. It’s low tech but reliable. Anyone can use them. This is why LAWSON uses them all the time despite having a fancy POS system with NFC VAS. The only problem with any paper coupon is losing them, in a pants pocket, the uncharted depths of a bag, the ‘I know it’s here somewhere’ checkout comedy routine. Digital e-receipts are always on your device.

The Pi-xcels e-receipt seamlessly zips to the users iPhone immediately after the Apple Pay ding with a background tag read notification (iPhone XS and later). Tap the notification and Safari immediately loads the e-receipt. It’s a quick, clever use of NFC background tag read that App Clips promised but never delivered, that safely puts receipts on the user’s device. How does Pi-xcels achieve this?

Pi-xcels NFC background tag read e-receipts in action

NFC background tag read done right
Pi-xcels does this by prepackaging NFC VAS integration. They license their technology to the NFC reader manufacturer so that the e-receipt function is part of the basic reader software menu. It’s the prepackaged integration that NFC VAS has lacked when competing with flexible QR code apps.

They achieve fast performance by cleverly leveraging offline embedded secure element transaction processing while the OS is free to go online to process the e-receipt, add points, generate barcode coupons, etc., all the post transaction extras to be incorporated in the NFC NDEF tag read/write.

To me the genius stroke is how they use NFC background tag reading. The power of background tag reading is that it’s automatic with one condition: the screen must on to be automatic. In the case of iPhone Apple Pay, the screen is on and unlocked for transaction authorization, so the background tag read is instantaneous and seamlessly takes the user to e-receipt download with a tap. If App Clips had delivered this ‘it just works’ focused, simple user experience, it could have been a hit instead of a dud.

Security is a given as there is a secure wall between what goes on with the NFC payment transaction process handled by the secure element, and the e-receipt NFC tag read/write process handled by the OS. They are separate processes. Lim says they plan to incorporate point reward post-transaction processing for showing points on receipts and/or launching the relevant app with the same seamless speed seen in the video. Pi-xcels technology works across all NFC flavors: A-B-F. There is a lot more that can add without losing the key elements of focused simplicity and speed.

Ingenico is the first licensee and Lim says they expect to announce other NFC reader manufacturer licensees soon, major players in the Japanese market. He said, “We think we can stitch up most of the market.” He may be right. The Pi-xcels strategy is keenly focused on the entire mobile payments experience. Imagine the potential for e-receipts when Tap to Pay on iPhone launches in Japan as expected in late 2023~early 2024. Tap to Pay on iPhone POS solution providers with Pi-xcels technology integrated in the mobile POS software would let smaller merchants easily add NFC VAS at checkout.

If Pi-xcels can execute their licensee agreements as planned, I think they stand a good chance of stitching up the Japanese market. There is no competition for the flexibility and ease of e-receipts that double as a QR code coupon VAS delivery vehicle. It’s an excellent fit with how Japanese customers use barcodes and QR for coupons and reward points at checkout. It finally brings the advantages of inexpensive QR VAS with simple prepackaged mobile based NFC VAS integration for small merchants without deep IT pockets. The Pi-xcels strategy of building a mobile based NFC digital receipt platform is simply, NFC VAS ‘for the rest of us’.

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.

The Self Checkout Barcode Reader Dilemma

Reach out and touch is not something we want to be doing right now. Along with wrangling face masks and Face ID iPhone Apple Pay in the Covid-19 era, we also face another hurdle: self checkout barcode readers. Any volunteers out there who like fondling public plastic? I didn’t think so.

Convenience store self checkout all have the same deal: scan with barcode reader, tap some choices on the checkout touchscreen, scan a rewards card and pay with Apple Pay Suica, etc. The stationary barcode readers at JR East station NewDays are slightly better but you still have the touchscreen to deal with.

Barcode app and plastic variety reward cards were already a pain in the ass before all the fun started and are worse now. Apple VAS and Google Pay Smart Tap for NFC contactless reward cards has been in place for some time but uptake in Japan has been slow and small. So far only 3 contactless NFC point cards exist: Docomo dPOINT, T-Point and PONTA, and only 2 places use them: LAWSON (dPOINT and PONTA) and Tsutaya (T-Point). Part of the problem is that VAS/Smart Tap support depends on 2 factors: the reader and the POS system.

Most modern NFC readers support Apple and Google protocols but POS system support is another matter. Pre-packaged POS system providers like AirPay and J-Mups that are popular with smaller merchants don’t support them yet. This means that only big retailers with deep POS development resources like LAWSON (Mitsubishi Corp group) have added NFC contactless reward card support so far.

Apple Pay Japan supports dPOINT and PONTA cards but there are subtle differences: PONTA card requires Face/Touch ID authentication, dPOINT does not. I have not fully tested dPOINT for point payment but suspect authentication is not required for getting points but required for paying with points. One hopes that with the Covid-19 crisis in full swing, retailers and card empires (JRE Card, etc.) have the incentive to provide customers with the safest contactless experience for both payments and reward cards.

dPoint card can be accessed without Face/Touch ID, PONTA requires authentication