Japanese Banks Launch Cheaper X-Border Payments Venture

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The world is moving towards borderless payments, and Japan is the latest to make its mark on that effort. Reports on Wednesday (Jan. 20) said some of Japan’s top financial institutions are collaborating to launch a cross-border payments system that will not only reduce friction but also aim to cut the cost of sending money internationally by as much as 90 percent.

The banks — Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. and Mizuho Bank — have teamed up to develop a money-forwarding system slated to launch in 2018 or later. Also backing the initiative is the Financial Services Agency and the Japanese Bankers Association, reports said, adding that other banks are likely to get on board, too.

Cross-border wired funds that start from Japan are valued at about $1.51 trillion every year, reports said. But for the estimated 6 million wire transfers that occur, each handled one at a time, the fees for banks and end users can rack up quick.

[bctt tweet=”Cross-border wired funds that start from Japan are valued at about $1.51 trillion/yr.”]

The new system will look to transfer funds in batches. The banks anticipate SMEs to be some of the biggest clients of a cheaper cross-border payments solution and hope to compete directly with FinTech players and startups that are disrupting the industry.

There is a catch, though. According to reports, the wire transfers, which today often take about a day to complete, are likely to take up to two days to complete when done in bulk.

The project also involves data systems companies from nearly a dozen participating countries helping to build the infrastructure. In Japan, that company is NTT Data, according to reports. Other companies and countries are likely to get involved, and reports said the system may eventually link to Western countries.