Banking

Japan's Top Banks Prep Cheaper Money Transfer Network

Japanese currency

Japan’s banking industry has been under pressure from the national government to reduce fees for sending money electronically. Now, the country’s biggest banks said they will work together to build a less expensive money-transfer network focused mainly on small transactions among individuals, Bloomberg News reported.

Japan has been slower than other developed countries in moving toward having a cashless economy. That’s despite having an economy of $4.97 trillion and a high rate of credit card penetration.

The new move by Japan’s largest banks could be a step toward changing that situation, since the money-transfer fees are seen as one obstacle to having a cashless society.

The banks involved include Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group. Also involved are the two main lending units of Resona Holdings. The next step will be to plan for the new payments infrastructure, the report said.

Currently, Japan’s banks use the Zengin System, a payment network that handles transactions worth $113 billion daily. Zengin will continue to deal with large transactions, such as those between businesses, Bloomberg reported.

In a joint briefing, the lenders said they want to launch the network as soon as possible. However, they did not present a timetable.

Bloomberg said the banks will probably look to cut down on costs by using the existing infrastructure for debit card payments. However, in Japan, debit cards have never become a major payment form in Japan.

Currently, the major banks charge $2 to wire less than $300 to other lenders’ accounts, Bloomberg said.

Another obstacle to Japan going cashless is the persistence of such payments arrangements as cash-on-delivery orders, per a separate report last month.

Paidy Co-Founder and CEO Russell Cummer told PYMNTS that despite the prevalence of credit cards in Japan — the average Japanese consumer has 3.2 of them — the use of credit cards for online purchases is limited.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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