The Japanese payments landscape and its future

Abstract

Does Japan mean it this time? What do the Japanese sword that young samurais brought to Europe in the late-16th century and a state of the art 'home video game' have in common? This paper assesses the current payment systems in Japan, technology developments currently under way and challenges ahead. A current summary of the four systems (BOJ-Net Fund Transfer System, FXYCS, bill and cheque clearing systems and Zengin) is followed by the underlying innovative trends in the Japanese payment scene. Innovation for what? All aimed at the benefit of the customers, so that one can make a payment anywhere and everywhere or be free from cash and paper. And what lies further ahead? Even policy makers became aware that the current systems, long protected by the language barrier and proprietary standards, cannot stay forever and need to merge towards global standards. Otherwise, the systems once on the edge will soon turn obsolete, reminding us of the history of the sword. Japan may be taking this opportunity much more seriously than one may think. 'Zengin' (a major small value payment system) is a good example. This purely 'Japanese' system may be reborn as a brand new system, and the new Japanese payment system may open its port to the world, in the same way that the Wii (another state of the art 'game') may capture the market in the world.