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A consortium of banks, led by Mizuho Financial Group and Japan Post Bank, has won support from the country’s central bank and financial regulator to launch the J Coin, an electronic currency to pay for goods and transfer money using smartphones.
The J Coin would be convertible into yen on a one-to-one basis, operating via a smartphone app and using QR codes to be scanned in stores. In return for providing the service for free, the banks would benefit by collecting more data on consumer spending patterns.
“I think this electronic money is quite ahead of [credit and debit] cards, because when you use the cards the shops pay a certain fee,” Yasuhiro Sato, president and chief executive officer of Mizuho Financial Group, told the Financial Times.
Meanwhile, MUFG has been developing a blockchain-based alternative called the MUFG coin. However, there have been recent discussions between the top banks about the possibility of MUFG joining the J Coin initiative.
“We are aware of the issue or concept [of J Coin], however, we would like to refrain from answering,” said MUFG when asked about the talks. “We want MUFG coin’s results and know-how to be used across Japan, including by other banks, but have not decided on what concrete measures to take.”
Several big Japanese banks have been lobbying their government and regulators about the danger of Alibaba’s Alipay service being launched recently in several cities including Tokyo, which they argue will allow data on Japanese consumers to be sent to China, according to a presentation seen by the FT.
Their plan is to showcase Japan’s fintech capability at the 2020 Tokyo Olympics, when hundreds of thousands of tourists are expected to visit Japan. Mr Sato added that it would work best if all banks worked together on the project. “We shouldn’t grab the idea for ourselves, we should have open innovation,” he said.
The J Coin is designed to wean the Japanese off their heavy dependency on cash, which accounts for 70 per cent of all transactions by value. That is higher than any developed country, which have on average reduced cash utilisation to only 30 per cent.
Full article on Financial Times (subscription required)