A consortium of Japanese banks received the green light from regulators to launch digital currency J Coin, in an apparent bid to reduce the country’s reliance on cash and respond to moves by high-profile mobile payment players.
The group – led by two of Japan’s largest consumer banks, Japan Post Bank and Mizuho Financial Group – received the go-ahead from authorities to prepare the service in time for the 2020 Summer Olympic Games in Tokyo, Financial Times reported.
Although the final details of the service are yet to be unveiled, J Coin is expected to be an electronic currency able to be used in retailers through QR code payments and for direct person to person transfer on mobile handsets.
One J Coin will be equivalent in value to one Yen, and consumers will be able to exchange funds back to physical currency at participating outlets.
Despite being one of the first nations to have mobile wallet technology available, with NTT DoCoMo launching its service in 2004, Japan remains a cash-heavy economy. Reports over the last 12 months suggest cash transactions comprise between 70 per cent and 80 per cent of payments made in the country.
The move to create a bank-backed service follows news China’s mobile commerce giant Ant Financial, Alipay’s parent company, is working on a Japan wallet launch for early 2018.
Ant Financial’s chief rival in its home market, Tencent, also made tentative moves in Japan and signed a number of deals in 2016 aimed at expanding the scope of its WeChat payment service into retailers popular with visitors from China.
In addition to Chinese rivals, J Coin will also face competition from the many existing mobile payment providers operating in Japan. These include traditional digital payment providers powered by Mastercard and Visa, in addition to app-based companies including Line Pay, which already boasts 30 million users.
Although not its central business – Line’s chat app has 68 million users in Japan – the company views wallet services as an important part of its future vision for a unified mobile service. Android Pay and Apple Pay are also available in the market.