TOKYO -- About half of Japan's 1,400 banks are planning to join a nationwide smartphone payment service that is now slated to start in October.
The launch date has been moved forward by six months to allow consumers to take advantage of a government incentive to go cashless. The incentive is to coincide with the October consumption tax hike, to 10%.
Many of the banks are regional lenders, who apparently are being counted on to help the cashless service expand quickly in rural Japan.
The smartphone service will use the infrastructure of an existing debit card system. The amount of a purchase will be immediately deducted from the buyer's savings account.
Users will download a smartphone app and register their bank account information. When being used to buy merchandise, the app will display a QR code for store clerks to scan.
The service was originally planned to debut next April. But the nonfinancial sector has been aggressively pushing into cashless payment services. Yahoo Japan's PayPay has signed up numerous merchants. And chat app operator Line late last month announced a pact with flee market app provider Mercari that will make it easier for users of Line Pay and Mer Pay to use both services.
"Early introduction is necessary," an executive at a major bank said.
But only about 30 major and regional banks will be ready by the new October deadline. Other financial institutions, including those affiliated with agricultural cooperatives, will join in phases.
The service will charge storekeepers, restaurateurs and other merchants a 1% fee. This compares with the 2% to 7% that credit card companies can charge -- an especially heavy burden for mom-and-pop operations. In addition, the system will not require steep equipment investments on the part of participating businesses.
Debit cards, promoted by the banking industry, can be used at about 24,000 shops in Japan, but the country's consumers have been hesitant to go that route, partly due to the need to type in personal identification numbers.
The banks believe that signing up a great number of merchants as quickly as possible will be crucial for the system to succeed.
