TOKYO -- Eager to ensure that digital currencies avoid the type of draining war that took place between supporters of VHS and Betamax videotapes in the 1980s, Japan's big banks are taking steps toward a common format for online payments.
Leaders of the country's three megabanks, Mizuho Financial Group, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, have said they can agree on unifying QR code specifications, the basis for electronic payment systems in other countries such as China.
Abbreviated from Quick Response, a QR code is a type of bar code that contains information about the item to which it is attached. It is readable by digital cameras, such as those on smartphones. Transactions can take place if both sides have smartphones, without the need for special terminals.
From April, Mizuho will partner with Fukushima-based Toho Bank to conduct digital currency tests at restaurants and other establishments in the town of Tomioka in northeastern Fukushima Prefecture.
The service will target individuals with accounts either at Mizuho Bank or Toho Bank. Customers can make immediate payments in digital currencies by using smartphones to read QR codes. The two banks aim to make transfer services between individuals available by 2020.
"Regional banks worry about whether the three megabanks can agree on unifying QR code specifications, but we can," said Yasuhiro Sato, president and CEO of Mizuho, at a news conference in Fukushima on March 15.
Unlike Bitcoin and other cryptocurrencies, which can be highly volatile, digital currencies can be a convenient and stable payment method, with a fixed value of one coin to one yen.
Mizuho has taken the lead in trying to establish common standards for digital currencies. Its initial plan was to issue a new digital currency called the J-Coin, with the participation of a consortium comprising the other two megabanks, regional banks and Japan Post Bank. Mitsubishi UFJ and Sumitomo Mitsui agreed in principle, but differed on the details.
Mitsubishi UFJ has developed its own digital currency, the MUFG Coin, and is reluctant to combine it with various others.
Nobuyuki Hirano, president and CEO of MUFG, said at a recent news conference that it was good that settlement operators would unify QR code specifications, and that the three megabanks would jointly consider adopting it.
But his bank has said it questions the need to consolidate digital currencies.
In Japan, about 60% of payments are made in cash, a higher percentage than in other developed countries. The use of digital currencies could reduce the high costs of transporting and managing so much cash.
But agreement on common standards and systems remains a ways off. The establishment of a council on digital currency is "still under consideration," said one bank representative.
The banks' failure to respond to customers' needs, their reluctance to adapt and their concern with saving face are among the reasons that Japan has lagged behind in the development of a cashless society.
Commercial banks could be overtaken in the race to issue digital currencies.
A number of central banks around the world are pressing ahead with research and discussions on introducing such currencies. Sweden, for example, is considering a central bank digital currency for use by households and companies.
In October, Bank of Japan Gov. Haruhiko Kuroda said in a speech: "Central banks, even though they do not have any imminent plan to issue [digital currencies], need to engage in research and analysis to deepen their knowledge about new technologies and to find room, if any, for improving their own infrastructure by adopting them."
The BOJ is working with the European Central Bank to research the technology used in cryptocurrencies and other areas. If commercial banks cannot formulate common standards for digital currencies, perhaps the BOJ will come up with the "real J-Coin."