TOKYO -- Japan's Mizuho Financial Group will launch its digital currency service March 1 under plans announced Wednesday, leveraging direct links to users' bank accounts to fight off outside players in the heated market for cashless payments.
The megabank is teaming up with 60 or so fellow financial institutions spanning most of the country. They together host a combined 56 million user accounts, which serve directly as digital wallets on the J-Coin Pay platform.
Fighting off established players like chat app provider Line and e-shopping company Rakuten, with strengths in reward points and other related services, will be no simple task. How J-Coin Pay sets itself apart will be key to the competition for leadership in digital payments, a gold mine of valuable consumer data.
"The arrival of all these new entrants is eroding the common-sense notion that payment services are provided by financial institutions," Mizuho CEO Tatsufumi Sakai said.
The experience of using Mizuho's platform will be similar to competitors'. The shopper will scan a QR code at checkout and be charged through the J-Coin Pay app, with a unit of the currency fixed at a value of 1 yen (1 cent). The user can transfer money from a J-Coin wallet to a bank account free of charge -- unlike Line Pay, for example, which charges a fee.
Signing up for J-Coin Pay will not require a screening as with credit cards. And it will also be open to users age 18 or younger, an advantage the company says will let it cater to "the needs of a wide range of ages."
Unlike banks' existing payment services, J-Coin Pay will handle both payments and remittances of a type catered to by Line Pay and its peers, such as letting parents send children pocket money or co-workers split bills.
Getting stores to accept Mizuho's scheme will also be crucial. Convenience store FamilyMart, part of FamilyMart Uny Holdings, is considering signing on, as are electronics retailer Bic Camera and East Japan Railway. The goal is to reach a minimum of 300,000 participating stores and at least 6.5 million users within a few years, tapping the broad base of account holders with member banks.
But even that user pool falls short of Line's base of 79 million Japanese users of its core chat app. Line Pay is accepted at 1.3 million stores.
Mizuho and peers also plan to charge member stores lower transaction fees than the 2% to 5% seen as common with credit cards, and to partner with foreign services like Alibaba Group Holding's Alipay to have them accepted at stores participating in J-Coin Pay.