eBANK to target small transactions

A venture firm headed by a former banker with Long-Term Credit Bank of Japan announced Tuesday that it will establish the nation’s first e-bank specializing in settlements of small-scale transactions.

The planned bank, named eBANK, will provide online settlements for customers who buy small-scale digital items, such as music and video clips for prices ranging from several hundred yen to 50,000 yen.

Officials of Japan Electronic Settlement Planning Inc. told a news conference that the venture differs from conventional online banks because it targets young people.

“We want to provide a new banking infrastructure that will not compete with existing and up-and-coming banks, including those planned by Sony Corp. or Ito-Yokado Co.,” said entrepreneur Taiichi Matsuo, a former LTCB official.

The company is currently capitalized at 900 million yen, with equity participation from such firms as major trading house Itochu Corp., Mitsui Marine & Fire Insurance Co. and Yamato Mutual Life Insurance Co.

By early next year, when eBANK is supposed to start operations, the company hopes to increase its capital to 20 billion yen.

It is envisioned that the firm will be 30 percent owned by various financial institutions, such as regional and “shinkin” (credit) banks that cannot afford to set up their own online banks, Matsuo said. The online bank will cut costs by doing away with branches or ATMs, the officials said. All transactions will be settled electronically and on a real-time basis, the officials said.

In the second phase of the venture, scheduled to begin in the middle of next year, the company will start offering credit settlements through next-generation cellular phones equipped with infrared rays.

Consumers will be able to settle their purchases at stores by exchanging data between their mobile phones and infrared cash registers, as well as exchange credit with other mobile phone users, they said.

While the bank has no plans to offer settlements in foreign currencies, it could eventually franchise its technology to foreign banks, enabling similar real-time online credit settlements overseas, they added.

The project is backed by high-powered individuals from various sectors, including Toyoo Gyoten, a former vice finance minister for international affairs. He will serve on the company’s advisory board.