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Japan Post is talking with East Japan Railway Co. about a plan to issue a cash card with the electronic money and prepaid train ticket functions of JR East’s Suica smart card, it was learned Thursday.

Japan Post, which operates the Yucho savings service, and the major railroad are considering launching the new card as early as next spring, sources said.

By joining with JR East, Japan Post intends to make its Yucho service more attractive in the leadup to the October 2007 start of its 10-year privatization process, the sources said.

As the first step of the process, Japan Post will be split into four firms, including one for the Yucho service.

JR East is aiming to fortify its Suica-based electronic money business through the tieup, the sources said. The Suica card can now be used as electronic money at about 6,700 outlets in Japan, including station kiosks.

Japan Post, meanwhile, will cautiously consider whether to allow holders of the Yucho-Suica card to charge their cards from their Yucho savings accounts using automated teller machines installed at post offices. There are concerns mainly among regional banks that the envisaged tieup could lead the government-affiliated postal service firm into pressuring private-sector businesses, the sources said.

Among private-sector financial institutions, Mizuho Bank, the retail banking unit of Mizuho Financial Group Inc., launched a cash card with the Suica functions in March.

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