Japan is looking at allowing e-money salary payments ahead of foreign worker influx

The government is considering allowing firms to pay salaries in electronic money to promote a shift toward a cashless society, sources said Tuesday.

The move is being sought as Japan is opening up in April to more foreign blue-collar workers, who are expected to face hurdles in opening bank accounts as they lack domestic assets and transaction histories.

In addition to e-money that can be added to integrated circuit (IC) cards and smartphones, deposits to prepaid cards and smartphone apps will be considered. Cryptocurrencies, which tend to be volatile, will likely be excluded.

The government is planning to introduce cashless salary payments first in the special zones designated for deregulation, and then nationwide, the sources said.

Currently, employees mostly receive salaries in cash or through bank transfers.

Japanese labor law insists companies pay salaries in cash at least once a month, in principle, so that they do not pay in kind with their products. Deposits to bank accounts are accepted under a labor ministry ordinance.

The government aims to limit those who handle cashless salary payments to dealers in a sound financial state, registered with the Financial Services Agency.

Talks will take place between the government and industry bodies to determine how best to protect workers from stalled payments if dealers go under.

Although credit cards and e-money have recently become more popular, Japan remains a cash-oriented society, with cashless payments at around 20 percent in 2015, sharply lower than 90 percent in South Korea and 60 percent in China.

The Tokyo Metropolitan Government and others have requested the introduction of e-money for salary payments, saying there is already high demand.

Last month, the government said at a meeting on special strategic economic zones that the introduction of digital money is a “topic to address swiftly,” while experts at the gathering called for a resolution to the matter by spring.

At present, e-money dealers are responsible for protecting deposits of users but face laxer monitoring than banks.

If a dealer goes under, it usually takes about three months for recipients to regain their assets, according to the government. Even if insurance companies cover their losses, a problem arises in paying those people who do not have bank accounts.

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