The banking industry has begun work to reduce the expensive fees for electronic money transfers that are widely viewed as an obstacle to the proposed shift to a cashless society.
Efforts are being made to open an interbank money transfer system for nonbank financial businesses, such as smartphone-based payment providers, and to establish a new fund-transfer infrastructure.
For interbank transfers, almost all deposit-taking institutions in Japan use the Zengin Data Telecommunications System, or Zengin System. It handles over ¥10 trillion in transactions per day.
Although the system is highly secure, the interbank transfer fees related to it have been high for decades. The fees stand at ¥117 for a transfer under ¥30,000 and ¥162 for transfers of ¥30,000 or more. Based on the costs, banks decide how much to charge customers for sending money to accounts at other lenders.
In its growth strategy action plan released in July, the government called for cutting interbank fees, noting they haven’t budged for over 40 years.
The Fair Trade Commission has said the fees far exceed the actual cost of sending money electronically, and other critics have complained they are imposing an excessive burden on customers.
The transfer fees levied by banks thus pose an obstacle to providers of cashless payment services, which handle numerous small-lot transactions. Such services are charged for remitting sales earned by client shops and restaurants to their bank accounts but end up passing the costs onto them, increasing their burdens.
Some payment providers limit the number of fund transfers to client accounts to save fee costs, causing financing worries for small retailers.
These factors are why Japan has been slow in shifting to a cashless society, sources say.
On the proposed interbank fee cut, the banking industry plans to hold talks with the Financial Services Agency and other bodies with an eye to reaching a conclusion by early next year.
Some regional banks oppose a big reduction because they rely on such fees for revenue. Still, the industry will likely be forced to address the problem because the government wants the costs lowered.
The industry is also trying to make it easier for cashless payment providers to join the Zengin System, so they will not have to pay the extra fees added by banks.
Still, interbank fees will need to be reduced to bring such nonbank businesses into the system.
Five major banks including MUFG Bank, Sumitomo Mitsui Banking Corp. and Mizuho Bank this month announced plans to build new financial settlement infrastructure outside the Zengin System to allow for low-cost fund transfers for smartphone-based settlement apps and other systems.