700 banks to join Japan's nationwide smartphone payment service

It will launch in October which coincides with the October consumption tax hike.

About half of the 1,400 banks in Japan are eyeing to join the nationwide smartphone payment service slated to go live inOctober, reports Nikkei Asian Review. Regional banks are amongst those expected to take part in the service as part of their efforts to foster the adoption of cashless payments in Japan’s rural vicinities.

Around 30 major and regional banks are expected to be ready to join the platform by the October deadline with other financial institutions, including those affiliated with agricultural cooperatives, are set to progressively join in phases.

Also read: Japanese banks tie up for QR code payment service

The app’s launch has been advanced from its originally planned schedule of April 2020 to give consumers the chance to take advantage of the government’s incentive to go cashless, which will coincide with the October consumption tax hike to 10%. 

The nationwide payment service will charge merchants a 1% fee, compared to the 2-7% fees from credit card companies.

Also read: Japanese banks speed up cashless push before 2020 Olympics

On their part, non-financial players involved have also started their initiatives in anticipation of the launch, with Yahoo! Japan’s Paypay already signing up numerous merchants.Chat app operator Line has also inked deal with flea market app provider Mercari to ease their services for both of their users.

The government has set a target to double the number of cashless settlements to 40% of transactions over the next 10 years as part of its Society 5.0 future investment strategy. Credit cards, electronic money and other cashless payment methods account for a fifth of the country’s consumer payments, trailing behind China and the United States.