Japanese Megabank Coalition Takes Aim at QR Code-Based Mobile Payments

March 2, 2018         By: Steven Anderson

Japan has always been an odd mix of the ultra-high-tech—look at their robot development—to the backward retro tech, as exemplified by their ongoing fascination with the fax machine. They’ve been comparatively quiet in mobile payments development too, but that may be about to change as three of Japan’s biggest banks are looking to create a standardized mobile payment system.

The new system in question is set to focus on the quick response (QR) code, and reports say that specific plans will be ready by the end of March. The whole system, meanwhile, will go live sometime in the group’s 2019 fiscal year. The banks involved in the push are Mizuho Financial Group, Mitsubishi UFJ Financial Group, and Sumitomo Mitsui Financial Group.

This trio together is said to be setting up a jointly-financed third party to oversee the overall system, and they’re set to open up membership to other banks interested in signing on, both large-scale banks and smaller regional banks alike. With 65 percent of payments in Japan settled by cash—about double the standard average for an industrialized, developed nation—it’s easy to see that there’s extra room here for mobile capability.

The combination of cashless payments and QR codes will not only help improve efficiency at bank operational levels, it will also offer a means to do so that keeps expenses at a minimum for retailers. The added choice and convenience may also improve customer experience and boost the chances of return business. Some are already hopeful to reduce the two trillion yen—around $18.74 billion US as of this writing—in cash-related expenses seen every year.

The biggest problem here, however, may largely be a cultural one. There are already mobile payments services available in Japan; the Line messaging app has Line Pay already in hand, and NTT Docomo will roll out a QR-based program in just a few weeks. But with so many users used to and expecting to use cash,  the ability of a mobile payments system to really catch on—even with bank support—seems slim.

Only time will tell just how this all comes out, but even a major bank effort may not be enough to make mobile payments take root where they’re not particularly wanted.