Chinese Tourists Purchase a Lot with Alipay and 70 Japanese Banks have Decided to Fight Back

Today, China’s National Day golden week has become a global golden week.

Data estimate that more than six million Chinese travel overseas during this year’s National Day holiday. With the steps of Chinese tourists, many foreign merchants have started to use China’s advanced mobile payment methods. If there is no Alipay or WeChat payment, the store will be OUT.

Recently, a Japanese gift shop owner asked for help on Japan’s famous BBS 2ch about how to open the Alipay. The owner says the recent National Day holiday in China has brought many guests to the store, who often ask if they can use Alipay. Although the store already supports VISA, the fact that it doesn’t offer Alipay service disappoints guests.

However, it is worth noting that China mobile payment in Japanese market has caused alarm in the Japanese financial field.

Recently, People’s Daily cites reports from TV Asahi that in mid to late September, about 70 local Japanese banks including Mizuho Financial Group, Post Saving Bank, Yokohama Bank, Shizuoka Bank and Fukuoka Bank, plan to jointly launch a virtual currency, temporarily named as “J Coin”.

As for why creating J coin, according to a report referred by the British Financial Times, recently Japan’s big banks have been lobbying Japanese government and regulatory agencies the threat posed by Alibaba through offering Alipay service in Tokyo and other Japanese cities. They argue that the service will send data about Japanese consumers to China.

In addition, Japan’s financial sector hopes to encourage consumers to use J Coin instead of cash so as to reduce Japan’s high cash usage rate.

Japanese Banks will jointly launch virtual currencies

Recently, about 70 Banks led by Mizuho Financial Group and Japan Post Bank has won support from the Bank of Japan (BoJ) and Financial regulators, launching electronic money J Coin to pay and transfer through mobile payment.

It is understood that the main function of J Coin is to provide mobile payment and transfer services for individuals and enterprises. J Coin could be connected with bank account, which can be exchanged for Japanese yen. When checking out, consumers could scan QR codes in the store through a smartphone app. In addition, transfers between individuals do not generate fees and overseas transfers are cheaper. At the same time, J Coin won’t have the obvious price fluctuations like bitcoin, which is equivalent to the yen.

Yasuhiro Sato, the President and CEO of Mizuho Financial Group, said: “I think this kind of electronic money is better than (credit and debit) card, because when you use the card, owner needs to pay a fee.”

In return, J Coin managing company will collect user shopping and transfer records. And the information will be processed into anonymous data, will be shared with other companies and Banks, and will be applied to the marketing and pricing strategies.

The bank plans to launch J Coin before the 2020 Tokyo Olympic Games. And BoJ and financial regulators hold an open attitude to the idea. At present, the banks have begun to contact large retailers, ready to settle details recently.

Compete against Alipay and Collect User Big Data

As for why creating J coin, according to a report referred by the British Financial Times, recently Japan’s big banks have been lobbying Japanese government and regulatory agencies the threat posed by Alibaba through offering Alipay service in Tokyo and other Japanese cities. They argue that the service will send data about Japanese consumers to China.

National Business Daily reporters noted that recently Alipay has taken multiple actions in Japan. Alipay officially announced in early June this year, Japan’s KFC had full access to Alipay. And it is now available in 123 stores in Tokyo and Osaka. Alibaba will also launch mobile payment service in Japan in the spring of 2018, striving to win 10 million users within three years. It is worth noting that Alipay, which has changed China’s payment method, is also likely to transform Japan’s mobile payment through a series of moves.

At present, Alipay is available in over 30,000 stores in Japan including Lawson, electrical appliances shops and department stores. And Alibaba’s future launching of new mobile payment service could use these shops as the center, utilizing affiliate Alipay network improved by increasing visitors. Alipay plans to increase the number of affiliated stores to 50,000 by the end of 2017. In addition to the settlement, Alipay will gradually increase functions related to life, such as the booking and purchase of movie tickets.

In addition to worrying about valuable consumption data may fall into the hands of Chinese companies such as Alibaba, the Japanese financial industry also hopes that J Coin could encourage consumers to use mobile payment and to reduce cash usage. In fact, as much as 70% of Japanese domestic consumption to date is transacted by cash. The ratio is higher than that in any other developed countries, whose ratio has dropped to 30% on average. Deloitte in April this year released a report showing last year’s financial technology deal was worth $17.4 billion. But Japan only contributed less than 1%, which was $87 million, while 80% of trading from China and the United States.

The difference in payment habits, according to an industry insider who asked not to be named, is essentially dependent on Internet application development. “Japan has the world’s most advanced retail stores and mature offline markets, and the competition there is intense with rather little profit. Adding high logistics costs, compared with the traditional entities with the first-mover advantage brands, the advantage of e-commerce is not obvious.

“It is well known that in recent years the rapid development of China’s mobile payment is greatly pushed by WeChat, Alipay and other third-party payment. But in Japan, due to various factors like the limitation of laws and regulations, so far there has not been any such third-party payment companies connected with banking system, realizing fast real-time transfer of funds,” the industry insider further explained.

However, according to Ying Zhanyu, professor in School of Finance, Central University of Finance and Economics, it is hard to understand Japanese monetary structure, condition, etc. from the perspective of efficiency. Instead, they are closely connected with national habits. It is testified by what Yasuhiro Sata said, “we like cash because Japanese value security.”

However, Sato admitted that “cash usage is not very efficient and we have to change this structure, from cash to electronic money”. Japan’s big Banks expect to lower cash transaction processing costs after the release of the J Coin, adding 10 billion yen to Japan’s economic output.

This article originally appeared in National Business Daily and was translated by Pandaily.

Click here to read the original Chinese article