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Enactment of new Japanese Settlement and Payment Systems Act
Practical Law UK Legal Update 0-422-1903 (Approx. 2 pages)
Enactment of new Japanese Settlement and Payment Systems Act
by Atsumi & Partners
| Published on 11 Aug 2009 • Japan |
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New Japanese legislation on settlement and payment systems was passed in July 2009, aiming to increase the international competitiveness for settlement services of Japanese companies and improve services to consumers by allowing non-bank entities with appropriate authorisations to provide fund remittance services.
On 15 July 2009, the Settlement and Payment Systems Act (Act) was enacted. The key aspects of that Act include:
- The introduction of regulations against so-called "server type" electric money. The Act regulates services in relation to which records are maintained only on a server or on the internet (server type). The Act on Regulation on Prepaid Certificates (Law No. 92 of 1988), which regulates pre-payment services in which electric moneys are recorded on the certificates (certificate type), does not apply to server type services.
- Permitting non-banks to conduct and provide fund transfer services. Currently, only banks licensed under the Banking Law (Law No. 59 of 1981) and certain other deposit institutions are permitted to conduct and provide "exchange transactions" (Article 2, Paragraph 2, Item 2 and Article 4, Paragraph 1, Banking Law), which includes typical fund remittance business. Consumers, particularly non-Japanese residents, frequently complain about banks' expensive remittance charges and short business hours during which they can use banks' fund remittance services.
The purpose of the Act is, by opening fund remittance services to non-bank entities who obtain the relevant authorisations, to increase the international competitiveness for settlement services of Japanese companies and to increase convenience for the consumer.
Recently, a mobile service provider has announced that it is planning to launch a fund remittance business with transfers being made through mobile phones. In addition, according to the news release, foreign companies such as the Paypal with rich experience in fund remittance business will break into the Japanese market. The Act will provide foreign companies with good opportunities for expanding their business in Japan.