Japan’s Mizuho Bank Ltd., a subsidiary of Mizuho Financial Group, Inc., one of the largest financial services companies in Japan, with total assets of approximately $1.8 trillion in 2017, has confirmed that it is launching a new bank digital currency platform called “J-Coin Pay” next month in cooperation with around 60 other financial institutions. J-Coin will be a stablecoin with the value of one of its units fixed at one Japanese Yen (JPY).
On 27 December 2018, we reported that Mizuho Financial Group (MHFG) was planning to launch its own yen-pegged stablecoin in March 2019 in a bid to promote cashless payments at Japanese retailers. This article is an update of that story based on everything we know now.
How Did the J-Coin Project Get Started?
This project was announced in December 2017 by Yasuhiro Sato, who was President of MHFG at the time. In a report by Nikkei Asian Review, we discovered that Sato had told them about J-Coin in an interview.
Sato had said that J-Coin would gain mainstream adoption “if the benefits to users and participating merchants become clear.” He had also said that it was important to have a bridge between J-Coin and the Alipay platform in order to allow Japanese retailers supporting J-Coin to accept payments from foreign visitors (especially those from China). Finally, he had suggested that Mizuho would try find a convenient way for users to exchange J-Coin with other form of electronic money (including other digital currencies).
What Is the Main Motivation Behind J-Coin Pay?
Mizuho is hoping to make money by charging merchants lower processing fees for payments than credit card companies. Nikkei’s December 2017 report also mentioned that “Mizuho also seeks to improve convenience by allowing users to exchange J-Coin with other digital currencies and electronic money.”
How Does J-Coin Pay Work?
According to Mizuho:
“J-Coin Pay employs QR codes to provide smartphone-based payment services. It will
allow customers to make payments, send and receive transfers, and perform other
financial transactions all on their smartphones. Customers will also be able to use the
smartphone app to move funds between their J-Coin Pay accounts and their deposit
accounts at their financial institutions for free, anytime and anywhere. “
What Does the J-Coin Pay Mobile App Look Like?
The app will be available for both iOS and Android from March 1st. Here is a screenshot from the iOS version:
How Does J-Coin Pay Promote Cashless Payments?
According to an April 2018 report by Japan’s Ministry of Economy, Trade and Industry, the Japanese government is “aiming to double the ratio of consumers using cashless payments to 40% by 2025.”
Here are the features of J-Coin Pay that will allow it to drive mainstream adoption of digital currencies:
- “Available in both urban and rural areas”
- “Available at both large retail chains and small- and medium-sized shops”
- “Available to anyone with a deposit account, including seniors and residents of rural areas”
- “Available to non-Japanese customers visiting Japan, through partnerships with QR code operators outside Japan”
- “Allows for transferring funds to other individuals as well as paying at stores”
- “Allows for transferring funds not only with Mizuho Bank accounts but also with accounts at any of the participating financial institutions”
What Is the Plan for the Rollout of J-Coin Pay?
Mizuho says that its customers “will be able to register their Mizuho Bank deposit accounts the same day and their deposit accounts at certain participating financial institutions from March 25,” and that “other participating financial institutions will be added gradually thereafter.”
What are the Future Plans for Expansion of J-Coin Pay?
Here are the main methods that Mizuho will use to expand this new offering:
- “Expand the J-Coin Pay affiliated store network and strengthen partnerships”
- “Enhance payment services for non-Japanese customers visiting Japan through partnerships with QR code operators outside Japan” (Mizuho’s partnerships with UnionPay and Alipay will be just the starting point for expanding its network of global partners)
- “Provide J-Coin Pay for transfers between corporate clients and individual customers, such as expense accounting and salary payment”