DEBIT CARD DEBUT:
Cash Card Payment Possible from March 2000
March 31, 2000
Shopping by debit card at last moved into high gear in Japan on March 6, 2000. Consumers can now use the ATM cash cards of 617 financial institutions to pay for purchases at 100,000 stores all over the country. This follows a trial that began in January 1999 and in which nine financial institutions and 19 major retailers took part. A debit card withdraws money from the user's bank account and immediately transfers it into an account designated in advance by the shop concerned.
Quicker than Credit Cards
Debit cards resemble credit cards in that they allow people to shop even if they are not carrying any cash. Special features of debit cards, however, are that shoppers pay no transaction fees and that the fees paid by shops to financial institutions are low.
The convenience of debit cards means that they are being welcomed by department stores and other large retailers. An executive at a leading household electronics store predicted: "Debit cards are very convenient, so they will spread rapidly." They are not, however, without their disadvantages. There is no escaping the danger that someone may steal a look at a shopper inputting their secret PIN or may be able to get at information stored magnetically by hacking into the terminals. There is also the problem that for small shops that sell relatively small amounts of goods to each customer, such as convenience stores, the fees charged by financial institutions whenever a customer uses a debit card in their store will squeeze their already small profit margins. Some analysts suggest that the use of smart cards and the system of bank fees will need to be reviewed in order to tackle these problems.
Pinning Hopes on PINs
Japanese people have historically viewed payment by cash as superior, while payment by credit card--with its connotations of going into debt--was looked down upon somewhat. Just like cash, however, payment by debit card effectively involves giving an amount of money equivalent to the price of goods to a store at the time of purchase. This may allow people to overcome the psychological barriers to noncash payment methods.
Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.