Japanese Banking System

Published by Siméon on

If one should ask me a drawback since I’m in Japan, I would probably answer that. It’s a real obstacle course. Compared to Europe, Japan Banking System looks archaic and isolated. Many times, I was like “but, why?”! I’ll not make critics about the Japanese habit to use cash, it’s more a matter of cultural habit. But, in some cases I was wondering why there are no choices.

Everyday life

Firstly, aspects that even tourisms can live. Firstly, ATM. They are not open 24/7, for example my University’s ATM is only opened from 9am to 7pm, even if it is in a special room, there are no reason to close the access. A machine is made to work continuously, it’s its main advantage comparing to a human! When the ATM is usable 24/7, like in konbinis, extra fees apply. Why?! What’s the technical reason that requires such fees? I cannot understand.

For example, from 7-bank website, if you withdraw money with a 7-bank card on their ATMS, it’s free during the day… but there is a fee during the night. Even if the ATMs are inside konbinis that are 24/7 opened.

Talking about fees, in Europe the ATM doesn’t charge you when you withdraw money, but your bank can do it if you don’t use their ATMs. In Japan, every ATMs charge you if you don’t have the card of the ATM’s bank. (generally, 110 yens for 10,000 yens and 220 for 20,000, doubled during the night). Hence, it’s double penalty! Moreover, if you don’t have an international bank like Revolut, that don’t charge you when you withdraw foreigner currency, there are a third fee.

Another point is the cards Suica, Icoca, Pasmo… that enhance train traveling. Indeed, buying a specific ticket for each trip is not required anymore. It works as an e-wallet that can be charged. The price of each trip is debited at the gates of the stations. The card can be charged at machines available in station or in some ATMs, but only witch cash. There are no machines with payment terminal, why? Moreover, the cards can be charged in konbinis that have the terminals for card (Japanese and foreigner ones), but it’s not possible to use them, only cash.

Main Intelligent Card (IC) from Japanese transportation companies. Up, the cards from JR companies (Japan Railway, former national company of Japan, divided in six entities and privatized).
Felica logo, made in Japan contactless

The only way to charge Suica with credit card is to use Mobile Suica (by smartphone). But there are two annoying requirements. First condition that can be easily resolved, is hardware. Indeed, Suica used the Felica NFC technology, created by Sony; it is different from general NFC. Whole Japan uses that system, for IC badges or other contactless cards. But only phone sold in Japan, iPhones and Google Pixels have the Felica chip. For example, my Samsung Galaxy S10+ doesn’t work, a Japanese phone is required. But the second condition is more problematic: only Japanese cards can be used with Mobile Suica!

And JR East (Suica owner) is not the only company that not allow foreigner cards. For example, Mercari website (second-hand marketplace) doesn’t allow oversea credit cards. It’s not written when the website asks for card reference. Moreover, Visa and MasterCard logos doesn’t help. But, when the time to pay comes, the website refuses the payment, just saying the card cannot be used (without explaining why). I should go in the FAQ (only in Japanese) to find the information, and understand what happened. To buy my product, I should: associate my Japan Post Bank account to Line Pay, and then create a virtual credit card to be able to pay only. Unfortunately, I didn’t have enough money on my account, so I had to wait the next day for ATM opening!

Bank account

As new resident in Japan, one of my first duties was to open a bank account. The easiest bank is Japan Post Bank. Indeed, in some bank, six-month of residence in Japan is required, before opening an account. It shoulb be noted that a short stay visa (tourism) cannot be used to open a bank account. Generally everything is in Japanese, almost no document is translated in Post; help from a Japanese is more than welcome! Another important thing is the timetable, in Japan banks close early, around 3-4pm. It’s better to come early, as the procedure to open an account is long.

Another important matter to open an account is hanko (Japanese seal), used as a signature. However, some banks allow foreigner to sign, like Japan Post Bank. Even if I had already a seal, I chose to sign. Indeed, the seal must not be lost or forgotten for any operation. Because I cannot forget or lose my signature, it’s safer!

Hankos in a store – Wikipedia

I only own a Japan Post Bank account, but I looked a bit for other banks. Same problem appears: the difficulty/cost of international bank transfer. Contrary to Europe with the SEPA area that simplifies everything, or with the IBAN used in Europe, Africa, Brazil or Middle-East to simplify international bank transfers; in Japan, there are not such things. Even if my European bank (Revolut) can send Yen directly, I cannot send them on my Japanese account. Japan Post Bank need an intermediate bank, Deutsche Bank, with fees, and I have to send euros. But on the pamphlet the IBAN of that account is missing, so how I make the transfer?

Seven Bank uses Wester Union, for other banks I only visited the websites but the transfer fees are about 40 €. Hence, to send money from Europe there are fees whether it’s from ATM or for transfer.

Banks give generally a cash card, that cannot be used in store. They also give a booklet, it’s the first time I have that! It can be used in ATM instead of cash card. When money is withdrawn or deposed, the new balance is written on it. It’s funny, it seems to come from another time. But some banks stopped to give it.

Cashless

Japan has the reputation to be a cash country. I could often have about hundred euros in my wallet. I France, I never use cash. However, Japanese government try to change that habit, indeed, when they increased the VAT tax, they also introduced a discount if you pay cashlessly.

Cashless promotion with 5% discount

Cashless are payment with credit cards, IC cards (like Suica), Line Pay, We Chat… However, as I said before, charging IC cards is only achieved by cash, hence, IC cards are nor really cashless! LINE Pay is the Japanese mobile solution, like the Chinese WeChat. At first, LINE is a messaging app like What’s app, that grown with a lot of services. To use LINE Pay it is necessary to connect it to one’s bank account (only Japanese) to send money to one’s LINE account. Then, to pay QR-Code or contactless can be used.

But for the contactless, the same problem with the Suica occurs: the system used. Again, it’s Felica, like all Japanese contactless terminals. The Visa and Mastercard standard cannot be used, as in Europe, it doesn’t work. The only place I could use it was McDonald’s. Actually, the employees are not familiar with that, each time I use it they are surprised and don’t understand what happen 😄. Hence, it is not possible to use its European phone (except iPhone/Pixel) with contactless (except QR-code). For example, Google Pay is blocked on my Japanese account because I don’t have the Felica chip, in France I don’t have any problems.

Another point that surprised me about cash hegemony that I don’t understand. In OK supermarket (hard discount supermarket), a fidelity card can offer 3% of discount when it used… except if credit card is used, why? Without the fidelity card, the price is the same by cash and by card… Another example are the bills. They can be paid in konbinis, but only by cash!

Conclusion

To conclude, even if I complained about Felica, I have nothing against it. There are probably technical reasons to choose it over other technologies, it’s also a matter of choice. I was just wondering about why only Apple and Google include the Felica chip in their smartphones. However, I cannot understand why it’s not possible to charge IC cards by cards; or why foreigners cards are banned sometimes. I find the insularity, literally as figuratively, of the Japanese Banking System annoying.


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