Japanese banks to offer instant money transfers using blockchain

Japan will this month become the first major economy to launch a domestic payments system based on blockchain technology when three Japanese banks start offering customers free real-time money transfers via a new mobile app. The launch of the MoneyTap system, which secured approval for its licence from the ministry of finance last week, could be an important step in helping Japan to achieve its goal of reducing the use of cash, which still accounts for 80 per cent of transactions in the country. The new platform has been developed by SBI Ripple Asia, a joint venture between Japan’s SBI Holdings and US blockchain specialist Ripple.

It will be launched by three of the country’s mid-sized lenders: SBI Net Sumishin Bank, Suruga Bank, and Resona Bank. Japanese banks charge customers about $3 to transfer even small amounts of money to other accounts via the Zengin domestic payments system, which only operates until 3pm on weekdays, meaning people often have to wait a day or more for money to arrive. That is much more expensive and slower than in many other countries. “We would like to change peer-to-peer and interbank payments in Japan, which are very inefficient,” said Takashi Okita, chief executive of SBI Ripple Asia and a former official at Japan’s Financial Services Agency.

“The FSA is trying to reduce cash as a percentage of the economy and once people use the new MoneyTap system they will never go back,” he said. “The banking industry in Japan is still living in the non-internet era — even the banks realise they have to change.” Alipay, the mobile payments arm of China’s Alibaba, launched a service in June to provide a quicker and cheaper way for people to send money from Hong Kong to the Philippines over its GCash blockchain system using Standard Chartered as its banking partner.

Ripple caused a stir in the payments industry in April by teaming up with Banco Santander to offer a service based on Ripple’s blockchain messaging technology that allows the Spanish bank’s customers in the UK, Spain, Poland and Brazil to send money in many currencies around the world. More than 100 financial institutions have registered with Ripple to use its blockchain-based messaging system, known as XCurrent, which allows banks to co-ordinate the transfer of money between currencies in seconds.