Japan Puts Its Money on e-Cash

Electronic money emerged four years ago as a convenient tool for fast-paced train commuters. The Japan Research Institute, an economic research group, estimates that at least 15 million people here are now using e-cash, a figure projected to reach 40 million — about one in every three Japanese — by 2008. The number of e-cash transactions reached 15.8 million per month in 2005, more than double last year’s figure, according to Japan’s two largest electronic money providers. E-cash is being accepted at convenience stores, department stores, cafes, restaurants, newsstands and electronics retailers — enabling users to go shopping carrying nothing but their cell phones. At some supermarkets, up to 40 percent of all purchases are made with electronic money. 

Electronic money also banks on consumers who are willing to pay for their purchases in advance, the opposite philosophy of a credit card. That works well in debt-adverse Japan, where only 9 percent of consumer transactions are settled by credit card. But can that translate in a place like the United States, where 24 percent of transactions are made on credit?

Some Americans, analysts note, are already using a version of e-cash to bypass toll lanes on highways. “In the U.S., use of credit cards and debit cards is already very well developed, so it’s unclear how electronic money will take off there,” said Shigeru Takamura, senior consultant at the Japan Research Institute, which is affiliated with the Tokyo-based Mitsui Sumitomo Financial Group. “Look for it in places where saving time matters, like parking garages and grocery stores.”

Many note that the idea works well here partly because concerns about safety and security are quite low — in Japan, even lost wallets are often returned to their owners intact. So the loss of a card or a cell phone loaded with hundreds of dollars of e-cash represents a comparatively small risk.

[Interesting this article does not make the connection considering that lost wallets with real cash in the U.S. pose the same “safety and security” risk as a pre-paid debit card and that FeliCa enabled cell-phones include a remote locking function.. try that with regular paper money..?!? — Eds.]

The Washington Post Via: MSN