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Japan: Japan To Introduce Law To Protect E-money Use


TOKYO, JAPAN: The Financial Services Agency is conducting a feasibility study on formulation of a law to strengthen the protection of electronic money use, sources said Sunday (2 Dec).

The agency's study group over payment is expected to submit a report this month regarding problems surrounding the use of e-money and other non-cash payment methods, according to the sources.

The agency, which seeks to map out the plan to enhance competitiveness in the financial and capital markets by the end of the year, aims to incorporate into the plan a policy to enact a new law, the sources said.

Deregulations for e-money operators will be examined to ensure the new law will not become a stumbling block for creation of new financial services. The regulations are expected to be more relaxed than that of banks.

The study group, headed by Tokyo University Prof Shinsaku Iwahara, wants e-money operators to better protect e-money users and improve payment systems. It will also try to convince operators of the necessity of setting up rules to allow financial authorities to keep watch on their management.

The agency will likely push for a system to register e-money operators and also study ways to protect users and lift a ban on a service for cashing-in e-money in the event of an e-money operator's collapse.

The use of e-money has rapidly expanded as people can easily use the system to pay for goods or services by simply placing IC cards or specially equipped mobile phones over reader terminals.

As of the end of September, there were more than 55 million IC cards in use in the country--such as East Japan Railway Co's Suica card, Sony Corp affiliate Bitwallet's Edy cards and Seven & I Holding Co's nanaco cards.

E-money also is used for making purchases over the Internet and can also be used to make deposits and withdrawals usually done through bank accounts.

However, the agency does not have an established framework to protect users if an e-money company collapses, or to deter illicit activities such as money laundering, sources said.

Currently, under the Prepaid Card Law, card operators are only required to deposit with the government funds equivalent to half of the unused amount of the prepaid e-money. (The Yomiuri Shimbun/ ANN)

MySinchew 2007.12.03

 

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