Friday, December 16, 2005

Japan is leading the technology again

Goodbye paper money, hello e-cash

Electronic currency is taking Japan by storm

Friday • December 16, 2005

TOKYO —- Electronic cash (e-cash) is rising to be a dominant form of currency in Japan as its society is rethinking commerce by doing away with the increasingly arcane concept of paper cash, reported The Washington Post.

Mr Toru Nashimoto, a 36-year-old man hardly carries his wallet with him anymore. "Who needs real cash anyway," Mr Nashimoto said.

E-cash is fast becoming popular with the young working professionals in the country.

Technology analysts say the use of electronic money amounts to a leap forward in commerce and shopping.

The possibility of using cell phones that transmit infrared signals, or a small card which doubles as a set of electronic keys could enable consumers to whisk through checkout lines, buying everything from sushi to furniture without even yanking out their wallets.

With e-cash, users can add value to their cards or cell phones at thousands of automated docking stations around the country, where they insert paper money and get credit for e-cash. The newspaper reported users could also use credit cards to replenish e-cash on the Internet.

The smart cards and cell phones used are embedded with antennas and integrated circuit chips that allow the devices to receive and emit electronic signals. When these devices are placed near a scanner at e-cash friendly outlets, a signal is emitted and credits (in smart cards and cell phones) would be automatically deducted.

Electronic cash emerged four years ago as means for convenience for the fast-paced train commuters. The Japan Research Institute, an economic research group, estimated at least 15 million people here are using e-cash, a figure that could possibly reach up to 40 million by 2008.

Convenience stores, department stores, cafes, restaurants, news stands and electronics retailers, all accept e-cash — enabling users to go shopping carrying nothing but their cell phones.

At some supermarkets, e-cash account for up to 40 per cent of all purchases.

Tokyo's subway system will begin to accept electronic money next year.

Mr Makoto Yamada, an executive at bitWallet Inc — operator of Japan's largest virtual money service — said Japan is moving towards a "cashless society".

It has been noted that the e-cash idea would work well in Japan partly because of the seemingly low concern for safety and security. In Japan, lost wallets are often returned to the owners intact. Hence the loss of a card or cell phone loaded with a lot of electronic credits would represent as a small risk.

Additionally, it is cumbersome to use cash in Japan, as the lowest denomination of paper currency is the 1,000 yen note. As a result, people would have to carry with them six different yen coins just to make small purchases.

The e-cash phenomena bloomed after DoCoMo, Japan's largest cell phone operator, added electronic cash transmitters to its latest-generation cell phones last year.

Currently, e-cash transactions are made available for purchases below US$10 ($16). However, that amount is expected to increase after DoCoMo extends credit amount on cell phones and smart cards.

E-cash could also play a part to help pick up the deflation in the country. Thousands of businesses are purchasing the new hardware required to accept e-cash. This was done in hope to encourage Japanese consumers to buy more.

Experts had cited the rise of e-cash as a reason for a drop last July in the circulation of yen coins, the first decline since 1971.