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| Illustration. Digital payment system for workers' wages. |
PEWARTA.CO.ID - Japan has officially begun transitioning to digital wage payments through various platforms.
This significant move to reduce cash dependency comes after PayPay, a popular QR code-based payment app, became the first company to receive government approval for this initiative.
The main goal behind this shift is to promote cashless transactions and broaden the adoption of financial technologies across the country.
According to a report from Kyodo on Saturday, PayPay Corp. and nine other companies under the SoftBank Group Corp. started implementing the digital wage payment system for their employees as of September 2024.
This method of payment is only used with the consent of the employees involved.
“This initiative aims to improve employee benefits by increasing the options for wage payment and to promote the expansion of PayPay's economy across the group,” read the company’s official statement, quoted via ANTARA.
PayPay has experienced rapid growth, emerging as one of Japan's most popular QR code-based payment apps, with over 65 million registered users.
Japan’s Ministry of Labor announced back in 2022 that companies would be permitted to pay wages through digital payment apps starting in April 2023. This policy is part of a broader strategy to expand the use of cashless payments and spur economic growth.
Despite this, workers who prefer the traditional method of wage payment can still opt for direct deposit into their bank accounts. This diversification in payment methods is designed to accommodate varying needs and preferences among workers.
According to a 2020 Japanese government survey, around 40 percent of employees indicated they would consider the option of receiving wages through QR code-based applications, giving PayPay optimism about public reception toward this innovation.
To ensure financial security for users, the government has set a maximum balance limit for digital wallets used to receive wages, capped at 1 million yen, which is approximately Rp103 million.
This measure is intended to protect users from potential losses, as payment app operators are not subject to deposit insurance systems like traditional banks. In Japan, the deposit insurance system guarantees up to 10 million yen, or around Rp1 billion, in the event of a bank failure.
The government also requires every payment app provider to undergo a stringent examination process for at least one year to prove they can maintain the security of wage balances, even if the business faces financial difficulties.
Currently, in addition to PayPay, three other payment app operators have applied to the Ministry of Labor for approval to implement digital wage payments.
Competition among these providers is expected to further expand digital wage payment options in Japan, providing more benefits for workers in the future.
