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  • Settlement Center for Debit Cards to Start in Oct. 1999
  • November 10, 1998 (TOKYO) -- The Japan Debit Card Promotion Association announced that it will establish a central clearing center in October 1999 to handle settlement information among financial institutions.
    The clearing center settles accounts between a customer and a retailer's accounts when the customer utilizes a debit card to pay for purchased merchandise or services.

    Both customers and retailers will be able to use a debit card to settle accounts if either party has an account with a member financial institution of the clearing center.


    Debit card terminal (prototype)


    A debit card enables an ordinary cash card to make payments at retailers. Unlike credit cards, debit cards do not carry credit. However, debit cards have an advantage over credit cards in that financial institutions do not need to issue new cards to customers.

    When a user inputs a password after having the debit card scanned, the balance of the account is checked to make sure that sufficient funds are available for a transfer to a retailer.

    Some financial institutions and retailers have decided to begin partial debit card services in January 1999. However, since there are no organizations that can handle settlements among financial institutions, retailers must sign a contract with each financial institution.

    Customers are not allowed to use cards of financial institutions that have not signed a contract with retailers.

    The clearing center that will start operating next year will solve this problem.

    Information from a customer's account is collected and transferred to a settlement bank, which will handle the settlement between the customer and a retailer. Member banks will be the settlement bank.

    Because customers can use the service even if they are not customers of the settlement bank, a Japan Debit Card Association official said that the association expects 1.1 billion to 2.2 billion settlements five years after the service is launched and 2.5 billion to 5 billion settlements 10 years later.

    The association was formed in June 1998, and it has 1,045 members, including the Ministry of Posts and Telecommunications; 914 financial institutions; 112 department stores, supermarkets and convenience stores; and 19 manufacturers.

    Related stories :
    Japan's Telecom Assn. to Start Electronic Payments Test
    IBM Japan Sets Up Study Group for Banking Service Using GOLD

    (BizTech News Dept.)



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    Updated: Mon Nov 9 17:28:59 1998 PDT