What's a fintech card like in Japan?

In what feels like a lifetime ago, i travelled to Europe from Japan to unwisely pit my yen against the euro. Why is this worth writing about? Well because i'm at heart a Singaporean, and at the risk of over-generalising (but not by much) Singaporean's love efficiency in stretching their dollar.

Finance in Singapore, Finance in Japan

I'll start with the usual caveats - this is my own experience, yours might differ, etc etc. Treat this as a decently considered data point.

As far as regular banking and finance goes, I'm inclined to think Singapore is light years ahead of Japan. In Singapore, my bank account is linked to a nationally accepted QR payment system that just works. I don't top up my e-wallet, the system does that for me at point of transaction, crediting the sum of the transaction from my bank to my e-wallet, then paying that out to the merchant i'm making a purchase from. No friction. My bank account supports multiple currencies. Interest rates are decently competitive. Bank transfers are next to immediate even outside of banking hours. I can do all of this on an app on my phone.

In Japan (at least from my experience) i can't link my bank account to my QR payment system digitally because my bank is a trust bank (SMBC Prestia), which is quite possibly not even on the list of banks apps consider when building integrations. Assuming i can link the two (i haven't tried), it has to be done by paper forms which, if you've tried to submit paper forms in Japan before, you'll understand is is full of friction. I get next to no interest (0.001%, as mentioned in my credit card post). All transfers of money are done by regular bank transfers, which require a manual vetting of your inputs by the bank before you're authorised to send money to them, i suppose as part of their KYC process. And because its vetted by people who physically sit in an office, this process respects banking hours and take several days. A very manual, throw-people-at-the-problem solution.

What about fintech?

On the fintech front, I have a YouTrip multi-currency card and Revolut card in Singapore, and a Wise card in Japan.

The promise of these cards are that they just work. YouTrip functions primarily as an e-wallet with Mastercard payment capabilities, while Revolut and Wise, while similar, have more complete banking functionality (i'll admit i don't use these other features, but a quick glance at my Revolut app reveals it pays out interest on banked value, supports investments including crypto, and has spending analytics)

In my experience with YouTrip and Revolut, there's only 1 step involved to using these cards - adding money. The transfer process is immediate, there's no manual exchanging of currencies required as its done at point of transaction, the rates are competitive, and it works with Apple or Google Pay. There's very, very little friction in getting and using the cards, which is a product win for both companies.

In Japan, i use Wise. By and large it was a smooth, technologically-enabled onboarding (something i'd taken for granted before coming to Japan). I signed up on their website, downloaded the app, did my KYC via the app by taking a picture of my identity card and my face, and was verified within 2 days. The transfer process, though, is a point of difference compared to Singapore.

What's the difference?

First, top ups are instantaneous in Singapore but aren't always in Japan.

Lets start with how it works in Japan. In my experience with Wise,

• I go to the Wise app, and choose to top up money
• I enter the amount i want to top up, and select "bank transfer" as the method. Wise doesn't charge bank transfer fees, but do charge a 3.3% transaction fee, up to a maximum of JPY990, if using the debit card top up option. You are paying for speed - the latter is immediate.
• Wise provides me a list of bank details to transfer the money to
• I access my bank via my bank's app or website and register Wise as a payee for bank transfers (this involves generating a OTP from a physical token. I hadn't used one in so long i'd forgotten how it works)
• I wait 2-3 days for my bank to (manually) perform KYC and register Wise as a payee
• I make the transfer, from my bank's app or website, for the sum i initially specified. My bank charges me a flat transaction fee, JPY165 per transaction.
• According to Wise, i should receive the funds in around 5 minutes. In my previous experience it took a few hours, but things might have changed since then. If it did, this is a hugely welcome change.

Implications? Assuming this was my first transaction, its 2-3 days to add money into my account. If i was overseas and didn't have my physical token, it'd be impossible to pay via bank transfer and i'd have to use a debit card for top ups, and pay a transaction fee. If not, its 5 minutes to a few hours.

What about Singapore? Well, this is something i truly took for granted while using my Singapore fintech cards, and got me thinking about just how load bearing Singapore's finance infrastructure is. Here's the short version:

• Singapore has this thing called General Interbank Recurring Order (GIRO), which functions as a direct debit system.
• According to the Monetary Authority of Singapore (MAS), the service is provided by the Singapore Clearing House Association (SCHA), an association between MAS and commercial banks.
• From the document, load bearing point 1: "MAS has explicit legislative powers to establish and operate RTGS systems, oversee the management of the cheque and Interbank GIRO systems and regulate the issuance of multipurpose stored value cards." This tells me GIRO is state infrastructure, which means it has state funding, which is a factor in why its free for consumers.
• Load bearing point 2: "Under eGIRO, the entire process of clearing and settlement, including processing of returned and rejected items can be straight through and automated." Key word "automated", which means processing time for transactions round to "zero" rather than "1 day".

So in comparison to Japan, the tl;dr of the process would be something like this:

• In Japan i would tell Wise (or any other similar service) "hey, i want to top up $x". They would say "ok, we'll look out for a transaction with these details, tell us when it's done." I then go to the bank to complete the transaction, bank says "that'll be JPY165 please", then i return to Wise and say "i've sent the money", and they credit me the funds once they see the transaction.
• In Singapore i would tell YouTrip (or any other similar service) "hey, i want to top up $x". They would say "ok, we'll talk to your bank and complete the transaction for you. In the time it took to say this, we've completed all necessary procedures on your behalf, for free, and credited the funds into your account."

How does this manifest to me as a consumer? In flexibility and liquidity. I can walk into a store, see something i want to buy, bring it to the cashier, and complete a direct debit for the exact cost of the item to YouTrip via QR code or bank transfer in the time it takes the cashier to ring up the item. This wasn't something i appreciated enough until i tried to use my Japan-based Wise card to pay for something that exceeded my pre-loaded funds. I wasn't willing to pay the debit card processing fee, so the lack of such load bearing infrastructure all but eliminated this payment method for me.

Second, mobile contactless payments for cards issued in Japan aren't always supported.

There just isn't enough publicly available information for me to make an informed comment on this, but as a consumer this is a point of frustration for me.

Wise's physical card is equipped with contactless payment technology. However, their website explicitly calls out that their card is not compatible with Google pay or Apple pay. The Apple pay version of the article states "we're working to change that", the Google pay version has no such mention.

I emailed Wise to ask about this, and they responded "Unfortunately, we can’t give any extra information — this is because of how we’re regulated and licensed in different regions." I infer from this that Japan says no.

(Interestingly, while Revolut does not support Apple pay, they do support Google pay. I haven't been able to test this because i don't have a Revolut account in Japan. If you do, feel free to let me know your experience)

Having to use a physical card while travelling makes me think of this Kanye tweet.

I don't want to be responsible for one additional thing, and I don't want to have to take out my wallet and physical card to pay for something when i know the option to not do so already exists.

To nobody's surprise, i ended up using my Revolut card (which was issued in Singapore and did support mobile contactless payments) significantly more than Wise when i was travelling, simply because i could tap my phone to pay.

In Summary

If you're Singaporean, appreciate the underlying infrastructure powering your cards and payments. Seriously.

If you're not, and/or have to use a fintech card issued in Japan overseas, well there could be worse things, like using a regular credit card issued in Japan overseas. (Completely anecdotal, but when i had to use my Amex overseas my rate was USD1 : JPY157. At the time, the prevailing rate was JPY150, so that's a >4% markup. Someone with a finance background feel free to correct me, but that seems... very high.)

Here's the tradeoff - using fintech cards from Japan requires a bit of planning in advance (something i'm terrible at). You need to top up funds in advance, in significant amounts to make the bank transfer fee cost efficient, and be ok with pulling out a bright green piece of plastic for every cashless transaction you make. In return, you get a competitive exchange rate. In Japan i think it's worth it.