Digital Money and Electronic Payment System

As I'm sure everyone is aware, Japan is moving toward electronic technologies from the standpoint of a more "cash-based" lifestyle, while in the U.S. the move is from a more "checkbook-based" lifestyle. One expects new technologies to enter into people's lives at precisely those points where they see the new way as noticeably more convenient or reliable than the old way.

So, as long as it's just as easy to get real cash as to replenish a digital cash card, people in Japan will probably keep using cash. They are used to carrying it around, they are comfortable with its reliability, and it's already easier now than before to get more cash from a nearby ATM.

Home access to the Internet (or other network) is still not to the point, especially in Japan, where there are lots of people who have the equipment or service available to replenish a cash card at their home desktop PC. Until that happens, you might as well get cash from the ATM as replenish your card somewhere.

Similarly, it is faster to pay with cash than with a debit card, but people in the U.S. had already become accustomed to carrying only a small amount of cash. Instead, people wrote checks at the grocery store, etc. A debit card *is* faster than writing a check.

Another example of lifestyle differences is in the area of financial management software. In the U.S., paying bills from a home PC is obviously more convenient than writing many checks and balancing a checkbook by hand.

In contrast, in Japan, it is more common (than in the U.S.) to have utility payments electricity, telephone, water/sewage) automatically debited from one's bank account. There is relatively less motivation to do one's own financial management via software at home.

With regard to on-line stock trading, the economic context may be the biggest factor blocking this activity in Japan, now that deregulation is making things easier. Since the economy is good in the U.S., people are enthusiastic about getting the highest possible return on their assets. In the middle of the economic downturn in Japan, people may be more concerned with protecting their assets than with growing them.

What about Europe? Do any of you have insights into why some countries, like Belgium, have relatively high usage of electronic money? We look forward to hearing from you,

(1) Richard Dasher
Lifestyle patterns and legacy infrastructure are probably the biggest reasons for the lack of enthusiasm for digital cash and electronic payment systems. This message is mostly about lifestyle.

I would like to add one more thing regarding this issue. It is the IRS tax filing. Because of this event!, many people are very much interested in for what purpose their tax would be used. And they check and control their own money by using software. In Japan, everything is opposite. People trusted the bank and tax ia automatically withdraw from their salary. These tax system should be the big difference.

Begining of the Conference-Copyright Infringement (3)Bradley L.Bartz
In my opinion the credit card is the electronic transaction tool of choice for Internet commerce. It is a transaction vehicle that is well understood by consumers and used by most.

If her observation, which agrees with Mr.Bartz's, is true, the picture is trikingly different in Japan. If you look at as an example, the payment vehicle they employ are QQQ, Webmoney, CyberCoin, Smash, Acosis, Niftyserve, SANNET, So-net, People, BUTAMAN and CALEN. To categorize them, they are (1) third party collection sites, (2) pre-paid cards, or (3)ISP collection services.

NONE of them, as I understand it, involve buyers sending credit card numbers to www.music.co.jp.
These mechanisms are analogous to CATV companies collecting pay-per-view charges on behalf of the contents providers. This format is actually becoming quite common in the download sales of digital contents in Japan. Please correct us if we are wrong. According to the student, she found that there are not many download contents sales sites in the US to begin with.

In the case of music, the famous ones are predominantly CD sales. Download cliparts are sold on some occasions in the US, but mostly in large lots using credit card and SSL. I asked her to look for sales of cliparts in single pieces, a practice that is often seen in Japan. She could not find any in the time I had given her.

It seems to me that the use of credit card has such a deep root in the US, that other mechanisms for B to C e-commerce payment are not developing very much. Perhaps less than in Japan. I also think such conservatism on the choice of payment vehicle is affecting the structure of businesses on the net.

Looking into the future, I think the most influential one is going to be music. With the advances in compression technologies such as MPEG, music download can become a killer application. It seems to me that if sales of download music takes off, unconventional means of settlement (ones that do not involve sending credit card number to the seller) will expand rapidly in Japan.

Can someone educate me how download music business is evolving in the US or in other parts of the world? Will it use credit card also? Or is the copyright issue holding the whole thing back?

(1)Richard Dasher
but people in the U.S. had already become accustomed to carrying only a small amount of cash.

The other point I want to make is that the office environment in Japan is quite different from the one in the US. In US, most of the employees has either a private room or a partitioned section. That means there is privacy on your desktop. But in Japan, most of the traditional companies has a big office with connected desks and no privacy.

That means you might not be able to access the web at work that much as compared to the US. Some bosses think that when you have a browser opened on your computer, you are not doing your job. How are these things in Europe?

- it is always easier to jump a level than trying to make a level accepted when it meets some psychological and/or marketing impediments. We have seen this for telephones, where some Eastern European countries jumped directly to cellular phones, while their "normal" phone infrastructure was still in limbo!

- psychological environment is fundamental! From that point of view, the overwhelming accent put on security aspects has been a disaster : what users have heard was not "we are improving security" but "stay away, it is not secure"! This did not happen for telephone, fax and (in France) for the Minitel; so, amazingly enough, the fear of payment problems on the Internet have NEVER occured for the other medias, which are in fact significantly less secure!

- one of the main impediments is the fact that corporate credit cards are not very popular in Europe. We are convinced that this is one of the keys for e-com, as one of the main items of development is the "standard" purchasing inside a company;

- especially in the "B to C" domain, if you want people to be accustomed to a service, you'd better begin with an everyday used service and/or which you can make more or less mandatory. For instance, in France, consumers are more willing to go towards chip-cards and electronic wallets because they are used to chip-cards for telphone-booths, for parking meters, toll-payment on highways...

And the minitel has shown that usage was mainly focused on practical aspects : phone directory (with expanded features), train schedule and ticket reservation, same for planes, local services... What this teaches us is that penetration of e-com depends on our capacity to offer services that people are already using on a large scale and designed in a more satisfactory and practical way than before.

(1)Richard Dasher
Similarly, it is faster to pay with cash than with a debit card, but people in the U.S. had already become accustomed to carrying only a small amount of cash. Instead, people wrote checks at the grocery store, etc. A debit card *is* faster than writing a check.

1. One central point of the Japanese discussion, especially, has been the frustration which Internet users have with the NTT monopoly on access to the 'Net. Should NTT's monopoly be broken? Should competition be allowed to provide a variety of points of access to the world wide Internet?

The issues of monopoly control of access to the 'Net are not just in Japan. Even in Germany, where Deutsche Telecom is supposed to be privatized and competitive, it is fighting vigorously to stop competitors from connecting for access on all types of services. In the US competition for the "last mile" of access is still not clearly allowed.

What about alternative technologies that go around the telecoms? Do these have a future in your country? Fundamentally, infrastructure still is a problem. 50% of the people of the world still do not have even basic telephone services.

2. The other central point seems to be around the sociological, cultural and psychological barriers to change, to the new technologies and how they will change all of our lives. Are these changes just too threatening to people? Will they resist relentlessly? Or is it just a matter of time until the new generation takes over? Which generation are we in?

Are changes brought about by the technologies really "good" for society? What about governments' new abilities to snoop into your private affairs? What about the diminishing of national boundaries and the barriers they imply? What about the elimination of jobs, the traditional intermediaries of our business culture - such as travel agents, stock brokers, insurance sales people, business agents?

Are these people relics of the past? Should we allow unchecked access to all the data, information, and knowledge that is on the Web? Are their fair limits that society should impose? Is their harmful information on the 'Net? Will unlimited access to all knowledge improve the human race?

These are questions to ponder as we approach the final week of our OnLine conference in support of the Nikkei Global Information Summit in Tokyo on March 12. What advice can we give the audience? What ideas can we spark among the people NIKKEI reaches? This is your change to be heard.

(8)Jim Johnson
The other central point seems to be around the sociological, cultural and psychological barriers to change, to the new technologies and how they will change all of our lives. Are these changes just too threatening to people?

I personally don't think so, but maybe in Japan, people tend to look at the effects of these changes. The new technology can be helpful in many ways to our lives, but it might take jobs away from some people. Of course, the new system will add new jobs but will the balance be right? That could be the question the government want answers from.

(8)Jim Johnson
Will they resist relentlessly?

(8)Jim Johnson
Or is it just a matter of time until the new generation takes over?

If we wait for the new generation to take over, it might take more than 10 years. I don't think we should take the "wait and see" approach here. We need success stories, as it is discussed in the Japanese panel, to give everyone hope.

(8)Jim Johnson
Which generation are we in?

I think we are in net-year and we have to react quickly to be in the flow for new businesses.

(8)Jim Johnson
Are changes brought about by the technologies really "good" for society?

I have to believe it is. The use of the Internet has made my job easier communicating with people abroad and getting live information from various countries.

(8)Jim Johnson
What about governments' new abilities to snoop into your private affairs?

This is a very sensitive matter and that's why I asked this panel about the concept of "Cupcakes". I believe the user should decide which information to send out to various shops and sites and the government should be regarded the same. The government should not use our private information if they can get it from different sources.

(8)Jim Johnson
What about the diminishing of national boundaries and the barriers they imply?

I heard about this theme from a professor at Keio University. Although the information barriers will be removed, I don't think the national boundaries will disappear. I think the traditional cultures of various nations will be affected by the net culture, but there would still be physical boundaries.

(8)Jim Johnson
What about the elimination of jobs, the traditional intermediaries of our business culture - such as travel agents, stock brokers, insurance sales people, business agents? Are these people relics of the past?

Of course, some of these jobs will not be needed but it won't be completely eliminated. People will always look for human relations regarding these services. When I visited Ins.web, they told us that insurance sales people will always be needed when they have to pay off the insurance.

(8)Jim Johnson
Should we allow unchecked access to all the data, information, and knowledge that is on the Web? Are their fair limits that society should impose? Is their harmful information on the 'Net? Will unlimited access to all knowledge improve the human race?

Since the Web is known as a free world of information I don't think we can change the culture at this point. There are some harmful information out on the Net, but I think we have to leave it to the users to determine the value and its harm. They will also have to use the knowledge to improve themselves.