Japan Preparing for Abolition of Paper Promissory Notes, Checks

Tokyo, Sept. 7 (Jiji Press)–Many financial institutions in Japan are set to end the issuance of paper promissory notes and checks on Sept. 30, ahead of the abolition of their use in March next year, to ensure a transition to internet banking and electronic payment services. From Oct. 1, payments from checking accounts via paper promissory notes and checks will no longer be available in principle. The Japanese Bankers Association and others are urging users of such financial instruments, mainly small and midsize businesses, to shift to electronic payment services, including a system operated by a subsidiary of the JBA for electronically recorded monetary claims. While promissory notes and checks have been used as means of settlement between companies, they have had problems such as the risk of loss or theft and the time required for funds to be credited. Digitizing the procedures is expected to reduce related workloads and costs. According to the JBA, the number of paper promissory notes and checks used in 2024 fell to about one-twentieth of its peak in 1979. In November 2022, the association launched an electronic clearinghouse to settle promissory notes and checks by converting them into electronic data. The number of transactions processed through the clearinghouse stood at about 340,000 in July, roughly half the level expected by the JBA. Many of the businesses that continue to use paper promissory notes are believed to be small and midsized companies in the construction and manufacturing industries that are unable to digitalize due to their business habits and resistance. The electronic clearinghouse itself will be abolished in June 2029. According to a survey by the JBA, 83 pct of financial institutions scheduled to decide a final issuance deadline have set it on Sept. 30. A JBA official called on “users to take enough time to make a smooth transition.” END [Copyright The Jiji Press, Ltd.]