TOKYO -- Mizuho Financial Group plans to issue a digital currency, dubbed J-Coin, with other Japanese banks next year and set processing fees paid by merchants lower than those for credit cards, President Yasuhiro Sato said in a recent interview with The Nikkei.

A pilot study will be carried out by March in one or two locations. The J-Coin project will gain momentum "if the benefits to users and participating merchants become clear," said Sato.

J-Coin will be converted into yen on a one-to-one basis and used at supermarkets, restaurants and other retailers, with shoppers scanning a QR code with their smartphones.

Mizuho Financial Group President Yasuhiro Sato

Mizuho plans to establish an issuing company next year and is expected to ask other financial institutions to invest as well.

It is important for J-Coin to be able to connect with Alibaba Group Holding's Alipay mobile payment platform, according to Sato. Alipay is widely used among Chinese consumers, and a linkup would make it easier for businesses accepting J-Coin to tap demand from Chinese and other foreign visitors to Japan.

Credit card companies take a percentage of total payments made through retailers as fees. By setting lower fees for J-Coin, a latecomer to Japan's cashless payment scene, Mizuho aims to increase the number of participating merchants quickly and make J-Coin popular among consumers.

Mizuho also seeks to improve convenience by allowing users to exchange J-Coin with other digital currencies and electronic money.

Meanwhile, rival megabank Mitsubishi UFJ Financial Group is developing its own digital currency, MUFG Coin.

(Nikkei)