







“Japan is very late to instant, mobile payments,” Takashi Okita, CEO of SBI Ripple Asia, told me over coffee in Tokyo. “In China, people are using Alipay and WeChat Pay. In the US people are using PayPal and Venmo. In Japan, people are still using cash.”





In an attempt to change that reality, last week Ripple announced the launch of MoneyTap, “a Ripple-powered payments app to offer real time settlement for domestic payments in Japan.” This new project is a collaboration between Ripple and SBI Holdings of Japan. Okita says that Ripple will work with Japanese banks to provide something similar to the mobile payment service Venmo, but using blockchain technology.





MoneyTap uses Ripple blockchain technology, which is distinct from the Ripple cryptocurrency (XRP). People can use their phone numbers or QR codes to send money to each other, with biometric log-in for security.







This could be a game changer for Japan. “In Japan, domestic inter-bank payments is not a very good experience,” Okita says. “The banking network is not 24 hours a day, it’s less than 10 hours a day, five days a week. The banks charge around $3 for inter-bank transactions, so if I’m sending you $3, I have to send the bank another $3.”





Meanwhile, Okita says, peer-to-peer transactions in Japan are still mostly in cash. “If I’m transferring $5 to you to buy coffee at Starbucks, I never use the banking system, I’ll just give you cash.”





This raises a much larger question. Why is Japan so behind on mobile payments? It wasn’t always that way, Okita says. Around 15 years ago, Japan was poised to become a leader in fintech. Okita notes that NTT Docomo launched a mobile e-wallet in 2004, allowing people to take a taxi or train using their phones. So what happened? The iPhone came along in 2008, Okita says, and Japan failed to adopt a new, game-changing technology.





Today, Japan’s start up culture is not conducive to disruptive financial innovation. “All over the world, powerful apps are coming from banking or fintech companies. But not in Japan,” Okita says.“There are no unicorns here. Most Japanese fintech companies are trying to achieve small successes without causing too much disruption.”





“There are not many fintech startups in Japan that have the ambition to disrupt the current industry,” he adds. “It’s too comfortable to work with existing players.”





It’s relatively to raise 10 to 15 million US dollars, but nobody tries to raise a billion dollars, Okita says. For that reason, he says, “disruptive apps never come from fintech startups.”





IPOs are much more common in Japan than in the US, Okita saya. Startups would rather collaborate with banks, get money from large institutions and then do an IPO. “This is the best scenario for start ups. Startups don’t like moonshots. A small shot is enough.”





MoneyTap, of course, is also working with banks. The program will be launched by SBI Net Sumishin Bank, Suruga Bank, and Resona Bank.





But do Japanese banks even need blockchain? It’s not like blockchain is required for mobile payments: PayPal and Venmo have done just fine without it. Okita explains that blockchain will make transfers less expensive for both users and banks.





“The current inter-bank transfer system is a very centralized system, because you need to invest a lot of money to keep it reliable. Blockchain-based payments don’t require that same level of centralization.”





MoneyTap is not working with a decentralized blockchain like Bitcoin’s, but a consortium blockchain that is similar to a private blockchain, where each member bank has a node.





There are other reasons why Japan needs a blockchain project of this scale. If nothing else, it’s a way for Japan to make up for lost time. “Japan was the king of the mobile internet, and then we were disrupted by smartphone technology,” Okita says. “Now Japan needs a new, game changing technology, and I believe that technology is blockchain.”





Can Japan still catch up? “Two years ago, Japan had an opportunity to become the leader in blockchain technology. Now it’s not so easy to be the leader,” Okita admits. “But that’s fine, we could be still a leader.”











