Many Japanese lenders to end paper promissory note and cheque issuance
An industry survey shows 83% of institutions planning a final issuance cut-off chose September 30, with smaller firms urged to adopt digital payments before March next year.
- A survey by the Japanese Bankers Association found that 83% of Japanese financial institutions plan to stop issuing paper promissory notes and cheques on September 30.
- Following the issuance deadline, payments using these paper instruments will generally cease from October 1, with a full abolition planned for March of the next year.
- The change is part of a push towards digitalization, with users being urged to switch to alternatives like internet banking and electronic payment services.
- This transition primarily impacts small and medium-sized businesses, which are the main users of paper notes, and aims to reduce costs, workloads, and risks like theft or loss.
Jiji Press reported on September 7 that 83% of Japanese financial institutions planning to set a final issuance deadline for paper promissory notes and cheques had selected September 30, citing a Japanese Bankers Association (JBA) survey.
The JBA and other bodies are urging users, primarily small and medium-sized businesses, to prepare for the switch.
An association official urged “users to take enough time to make a smooth transition”.
Many companies that continue using paper promissory notes are believed to be small and medium-sized businesses in construction and manufacturing, held back from digitalisation by established commercial practices and resistance to change.
That deadline means many institutions will stop issuing the paper instruments on September 30.
Payments from current accounts using them will, in principle, cease to be available from October 1, before the planned abolition of their use in March next year.
Internet banking and electronic payment services are being promoted as replacements, alongside a system run by a JBA subsidiary for electronically recorded monetary claims.
Digitisation is expected to cut associated workloads and costs.
Paper instruments, traditionally used for settlement between companies, also carry the risk of loss or theft and can delay the crediting of funds.
Paper usage had already fallen by 2024 to about one-twentieth of its 1979 peak, JBA data show.
The Electronic Clearing House, which the association launched in November 2022 to settle notes and cheques after converting them into electronic data, processed about 340,000 transactions in July, roughly half the volume expected by the JBA.
The facility itself is due to be abolished in June 2029.
[Copyright The Jiji Press, Ltd.]
