Wise Makes History as First Foreign Firm to Access Japan's Payment Clearing Network
- tech360.tv
- Oct 18, 2024
- 2 min read
Wise secures direct access to Japan's bank payment clearing network, a first for a foreign firm. Japan's high average fee for cross-border payments prompts Wise's entry into the market. Total remittances in and out of Japan reach a record high of 1.54 trillion yen in the 2023 financial year.
This development, announced by Wise on Thursday, has the potential to disrupt the competitive landscape for remittances in Japan, impacting major banks like Mitsubishi UFJ, as well as smaller players such as SBI Shinsei and Sony Bank.
Despite a gradual decline in fees for cross-border payments in recent years, costs still remain relatively high. According to World Bank data from the first quarter of 2024, Japan has the highest average fee among G7 countries, standing at 6.94% for sending US$200. In the 2023 financial year, total remittances in and out of Japan surged to 1.54 trillion yen (US$10.3 billion), a record high representing a 14.4% increase from the previous year.
By gaining access to Japan's "Zengin" system, Wise will be able to bypass intermediary banks involved in processing and settling funds within Japan. This direct access is expected to lead to reduced fees and faster processing times for customers. Wise, known for its range of services including consumer remittances, business accounts, and providing backend payments infrastructure to financial institutions, boasts an average fee of 0.59% for its cross-border transactions globally.
In its most recent financial report, Wise revealed a 20% increase in quarterly cross-border volume. Throughout the 2023 financial year, the company facilitated the transfer of approximately 120 billion pounds in total, accounting for 5% of personal remittances and 1% of small and medium business remittances worldwide. Notably, Wise experienced a 35% growth in its personal and business customer base in Japan over the past financial year.
Wise secures direct access to Japan's bank payment clearing network, a first for a foreign firm.
Japan's high average fee for cross-border payments prompts Wise's entry into the market.
Total remittances in and out of Japan reach a record high of 1.54 trillion yen in the 2023 financial year.
Source: REUTERS
