The service called "Kotra (cotra)" will start on October 11.
Kotora" is a small payment infrastructure for transfers between individuals of 100,000 yen or less, and stands for "small transfers," or in alphabet, cotra for cooparativr transfer system.
The settlement operator is Kotora Corporation, whose shareholders are megabanks Sumitomo Mitsui Banking Corporation, Bank of Mitsubishi UFJ, Mizuho Bank, and Resona Bank (including Saitama Resona Bank), each of which holds an equal 25% stake.
The megabanks' joint development of a small-value payment infrastructure is intended to cooperate with the government's policy of promoting cashless transactions and to reduce the cost of handling cash, which is estimated at 800 billion yen annually.
There are no transfer fees for money transfers between companies that are members of "cotra" via the smartphone application. Moreover, the cell phone number or e-mail address of the recipient can be used to send money, so there is no need for the recipient's bank account number.
Since remittances between individuals are estimated at 40 trillion yen per year, no remittance fees would be a great benefit to users.
Initially, it appears that remittances will be limited to interbank transfers through the National Bank Funds Settlement Network (Zengin System), but the policy is to open up the Zengin System if money transfer operators open checking accounts with the Bank of Japan.
To explain a little, money transfers between banks are done through the BOJ. When we transfer money from our bank account A to someone else's bank account B, we usually think that the money is directly transferred from bank A to bank B. In reality, however, the money is settled by transferring it between the checking accounts of each bank at the BOJ. The Zengin system is responsible for such settlements.
Therefore, in order to settle payments through the Zengin System, a money transfer agent needs to open a checking account at the BOJ and put funds in it.
Since remittance transfer companies such as PayPay and Rakuten Edit will also join "Kotora," I believe that the number of payment methods will expand all at once.
As payment methods, such as payroll transfers that do not involve banks, continue to evolve, I too will deepen my understanding of new systems and adopt less costly methods.
