Firms in Japan consider cashless payment of salaries

By the next fiscal year, companies may be allowed to digitally pay their employees’ wages to their cashless accounts.
By: | September 16, 2022

A panel of representatives from trade unions and employers within the labour ministry broadly agreed on the plan at its meeting on September 13. 

However, Yuko Tomitaka, head of the general policy promotion department at Rengo (the Japanese Trade Union Confederation), said discussions on this topic will continue. 

“Wages support workers’ lives, and, therefore, their safety and certainty must be guaranteed,” Tomitaka said. “We can’t easily accept something with questionable safety just because it is convenient.” 

Under the plan, companies will be allowed to pay wages to cashless accounts such as PayPay, d-barai, or Rakuten Pay. Operators of such digital accounts are called money transfer business operators. 

The balance in an employee’s cashless account will be capped at 1 million yen (US$6,972). Any amount beyond the threshold will be paid the usual way, including through the employee’s bank account. 

Digital wage payment enables employees to use cashless payments without depositing funds into their digital accounts.

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However, experts have argued that employees who are paid their wages digitally could be at risk of losing money if money transfer business operators go bankrupt or if their digital accounts are used for fraudulent transactions. 

To prevent such a risk, the labour ministry will establish a system to largely compensate all lost funds in such circumstances, according to The Asahi Shimbun.