TOKYO: Japan is expected to allow companies to pay salaries directly into accounts for smartphone payment services from next April, at a time when the government is promoting cashless payments.

Such “digital salaries” are expected to improve convenience for salaried employees, while there remain challenges such as higher administrative burdens on companies.

From next April, employers can transfer salaries of up to 1 million yen to employees’ accounts for smartphone payment services such as PayPay and Rakuten Pay.

Among providers of such services, there are hopes that digital salaries will help spread the use of their services and increase payment amounts.

Digital salaries are also expected to be helpful for foreign workers, who face difficulties opening bank accounts in Japan.

Among banks, meanwhile, there is skepticism about digital salaries. “We don’t see strong demand (for digital salaries) among people who currently receive salaries in their bank accounts,” an industry source said, adding that they will have to complete certain procedures if they shift to digital salaries.

There are also concerns that digital salaries will complicate related administrative work at companies and that it is uncertain whether as high safety and stability as in payments to bank accounts will be ensured.

The labor ministry is slated to finish accepting public comments on the matter on Friday and then work to map out details of the new system.

“It is necessary to create a functioning system that balances convenience with safety and security,” Junichi Hanzawa, head of the Japanese Bankers Association, said.

JIJI Press