Category: Banking

 As I am sure most people know, banks accept deposits from customers, and then pay interest.  This costs the bank money.

Banks also typically lend money out for business loans, home loans ,and other types of loans on which they of course charge interest.  

Basically, the way banks have historically made profit is that they borrow money from depositors, lend that money out, charge interest, pay some percentage of that back to the depositors, and keep the rest for themselves.  

Here are some average numbers from the United States as of the end of 2022.

• Car Loan – 3.3% – 5.99%
• Savings Account – 3.3% – 4.35 %
• Standard Home Loan 5.5% – 6%
• Business Loans (bank) – 4.2% – 4.5%

As an example, an average consumer might put money into the bank, which pays them 3.3% interest.  The bank lends that money out as a home loan at 6%.  That gives them a 2.7% margin.    Since the banks have many millions of depositors, many thousands of home loans, and are operating billions of dollars, this more than covers their cost for renting expensive bank buildings and paying their employees, and leaves plenty of profit for returning to investors, expansion, etc.  

Sadly banks in the US have gotten into less honorable, but more profitable operations such as pay day loans, title loans, and credit cards – but we’ll leave that discussion for another day.  

The point is: banks in the US, and in most countries, have a large customer base and a wide percentage point spread to work with.  

So how about Japan?

I’ll use Mitsubishi UFJ Bank as an example: 

• Normal Deposit Account (Futsuu Yokin Kouza): 0.0010%
• Variable Rate Home Loans: 0.345% – 0.475%

Yes, you read that correctly: The interest rate they charge on home loans is less than half a percentage point in the most expensive case!  10 year fixed rate loans are closer to 1%, but that’s still extremely cheap compared to most countries.  

These rates aren’t special to Mutsubishi either.  As of this writing, Sony bank charges 0.397% (if you put a 10% deposit), and SBI Shinsei Bank charges 0.320%

What that means is that the bank has to lend out the money, collect the payments, pay their rent, employee payroll, IT fees, utility bills, taxes, pay for losses on bad loans, and then pay interest back to the depositors.  It’s no wonder the rate on deposit accounts is essentially zero.  

If you are willing to lock your money away for a year or more, then you can get an increased rate of return, say.. 0.0020%!  

Having to live on a margin of less than 0.5% of interest requires massive scale and low costs.  A foreign bank operating in Japan is by its very nature likely going to have a small scale and higher costs.  

Because of this, the two main foreign banks operating in Japan both closed their retail branches in the past 10 years.  

HSBC closed all of their retail/consumer operations and fled a number of years back.  Their branches were simply closed as they said goodbye to their customers.  

Citibank also operated in Japan, essentially catering to rich foreignors, and also closed.  This was not just to profit crunch, Citibank Japan was punished by the Japanese government multiple times for dealing with the Yakuza.  

In the case of Citibank, though, SMBC Trust Bank took over the operations, absorbing citi Japan into  SMBC Trust Bank in 2015, and branding it “Prestia”.

Because of this history Prestia is one of the only banks  where most everything is available in English, and one of the only banks to charge a monthly fee just for having an account (Depending on your balance).  

If you want to open an account at a major bank, it is as easy as walking into the nearest branch – if you speak Japanese.   If not, you might want to bring a friend.  

Typically anyone can open an account, so long as you are a legal resident.  This means no tourists, but most anyone else.  

Since a basic bank account does not allow you to run a negative balance or borrow money, there is generally no credit check or credit history needed.  

You will be asked to provide identification, which for a foreignor might include your MyNumber card, Zairyu card, health insurance card and/or your passport.  You may be asked to provide a copy of your Jyuminhyo (residence record), which you can get from city hall.  They may ask for information on your employer as well.  Basically, the only tro real requirements are that you are a legal resident, and you will be in Japan at least 6 months.  

You may or may not be required to provide an Inkan (Stamp), so you may want to have that made up ahead of time.  Some banks will allow signature instead.  

There are two basic types of accounts

• Futsuu
• Tozan

All you need to know is that Futsuu means “normal”.  This is the type of account msot everyone has.  You can accept direct deposits from your employer, and set up direct debits for things like electricity and gas payments.  

Most banks do not charge any monthly fee for maintaining an account, and don’t charge any fee to open an account either – this means you can feel free to set up multiple accounts at different banks if that’s useful to you.  

Typically a bank will not let you set up accounts at more than one branch, and will not let you set up more than one account of the same type.  This is one reason why people will often hold accounts at multiple banks.  

Technically, banks will pay you interest on your balance – but in practice, the interest rates are so low in Japan that you may as well consider the account to be interest free.  

You can of course earn slightly higher interest by opening a time deposit account (CD), but even then the interest is so low as to not be worthwhile for most people.  

Typically banks have no minimum balance, but you may get some perks by having a higher balance or setting up direct deposit for your paycheck.  Examples would be reduced ATM or transfer fees.  

Banks will offer you an ATM card, which you will probably want to accept.  There are various options, including the ability to use the ATM card at convenience stores such as 7-11.  You might have to pay more when you use a convenience store ATM, but they are usually located more conveniently than your bank’s ATM corner, and almost always open 24/7.  

Manually Transferring Money

You can easily transfer money to anyone else’s account using your ATM card, or online – so there is really no need for services like Vinmo or PayPal for domestic payments.  

The information you’ll need to know to transfer money is the following:

• The financial institution name or 4 digit code
• The branch name or 3 digit code
• The account type (Probably Futsuu)
• The account number
• The account holder’s full name in Katakana

If you know those pieces of information, you can transfer money from your account using your ATM card, or with internet banking.  You may need to at least be able to read enough Japanese to select the bank name and branch name from a list, or enter the first few characters into the ATM or internet banking.  

Once you have entered the bank, account type, and account number, one of two things will happen:

1. The ATM/web site will display the account holder’s name in Katakana
2. The ATM/web site will ask you to enter the account holder’s name in Katakana

Either way, the purpose here is to confirm that you didn’t mess up the information and that the person (or comapny) you are sending money to is correct.  Once you have confirmed this, then the payment will go through.  Once you have sent the payment, the money is gone, and there is typically no way to get it back.  

The checks are typically done in real-time, but if somehow the payment was sent to an invalid account, the money would be returned within a few days.  Otherwise, the money now sits in the account of the person you sent it to.  

You can of course use this method to send money between your own accounts.  

Note: JP Bank uses a different system, but the account information can be transformed to conform to the system listed above.  

Transfers used to only take effect during business hours on business days, and could take several hours if you were sending to a different bank.  This meant that even if you sent money on a weekend or holiday, the money would not arrive until the next business day (even though it would disappear from your account immediately).  

Recently, there is a new “instant transfer” system being instituted at most banks.  This system will always transfer the money in less than 10-15 minutes between participating banks, any time of any day (unless they are undergoing maintenance).    You don’t need to opt into this in most cases, it’s automatic.  

Not all banks subscribe to this new system, though, so if you have an account that doesn’t (like Prestia), then you might need to wait a bit longer for transfers to  clear.  

Where do you find the information for your bank, branch, and account number?  The branch and account number are printed on your cash card.  

Note that because you can just transfer money to anyone, any time: Personal checks aren’t really a thing.  

Passbook  vs. Eco

Japanese accounts traditionally issue Tsucho (Passbooks), which can also be used at the ATM, and will print a record of your transactions.  More recently, banks are pushing “Eco” accounts, which do away with the passbook.  It’s most cases, it’s your choice.  You can usually get both a passbook and an cash card (ATM card) on the same account.  

Note that banks don’t typically send statements since the idea is that you have a passbook instead, or reference your statement online if you have subscribed to Edo Tsucho.  Bear in mind that if you need an official paper record of your balance for a loan application, visa application, etc. and you have switched to a passbookless account, then you may need to ask for a balance statement printout.  This can be a hassle and take several days.  

Debit Card Features

Banks will also sometimes ask you if you want to have a debit card feature on your ATM card.  This has nothing to do with the “Check Card” type feature often offered by foreign banks where you get a Visa logo or something like that.  If a mega bank asks you about a debit card feature, they are likely talking about J-Debit, which is a system that lets you pay with your ATM card at some merchants, such as Bic Camera.  

The Check Card,  or Visa Debit card type feature  has also become available at many banks over the past few years.  This is typically called a “Shopping Card” by the big banks.  Sometimes this will be a debit card that has both a credit card number and cash card features, sometimes there will be two separate cards issued.  

I believe the reason for this is that the IC part of the card could be Visa, or Cash, but not both, so there was a decision to be made by the banks about whether to use only Mag Stripe for  one feature, or wanting to have the extra security of using IC for both.  

Another thing to consider is that like real credit cards, check card style cards have expiration dates, whereas normal Cash cards issued by Japanese banks do not.  The larger banks tend to issue the cash cards and shopping cards as two separate cards.

For example:

• SMBC offers a Visa debit card that supports both Visa contactless payment and iD debit.  It has an IC chip so you can use it at stores, and a number printed on it which you can use online.  It also has a PLUS logo on the back, which I believe means that it can be used for cash withdrawels overseas.
• MUFJ offers a Visa debit card that supports Visa contactless, but not iD or QuickPay, making it less convenient in Japan.  
• Rakuten bank offers Visa or JCB built into their cash card if you apply for it.  
• Prestia (SMBC  Trust) offers a multicurrency combined Cash & Shopping (debit) card that works with Visa Touch and iD Debit.  
• JP Bank recently started offering Visa debit cards as well, and their cards are integrated debit/cash cards.
• Sony bank offers a multicurrency combined visa debit/cash card.  
• su Jibun Bank only offers a basic ATM card, but their app will generate a virtual card with a number than can be used for online shopping, and QuickPay contactless payment from your phone.  

Most banks will issue a shopping card with Visa or JCB, and a few with Mastercard.  Some banks, like Rakuten bank will allow you to choose.  Being Japan, I would choose JCB if given the option, but if you plan to use the card overseas, then Visa or Mastercard may be a better option.  This includes if you want to use the card to pay for subscriptions to overseas web sites, etc.  (though bear in mind this won’t work with some sites anyway, if they want to verify your address and don’t support Japanese addresses).  

Some shopping cards will  support Visa Touch, iD, or QuickPay.  iD and QuickPay are the native Japanese options for postpaid (or in this case, real time debit) contactless payment, Visa Touch may work overseas.  Some cards even have both, or have one built into the card, but will let you set up the other on your phone.  You really want to get both, because iD and QuickPay are supported many more places in Japan than Visa Touch.  These options will deduct money from your account the instant that you use them, and so require a balance in your account, but they don’t need to be charged.  

Some banks will issue cards that include other forms of contacteless payment, including Waon (Aeon Bank), Nanaco (Seven Bank), EDY (Rakuten bank), Suica (JP Bank and others).  These are all convenient, especially the Suica (since you can use it to ride the train), but they are prepaid, and have to be charged before you can use them.  You can charge the Suica and Nanaco cards at any 7-11 ATM, and of course Suica can be charged in train stations as well.  

It’s interesting to note that a new trend is that many new credit cards are “numberless” (often called “NL”), meaning that they don’t have any number on them at all, and there is no mag stripe.  They only work with an IC reader.  This means they can’t be used for online  purchases, but they may allow you to generate temporary numbers on their net banking site or app.  This trend may filter over to debit cards in the near future.  

Apps

Most banks now have smartphone apps, though what you can do differs wildly between banks.  Some only allow you to check your balance, while others will act as an OTP, allow transfers, set up contactless payments, and sometimes even withdrawels/deposits.  In particular, PayPay bank and au Jibun bank both have apps that allow you to scan a QR code at the ATM and withdraw or deposit money without an ATM card.  

OTP Tokens

Many banks allow you to request onetime password tokens.  These will either be in the form of a physical token or a special app that allows you to generate a code which you must input to the web page in order to proceed with transfers, etc.  For example, Mitsubishi UFJ bank will give you a physical token or you can set up their app to generate codes.  Often times, the app will be free, but there will be a small charge for a physical token.  The physical token is better in some ways, as you won’t need to worry about anything when upgrading your phone, and it isn’t likely to be prone to hacking.  

Rakuten bank doesn’t have an OTP token as an option last time I checked, but they send one time passwords to your email instead.

What the OTP token is required for, and how it is used also vary between banks.  For example, most banks just require you  to press one button and generate the code which you enter – but JP Bank requires you to enter the transferree’s bank account number into the OTP in order to generate the token code.  When registering a payee for PayPay bank, you can decide whether OTP will be required to make transfers to this payee in the future, but some banks will just always require the OTP code for any transfer.  

Direct Debits

As mentioned above, direct debit can be set up to let money be withdrawn automatically by credit cards, utiltities, etc.  This is something that in general needs to be requested to the company in question, and they will forward you request your bank.  Your Inkan (stanp) is typically required for the paper form you must fill out.

Sometimes these forms can be filled out online, and after filling out the portion on the company’s site, they will often forward you to the bank’s site, where you will be required to log in, and probably enter your OTP.  

Some banks, such as PayPay will let you see a list of currently authorized transfers, and cancel them from the site.  Most banks, however don’t have this feature.  

You can think of this as a “Pull” feature, as Tokyo Gas, Nuro Internet, Docomo Phone Service, etc., will initiate the transaction and “pull” the money from your account each month.  

You can also use your shopping debit card to set up payment for the comanies that support that – the main difference from a practical point of view is that shopping card transactions will show up on your online statement or passbook as something like “DEBIT 0234” instead of something more specific like “Tokyo Electric”.  

If there is no money left in your account, there is typically no insufficient balance fee from the bank – the transfer simply doesn’t go through.  Some companies will try the debit again at the end of the day, or the next day.  Other companies won’t, and so you will need to then send them the money another way.  Usually this will mean either manually transferring the money to an account they give you the information for, or using a card to deposit the money.  (For example, if you have a Marui credit card, you can deposit money to pay off your balance using cash by using a Marui ATM at one of their department stores).  

Not all companies will allow direct debit from all banks.  For example, View Card will not allow you to set PayPay Bank as a direct debit source, but they will let you use MUFJ.  This is unlikely to be an issue if you use one of the Megabanks.  

Post Card Payments

Many bills will show up in your mailbox as postcard type pieces of paper with a bar code until you set them up to be paid some other way (such as the direct debit mentioned above).  These can include utility bills, credit card bills, tax bills, and more.  

The typical way to pay these is to take them to the convenience store and pay in cash (or Nanaco electronix money) at the cash register.  There are apps and banks that will let you pay these by scanning them with a smartphone app and deducting the money from your bank account.  

Automated Transfers

Surprisingly, most banks don’t have “Push” features to automatically send money to other accounts.  Some, such as PayPay do, but these may incur transfer fees.  If this is important to you, you may want to have your pay deposited into the account with the automated transfer feature, and then this bank can send the funds elsewhere is required.  Obviously, when pushing money, the amount needs to be determined beforehand, so this can’t really be used for things like utility bills which change every month.  It can be used for things like rent, however.  

Some companies will allow you to split your pay and have it split up and deposited into more than one account, but many don’t want to deal with the hassle.  If your company supports it, this may be one option to fund multiple accounts.  Also, some companies allow you to specify one account for standard payroll, and another for bonuses.  

On the other hand, something that most banks do offer is automated import of money from other accounts.  These typically don’t cost anything, but may be limited to once per month, and the timing is usually pre-determined.  For example, au Bank and PayPay bank offer the ability to transfer money from other banks on a regular basis, but this works something like this:  The money appears from the source account just like any other debit, on the 27th of the month.  The money appears in the destination account on the 4th of the month.  This type of transfer usually needs to be set up well ahead of time, and is intended for long term use, for example to move money to a account every month for savings purposes, etc.  

Real Time Debits

Some accounts and services have the ability to be linked in such a way that they will immediately withdraw funds from your account for aspecific purposes.  A good example of this is that most banks have a related company that operates brokerage accounts, and it is typically possible to set things up so that you can transfer money from your bank account to the brokerage account in real time in order to invest.  This feature is often called “Money Bridge” or similar.  For example, Rakuten Bank and Rakuten Securities can be used in this fashion.  

 There are several national mega banks, numerous regional and local banks, as well as many online banks.  The lines between these are a bit blurred in some cases, but these are the three main categories for practical purposes.  

Mega banks will have the most branches around the country, and you can walk into one any time you need to do some paperwork, etc.  

Regional and local banks will often offer your better deals on interest rates, etc., but may not have ATMs all around the country.  

Online banks will generally offer the best deals, and the best online banking, but have few or no physical branches.  The other banks also have online banking, though the available features often lag behind the online banks.  

Examples of Mega Banks:

• Mitsubishi UFJ Bank (MUFJ)
• Sumitomo Mitsui Banking Corporation (SMBC)
• Mizuho Bank
• Japan Post Bank (JP Bank) – Run by the post office
• Resona Bank

Examples of Regional Banks:

• Chiba Bank
• Yokohama Bank
• Tokyo Star Bank

Examples of Online Banks:

• Sony Bank (Moneykit)
• Seven Bank (Run by 7-11)
• Rakuten Bank
• PayPay bank (Previously Japan Net Bank)
• au Jibun Bank
• Aeon Bank

Credit unions are a thing, they are called Shinyokumiai, or “Shinkumi” for short.  They are not so common, though.  

There are also so called “Trust” banks in Japan, which we will cover in the future.  

Investment banks are also common, usually being linked to a “normal” consumer bank.  

 The term “Net bank” has always seemed silly to me, as internet banks still have employees and presumably offices, and “normal banks” still have internet banking these days – so it’s a relatively pointless line in the sand.  Money is mostly virtual anyway.  

That said, many so-called Net Banks don’t have any branches that customers can visit.  Even Sony Bank closed their branch office due to Covid.  Since Mega-Banks have to pay rent for lots of huge offices, they tend to charge higher interest rates for loans, pay [even] lower interest rates for deposits, and charge more fees.

To stop from bleeding customers, some of the Mega-banks have started their own net banks.  For example, Mitsubishi launched Jibun Bank in a joint venture with au.  

Some people, especially the older generations, feel “safety” and “trust” with the famous mega-banks like Mizuho and Mitsubishi – but given that all accounts are insured with the government, there is no real safety advantage to having an account with one of these banks over a small regional bank or net bank.    

A more recent development is that some banks are offering their banking infrastructure and certifications for rent to other clients in much the same way that major mobile phone carriers offer their infrastructure for resale to others carriers.  

There were already a lot of companies participating in this, but most did not offer any special advantage, except if you bought a lot of stuff at a certain store.  For example, much as there is a Bic Camera Credit card, there is a “Takashimaya Bank”, where it is just Shinsei SBI Neobank re-branded to Takashimaya bank.  Takashimaya is just a department store, so they don’t actually have approval from regulators to create an actual bank, nor do they have the infrastructure, etc. – but they can outsource Sumishin SBI to offer a branded banking service and presumably all parties involved benefit.  (Note that the English word “Bank” has no legal meaning in Japan, so they can call themselves a “Bank” all they want, and it’s just fashion).  

 Department stores aren’t interesting to me – but you know what is?  Japan Rail.  Why?  Well everyone takes the train.  View Card is one of the best credit cards in Japan because the points you earn are JRE points, which can be used to charge Mobile Suica – rendering them effectively the same as cash.  No limited catalogs full of stuff you don’t want that is super overpriced, no discounts on services you’ll never use – none of that – just points you can spend as money anywhere.  

But what if you want to use a debit card instead of credit card?  Well Japan Rail East thought it was time to come up with a solution to this, and thus “JRE Bank” was born.  

It’s a service offered by Rakuten bank, but it’s separate enough that you can sidestep the usual “one account per person” restriction and set up an account with JRE bank even if you already have a Rakuten account.  

The main advantage over a normal Rakuten account is that you can earn JRE points by using your debit card, and depending on various conditions, such as setting your payroll to be deposited in your JRE Bank account, setting your View Card to deduct from there, etc., you can earn enormous discounts on train tickets.  

So, it’s good for anyone who might want to take the train… which is basically everyone.   This has taken the Japanese internet by storm, but.. yeah okay so you get points and cheap train tickets.  This is great, but not even the best part to me.

See, I’ve had a longstanding problem:

1. I shop (and drink) at some places that only take cash.

2. I don’t want to carry a lot of cash.  I want to set spending limits.

3. Because of the above, I need to go to the ATM often.

4. Most mega-banks offer free ATM service, but their ATMs have very limited operating hours, or are not so many in number.  (For example, SMBC Prestia ATMs operate nearly 24/7 and are always free to use, but they only have 14 ATMs in Tokyo).  Mitsubishi has more ATMs, and some of them are open late, but they charge 110 JPY after 9pm!

5. Most internet banks let you use Conbini ATMs for free (since they don’t have their own ATMs), but only a few times per month.  After that, you have to pay.  

I like Rakuten, because it is the only bank I know of that lets you set a daily limit of less than 10,000 JPY on withdrawals, and it also lets you set times and locations where withdrawals can/can’t be made.  

As an example, I can set the following:

a. Only up to 8000 JPY per day.

b. Only between 9am to 2am

c. Only in Tokyo or Kanagawa

This is a pretty good system to stop any kind of fraud or misuse, and also for even for threats and self control.  

But… if you are limiting yourself to less than 10,000 JPY then you will need to use the ATM more often.  This is exactly what I want – but I don’t want to pay all the fees!  

If only there was a bank that let you set up such limits, but also had ubiquitous ATMs in many locations that were free to use for long hours.  

Enter JR bank.  Since it’s based on Rakuten Bank’s systems, JRE Bank allows the same sort of fine tuned security settings.  It also has a key difference from normal Rankuten bank accounts – unlimited use of View Altte ATMs.  Given that basically every JR station has a View Altte ATM, you can use the ATM for free most places you go shopping.  Sure, if you live near a subway station, there may not be a JR station nearby, but you will probably pass one on the way to work or shopping.  If not, you can also use Conbini ATMs for free a few times of month.  (Up to 7 times if you keep a massive amount of money with them).  

JR stations are also typically open long hours, typically closing after midnight and opening by 5am.  What’s more, the ATMs are sometimes located on the outside of the station – in which case you can use them even when the station is closed.  W

In case there is no View Altte ATM and you use a Conbini ATM it will cost 220 JPY if you don’t have any more free withdrawals left for the month, regardless of the time of day.  Not the cheapest or the most expensive.  

—-

The other strong contender for ATM use is Sumishin SBI Neobank.  Just by setting up an account and linking it with your mobile phone, you can use the ATM for free 5 times per month.  

The first thing to know about Sumishin SBI is that being basically a net bank, they don’t really have their own ATMs.  Having said that, you can use Conbini ATMs, Japan Post ATMs, and also View Altte ARMs.  Impressively, even when you don’t have any free withdrawals left, they only charge you 110 JPY for using a Conbini or View Altte ATM – regardless of the time of day.  

Like Rakuten and JRE Bank, they also have a rank system where you can earn more free withdrawals based on various conditions, but the difference is that their terms are very generous.  

At the lowest rank, you only get one time for free, but all you have to do is log in with your smart phone to reach rank 2, which will give you 5 free withdrawals per month.  

Reaching rank 3 is still not too difficult, and will give you 10 free withdrawals per month for free.  I suspect this would be enough for most people.  

Rank 4 is a bit more difficult to reach for free, but you get 20 free withdrawals per month!  That means you could visit the ATM basically every weekday to withdraw your lunch money and still not pay any fees.  

Note: This was recently changed from unlimited to 20 times per month, so you know there were some people using the ATM three times per day or something.  

The easiest way to reach rank 4 without keeping a huge amount of money in your account is simply to pay for it by signing up for the  Platinum Debit Card (Mastercard).  The cost is something like 11,000 JPY (although the first year is free with some conditions).  

20 free withdrawals per month x 12 months = 240 free withdrawals.

11,000 / 240 = ~46 JPY per withdrawal.  

I am guessing that they are literally just charging what they are paying to the ATM providers.

Of course, since it’s a platinum card, it comes with other dubious benefits like airport lounge access, vacation & mobile device insurance, etc.  The most important benefit (besides the increase in free ATM withdrawals) is that you earn points at a rate of 1%, and those points can be converted to cash back.  Granted, you would have to spend 110,000 on the card in a year to make the cash back actually cover the annual fee for the card.  

Still, if you want to use the ATM often, and are not near a JR station, then Sumishin SBI is a solid option.