Note: I’m writing this post while completely content with my life in Japan. I’m suffering from very little homesickness and this post is in no way a vendetta against Japan. I’ve wanted to write a critical post about Japanese finance for a while, but in no way is this me being sad and missing home and Chipotle. Well, I do miss that one a little.
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The perception of Japan in America is one of futuristic technology, ninjas, and sushi. For the most part, this is accurate. But not much is known about how the Japanese handle their daily finances.
I always thought most countries used debit, credit, ATMs, online bill-pay, and other 21st century finance concoction like Americans. Upon landing in Tokyo in July, I was introduced to a different side of Japanese finance.
The way the Japanese handle their finances seems like they’re ten years behind America.
Here are the 4 aspects of Japanese finance I’ve been disappointed with.
1) Bank Books / No Online Banking
After signing up for my bank account I was issued a bank book. A physical bank book. It’s blue and has cartoon dolphins on it. Initially, I held it in my hand and just shook my head in disbelief. It’s a little more boxy than a checkbook was in America in 1997.
The bank book keeps a running total of my bank balance because there’s no online banking in Japan. Whenever I head to the ATM to make a withdrawal, I insert my bankbook and it updates my withdrawals, deposits, bills, and provides a running total of the money in my account. I appreciate that it prints out the totals instead of having to balance my bank book, but it’s still a shock to my American finance system. It’s bulky and a pain to carry when I want to update it. I was also issued a bank card so the bank book adds clutter to my financial life.
The no online banking is an inconvenience, but it doesn’t have me cursing the Japanese Ben Bernake. I check my online financial accounts too much already so not having another money website to worry about is fine. But it’s disappointing when I want to see what bills have been charged to my account and I have to pack up my bank book and trudge to the nearest ATM (only .5 miles, but it’s the principle).
*Updated 12/7/09*
I’ve now had a couple people inform me that online banking does exist in Japan, but it appears you have to sign-up for it when you initially go in to the bank to get your account. According to my friend Dawn, who went in to the bank with a girl who speaks wonderful Japanese, it takes 2 months for the online banking to start. I’m not saying this is a universal rule, but this appears to be the case in my prefecture.
Perhaps this is a topic for another post, but the idea of having to opt-in to online banking seems ridiculous. It’s proven that opt-in programs don’t support high percentages participation and I just don’t understand the benefits of the banks not having their customers use online banking.
Anyway, thanks to my readers for the heads-up on this.
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2) Credit Cards Exist, But They’re Hiding
I’m pro credit card. I always paid of my balance at home and reaped the rewards from cards. I love the convenience and the ease of not carrying cash. That all changed when I left O’Hare in July.
My post earlier this week about the credit card use of Asian countries showed that Japan is warming up to credit cards but I have yet to see one person pull one out at a store. Cash is king and it doesn’t seem like any of the stores push credit cards. I never see signs saying they accept Mastercard or Visa and it seems like a non-issue. I’m in a rural area of Japan, so it might be different when you get to the big cities. Regardless, it’s very surprising to see no signs of credit cards in my day-to-day life. This leads to my third disappointment.
3) Change is Everywhere
Since cash rules, I find myself carrying a lot of it. Japan also uses change more prominently than America. 100 yen is about a dollar and Japan has change for the 1, 5, 10, 50, 100, and 500. In America, I recall trying to get rid of some change at a store to free up my pockets or bedside table and feeling really good about myself when I handed it over to the 7-11 employee in exchange for another Slurpee. It felt great to be free from the constraints of dirty coins. In Japan, it’s a never-ending battle against my change and one I’ve forfeited because it’s not going to cease until I leave the country.
4) The Non-Existence of Debit Cards
Debit cards are everywhere in America. Even the anti-credit people are usually ok with debit cards. They provide ease and you don’t have to worry about interest rates, debt, or missing a payment. They don’t exist here. I need to do some more investigative work to see if anyone has them, but it seems like debit cards are about as popular as credit cards.
So, why?
Japan is loaded with tradition and their respect for the way things have been is the only reason I can come up with for the four grievances above. The idea of a major country-wide financial change seems unlikely in a country that holds the elderly in such high regard and is inherently conservative towards most topics.
Not everything is negative. My bills and paycheck are automatically withdrawn and deposited into my account. I’m also told by friends that overdraft fees are more lenient. I’m not going to try to test this one out, but if you don’t have sufficient funds in your account for a bill the bank just waits a while to see if you fix it. Pretty trusting of them if you ask me.
I’m sure as the younger generation comes up, plastic and the internet will play a more prominent role in their daily financial lives, but it doesn’t look like any big splashes will be occurring soon.
Which of the four gripes surprised you the most about Japan? Am I being too picky about my money or are these warranted complaints?
Photos by and Mike Cash & iMorpheus
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When I went there in October of 2006, I was also really surprised by the lack of places that accept credit cards in this day and age. Not realizing this, I had to withdraw cash from an ATM since I didn’t bring enough, and it was hard to find an ATM as well.
I completely agree that it feels like they’re behind when I am spoiled by how easy it is to manage my finances here. It’s easy to pay with plastic and I don’t have to worry about making sure I have enough cash.
I’m also surprised by the bank book system that they use and the lack of online banking, that would be a deal killer here in the states.
Glad to hear that you’re enjoying Japan, I can’t wait to visit again.
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Austin Reply:
December 5th, 2009 at 11:03 am
The clutter and unnecessary ATM trips are what gets me. Perhaps they don’t have as much consumer debt because they pay with cash, but who knows.
Where were you in Japan and what were you doing?
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I never had the opportunity to have a bank account in Japan, but I totally get the change factor! Here in America it’s a great satisfaction to get rid of change! But in Japan, part of that “change” is actually valuable – the 100 and the 500, and they also weigh more, of course. So usually a bulk of it would be 100s. After a point it just became normal for me to heave out my wallet full of change. On the plus side, if you do a bit of math before getting to the register it’s easy to unload some change – especially since prices are what they say the are on the label.
& I had a funny story with a credit card. After coming back from Taiwan (my debit card had been eaten up by an ATM, so all I had was credit card and like 10$ left!). I took out my credit card to buy a train ticket at the airport and then you know, I signed the receipt. Then the cashier said “no no no, your signature please!” and I thought it was odd, but I completely forgot I put “ask for ID please” on that credit card, so it took me around 7 minutes to explain to him what it meant and why that wasn’t my signature. It wasn’t a bad experience (although I was hoping he didn’t think I stole it) it was just funny. So it shows me that even that credit cards are not the norm, that this kind of “ask for id” thing is even more rare.
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Austin Reply:
December 5th, 2009 at 11:01 am
Ha, I can picture that exact story happening in my head right now.
France uses a lot of change too and I remember getting on a train with a bunch of it in my shallow pockets. The seats were mini-style and I lost like 10 bucks in change because it fell into a impenetrable crevice of the train seat.
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You are incorrect on Number 1. You can do online banking in Japan. I do all of my banking at Shinsei online, including bank to bank transfers (bill pay). http://traveljapanblog.com/wordpress/2009/09/shinjuku/ I doubt Shinsei is the only bank doing online banking in Japan.
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Austin Reply:
December 5th, 2009 at 10:58 am
I think you might be right about that. I visited my bank’s website and there’s a section for login but I was never informed of a login number or password so I’m stuck for now. I signed up with a teacher from my school as well and I recall asking her about online banking but she must have misheard me.
Thanks for the heads up. Your pictures are gorgeous at your blog. Thanks for commenting!
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1. Mizuho Bank does internet banking too – you just have to ask to have it activated as mentioned.
2. It’s not as bad in Tokyo, but it’s still not anywhere near where it is in the US, which is getting pretty close to a cashless society. You can use a card in any major store or restaurant, but don’t even try at fast food or conbinis. Or smaller restaurants.
3. I actually see this as an advantage – isn’t a $1 pretty cheap for a bill? Bills only stay in circulation for about a year while coins stay around for quite a bit longer (in the US at least), so this is much more effective from a minting perspective. I think you’ll find that worldwide the US is the black sheep in this respect.
4. Totally agree with you here – I miss my debit card.
PS: There’s a Chipotle-esque restaurant that just popped up in Tokyo called Frijoles – check it out if you’re ever in town!
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Austin Reply:
December 5th, 2009 at 12:23 pm
My girlfriend mentions Chipotle at least once a week so she’ll probably be buying a train ticket as soon as she hears that news.
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This article is beyond wrong. You should take it down. For goodness sake – online banking has been around for 10 years. Credit Cards and Debit cards are easier to use than the US. I could go on but why bother ….
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Austin Reply:
December 6th, 2009 at 2:48 pm
@Jim Cotter
I appreciate your criticism. I mentioned that I’m in rural Japan which could be a reason for my opinions on Japanese finance. Although I was also in Kyoto for 2 months in 2007 and cannot recall one time seeing someone use a credit or debit card.
I still think it’s odd that you have to ask to be signed up for online banking. It’s proven that when people have to opt-in to programs like that the percentages go way down. There’s more than 100 ALTs in my prefecture and I’ve never heard anything about online banking so even if it exists, it’s not as prominent as it should be in 2009.
As far as credit and debit cards being easier to use, I’m not really sure what your definition of easier means and why you would assume it’s difficult to use them elsewhere.
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While I don’t have a credit card now, when I had one back in 2003, I used it without any problems at most bigger stores, including Uniqlo in Utsunomiya.
And like other commenters said, internet banking does exist, you just have to ask for it, and the asking bit not unique to Japan. You have to ask for it in many European countries, too. But maybe the reason why you haven’t heard anything about online banking from any of your ALTs is that they are not nearly proficient with the language to be able to use it?
What pisses me off is when I need to withdraw money after banking hours or on weekends and get slammed with a transaction fee by my bank.
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Austin Reply:
December 6th, 2009 at 6:37 pm
@AnnaI
The ALTs not being proficent is very possible.
Do all ATMs and banks charge a fee for “after-hour” transactions? Is this shown on your bank book?
Thanks for commenting!
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I don’t know if all banks do it, but Tochigin definitely does. Mizuho maybe doesn’t have it. JP bank doesn’t have it. And yes, the fee is shown in your bank book. Normally, a list of fees and hours during which they apply are posted on a board above the ATM.
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Austin Reply:
December 6th, 2009 at 7:01 pm
@AnnaI
Great advice. I should look into crazy ATM rules for a future post. You’re just east of Fukui Prefecture, right?
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a bit further than “just” east, but yeah, east… :)
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I actually really like the bank books. I often forget to carry it around and just use my card instead, but having the whole history of transactions in a place where I can see it anywhere is pretty great for me.
I have online banking with my little regional bank (pretty much limited to Fukuoka Prefecture), but I don’t really use it, because the bank book has all of the information I need in it.
I also like the furikomi system and the ability to pay for a lot of things at delivery time.
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Austin Reply:
December 7th, 2009 at 5:07 pm
I agree that paying on delivery is pretty cool. It’s very trusting, but would be helpful in a lot of situations.
I guess we’ll agree to disagree on the bank book debate. But think about all of the trees!
Thanks for commenting!
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If you get internet banking watch out for the transaction fees. My bank (SMBC) charges if I transfer to an account at a different bank.
For all the loose change: check your bank’s ATM machine, you might find it has a coin deposit slot.
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Austin Reply:
December 7th, 2009 at 5:09 pm
If you don’t mind me asking, how much do you get charged for internet banking? Thanks for the advice on the coin slot. I hope my ATM can hold 15,231 one yen coins ;)
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greg Reply:
December 15th, 2009 at 12:32 am
net banking is free. i would like to more delicately second what another commenter said. this post is so filled with errors as to be a disservice to your readers. i use several forms of net banking for online auctions, checking my balance, paying my rent, and so on. i use my credit card several times a month when i drive on the highway (ETC) as do a large majority of the drivers on toll roads. the credit card system is different here in that at the point-of-purchase you choose to either pay all at once like a debit card or in installments like a credit card. there are no hidden fees, no penalties for late payments-in other words banks do not screw you out of every yen they can here. perhaps, your lack of language skill is hindering your understanding of how things operate here. but having had extensive experience between the US, Europe and Japan’s banking systems, I’ll take Japan. It is cheaper, fairer and completely transparent. as for you coin fetish, that is all on you. spend it-it is real money. however if you can’t get that and you don’t like all of the change, next time you go to the bank just deposit it in the coin slot in the ATM. i don’t know how much it will handle all at once, but it doesn’t cost anything to make deposits during business hours, so just make multiple deposits if you have to.
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Austin Reply:
December 15th, 2009 at 8:14 am
Thanks for the thorough responses.
I’m sorry you consider this post flawed but these are my observations for my prefecture. My lack of language skill really has nothing to do with it since my friend who is a translator was told online banking takes 3 months to set up.
I realize things are different across the country so depending on where you are probably has something to do with your differing views. Great advice on the change though. I really hope my ATM has a slot.
As far as the car goes, I’m planning on selling it to a foreigner whenever I leave. There will be someone who will come in to my position who will be a potential buyer so hopefully that works out. Thanks for the advice on the car guarantee. I’ve been a little nervous that once it gets to a certain point it’s going to break down, but it’s a relief to know I have the guarantee on the back end.
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I appreciate the bank books which you can feed to into the ATMs here. I also like the convenience of doing bank transfers (furikomi) from the ATM at any time. If I’m late coming home, whenever I remember to take care of a transaction, the ATM is operating. Pretty cool if you ask me.
I use my Japanese credit cards as frequently as I did in the old country. Some businesses, when handling large amounts of money, will debit my account. But it’s a bummer they aren’t widely used.
The only thing that ticks me off about Japan’s banking is that the systems do not play well with banks in the old country.
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Austin Reply:
December 8th, 2009 at 2:48 pm
Have you been burned trying to send money home or something?
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AnnaI Reply:
December 13th, 2009 at 10:54 pm
I think what Chibaraki means is that it can be problematic to use your foreign ATM card in Japan. In Tochigi, I know of only two places that have ATMs that accept foreign cards (meaning you can withdraw money from your account back home), and that’s the post office and 7-11.
I know that Citibank does too, but we don’t have it here.
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I lived in Japan in the mid-70′s, and it sounds like not all that much has changed. (Except, I used to get paid in cash–sounds like you don’t have that problem.)
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A traditional American will find all of what you wrote to be annoyance but some countries doesn’t like some of the ways of America and so they opted not to adopted their culture or business operation. Reading what you wrote about Japan reminded me of how my country was once before they adopted the American culture. Japan still as their identity and this is wonderful for them. Not saying credit card and online banking is bad. But those tends to encourage irresponsible financial behavior.
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Austin Reply:
December 17th, 2009 at 1:53 pm
That’s a really valid point.
Overall, this wasn’t a post ripping Japan and saying they’re wrong with what they do. It’s more of an observational post that points out why this is so different from America, and why it’s difficult to deal with.
Thanks for your comment!
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You can sign up for online banking with most banks; mine is just a regional bank, but it was done via a simple application several years after opening the account.
Credit cards are widely available. I’ve had to turn down people hawking them many times, and have limited myself to three accounts, which give good points, or miles, or longer guarantees on purchases. Many ccards have online access.
There is debit, for example Edy cards (mine gives me airplane miles), Suica which is tied to JR, and other gizmos for debit including many types of cell phones that one scans at the register.
It’s clear that you don’t know Japanese language, or finance, apparently, and yet your blog is yet another example of the “instant Japan expert” syndrome so common among ALTs. I am also living in a rural place (Miyazaki), so don’t take this as a rant from a Tokyoite who doesn’t understand inaka. You need to do your homework. Best wishes for 2010!
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I spent 2 years in rural Japan (Yamaguchi), and I will confirm that all these complaints are also things I saw. But, I had the opposite reaction–having to plan ahead and pay with cash for everything (including plane tickets to visit home–ouch!) helped me keep better tabs on my money and keep my spending under control. Actually, one month when I had a big savings goal, I limited myself to only spending coins that I had around my house and managed to feed myself and get where I needed to go without any trouble.
In fact, I got a little compulsive about tracking my spending and started using a color-coded 家計簿 (kakeibo) like a Japanese housewife–I stocked up before moving back to the US.
Nice blog–I followed a link from Get Rich Slowly.
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Austin Reply:
February 9th, 2010 at 12:01 pm
Thanks for the kind words, Becky!
What were you doing in Japan? I think I may try out your coin tip soon. I have at least $100 around my apartment and it’ll just be wasted if I don’t use them.
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I like FinanciallySmart’s post
Your complaints are actually some positives for me, I like dealing in cash and the low crime rate allows me to not worry about carrying enough of it to last a week or two. I hate owing money so I don’t need credit cards and the change is easy to get used to if you have change wallet and dont let the 1,5, and 10 coins pile up.
Also Suica and Passmo and other pay-for-points work pretty much the same as debit cards for chain stores (though I guess I try to avoid chain stores, I always keep a lot on it so I don’t need to carry train money).
My only real complaints is how rigid ATM system is
1 Not being able to use ATM cards at other banks or post office ATMs
2 NO WITHDRAWLS ON SATURDAY NIGHT- WHAT IS THAT!
3 No connections with international banks, when I went to China I felt totally screwed with no access to my Japanese bank account which has much more than my American account.
I think you give some important tips for people coming to Japan so nice article, but I don’t think this is a matter of better-there/worse-here.
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Nothing wrong with using cash. Credit cards are accepted most places (though not cheap supermarkets because they’d have to pay to accept your card). You can chose to make either one or two payments to the CC company without interest.
You sound like a typical middle class American professional’s kid brought up to think money is the meaning of life. Get out and smell the roses.
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