Zento Shin Failure Shakes Cashless Payment Industry
The bankruptcy of payment processing company Zento Shin has raised concerns over the impact on restaurants and other small and midsize businesses, while highlighting regulatory gaps in Japan's rapidly expanding cashless payment industry. (News On Japan)
Bankruptcy of payment processing firm Zento Shin has sparked concerns over repercussions for restaurants and smaller businesses in Japan's expanding cashless payment sector. The company, which filed for bankruptcy in July, accounted for roughly half of total corporate bankruptcy liabilities, totaling 236.3 billion yen. The failure has drawn attention due to the crucial role payment processors play as Japan strives for a cashless economy, with the government targeting an 80% cashless payment ratio by 2025, up from 58% in the previous year.
Credit cards currently dominate cashless transactions, accounting for over 80% of payments totaling 134 trillion yen. Payment processors like Zento Shin have aided this growth by handling transactions between credit card companies and merchants, consolidating transactions from multiple card issuers and providing expedited payment settlement.
The collapse of Zento Shin has raised concerns over merchants' ability to recover sales proceeds from already processed transactions, highlighting gaps in regulatory oversight within Japan's payment industry. Credit card-related businesses under banks and trust banks face stricter supervision, while payment processors have operated with less oversight, leaving merchants vulnerable to financial risks when intermediaries fail.
The case also reveals allegations of improper accounting practices spanning years, prompting financial authorities to reconsider payment processor supervision in the future. Japan's push toward cashless payments stems from potential cost reductions across society, increased transparency in transactions, and convenience for foreign visitors.
For merchants, particularly restaurants, cashless payments can simplify administrative tasks, reduce costs, and generate valuable purchasing data. However, the Zento Shin bankruptcy underscores the financial risks associated with reliance on payment intermediaries. Meanwhile, a typhoon headed west of Okinawa is expected to bring heavy rain to southern Japan, while Japan's Environment Ministry plans to survey animal cafes amid concerns over welfare and infection risks.
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