Paypal coming to Japan

UPDATE: Just to be clear, this article is about an expansion of Paypal’s services in Japan  into bank remittances. Paypal already offers some services in Japan linked to credit cards. Thanks to commenter Adrian for pointing that out.

The Nikkei has an article noting that thanks to law revisions set to pass in the current Diet session, restrictions on the remittance business will be substantially relaxed in a move that will finally allow Paypal to offer its services in Japan. The article contains an example of how sending money will change starting some time in 2010:

Current money transfer services offered by banks are not ideal for sending small amounts of money overseas. For example, a major Japanese bank charges 5,500 yen for wiring money to a U.S. bank account regardless of the amount.

PayPal and other online money-transfer services offer a cheaper, more convenient alternative to traditional bank wires. High fees have stopped a grandmother in Nagoya from sending a 5,000 yen birthday gift to a grandchild in the U.S., since she would have to spend more on fees than the amount she is sending.

If an online money transfer service such as PayPal can be used, the grandmother probably would have sent the money without hesitation because fees for sending 5,000 yen to the U.S. using that service come to no more than 200 yen.

This sounds tempting, but the numbers presented are misleading, especially in this English-language summary of the original Japanese article.

According to the print edition of Nikkei, Paypal will charge fees of 1.9-2.7% of the amount, plus an additional 30 yen fee, in contrast to banks which take a flat fee (usually around 4,000 yen, but Lloyds charges just 2,000) plus a foreign exchange fee of around 1%. So while the service looks cheap for small amounts like the example above, in reality the fees are cheaper than banks only up to around 150,000 yen, according to a company spokesperson quoted in the article (vs. Lloyds that number falls to 100,000 yen). For debt slaves like me who routinely send 200,000 yen overseas each month, this would make no difference at all.

And of course Paypal’s service has other benefits besides overseas remittances – it’s mainly a convenient way to pay for online auction purchases (without giving out credit card info), so maybe it will catch on here as well. Other benefits touted by the article included 24-hour service and “lower fees” though they did not present examples as to how the fees for domestic transfers would be cheaper.

Plus other businesses such as NTT Docomo are planning their own services, so maybe at some point someone will find a profitable way to make overseas remittance cheaper.

10 thoughts on “Paypal coming to Japan”

  1. “So while the service looks cheap for small amounts like the example above, in reality the fees are cheaper than banks only up to around 150,000 yen”
    Your phrasing here is odd, as it implies some sort of trick. There is no trick- Paypal (like similar services) was designed explicitly for small amounts because there was no other system for quick small person to person transactions, other than cash. Do you remember using Ebay before having a Paypal account, and actually having to mail a personal check to the seller and waiting an extra week for it to clear before you got your merchandise? Complaining that Paypal doesn’t measure up well with Lloyd’s for large remittance is kind of silly, although it is worth pointing out.

  2. It is not silly if you are in my position. I have no use for Paypal other than as an international remittance service

  3. I hope to God that Paypal stays the hell out of Japan. It is a disgusting, soulless company that should not be allowed to survive, let alone expand. Sure, they seem convenient; then they lock up your money for “security reasons” for months on end and don’t tell you what the hell is going on, and that will be the end of your trust in PayPal.

  4. I agree with Joe Jones.
    PayPal security sucks. Somebody hacked my account eBay and PayPal’s side. Took all my money out and then went in to my business account and sucked it dry and if that wasn’t enough went online and made a lot of charges! It took five months and a court judgment for them to make everything right. Also with innumerable telephone calls. I know of others as well who have there own horror stories to tell. Oh and how did I eventually resolve this? By hiring an attorney and taking them to court. The judge said that PayPal was operating a very unethical business.

    Just Google PayPal sucks and don’t say you weren’t warned.

  5. Not quite sure I understand the context of the article: you can use Paypal linked to Japanese credit cards and Japanese addresses right now — I think what you meant is that you can now do international remittances or that they’re opening an office in Japan.

    Either way, the title is a bit confusing.

  6. True I could have been more clear. The two big changes appear to be that Paypal will be allowed to do bank remittances and overseas remittances, where they could only work with credit cards before. And since so few banks offer ATM cards with Visa logos that effectively cut off the type of transactions typical in the US.

  7. Paypal has been able to pay money into Japanese bank accounts for a while — the only restriction was that you couldn’t “pull” money from a Japanese bank account unless it had a Visa debit card (i.e., eBank or Suruga).

    There’s a similar UK-based service called Moneybookers which can accept money from and pay money to Japanese accounts. They have a correspondent in Japan called Bibit Payment which simply takes the money by furikomi and notifies Moneybookers to credit your account. This service is also buggy, though, so I only used it once and then went back to simple SWIFT transfers, which are fast and pretty much foolproof.

  8. There is way to transfer money to your bank at other country through transfer bank(経由銀行 Keiyu ginko in japanese). Just Pay 800 yen for transfer to Transfer bank. Transfer bank will forward you money to your local bank. I use this way to transfer money to my country

  9. All I can say is that during the past couple of years here in Japan, PayPal has been a lifesaver! Of course I still use my bank for major currency transfers, as a booked wire rate is always preferable to a retail rate. But for sundry transactions all over the globe, not having had PP would have been a nightmare!

    I’m glad they’re expanding here, though they’re obviously attracting the attention of the regulators (who are likely cozied-up with domestic money transfer companies).

  10. Unfortunately the new regulations will, at least temporarily, make it illegal to use Paypal in Japan for non-commercial transactions, and will make it more difficult to move money between Paypal Japan and foreign bank accounts. I am still unclear if these limitations will go away once Paypal files some more paperwork though.

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