Payment infrastructure initiatives in Japan: Extended operating hours and the Zengin Electronic Data Interchange system (ZEDI)

The Zengin System supports the Japanese payment settlement system through the provision of a highly secure and reliable network that connects the country’s financial institutions. In 2018, the system saw two major advances. The first took place in October, when operating hours were expanded to provide 24/7 service, 365 days a year, and it became possible to confirm the receipt of funds in real time. The second took place in December, with the launch of the Zengin Electronic Data Interchange System (ZEDI), which made it possible to attach commercial information to domestic fund transfers via the use of XML-formatted electronic messaging. Under the Zengin System, Japan’s payments infrastructure system is becoming increasingly advanced. However, even when taking into account the five payment trends addressed by advances under SWIFT (settlement speed; open access; simplification of remittance destination designation; partnerships with financial institutions and technology companies through application programming interfaces; and adopting message standards), there remain many challenges. This paper discusses Japan’s payments infrastructure and the possibilities that emerging technology and innovation can bring to the nation’s banking industry and payment services sector.