--- begin forwarded text

 Date: Mon, 12 Dec 2005 19:10:44 -0500
 To: Philodox Clips List <[EMAIL PROTECTED]>
 From: "R. A. Hettinga" <[EMAIL PROTECTED]>
 Subject: Japan Puts Its Money on E-Cash

 No, not *that* E-Cash(tm), but you get the idea...



 The Washington Post

 Japan Puts Its Money on E-Cash
 While Saving Time, Consumers May Spend More

 By Anthony Faiola
 Washington Post Foreign Service
 Monday, December 12, 2005; A01

 TOKYO -- Toru Nashimoto, a trim 36-year-old with nary a coin in the pockets
 of his slick pinstripe suit, confidently strode toward the cashier at a
 bustling sushi bar to settle his $45 lunch tab. He whipped out a thin
 electronic card and placed it above a scanner that quickly blinked neon
 blue before emitting a computerized ka-ching.

 It was the telltale sound of Japan's new electronic money. In seconds,
 Nashimoto had paid for his meal of sea urchin, eel and raw fish and was
 hustling back to work. No change from the cash register, no waiting for
 confirmation, no pin code to enter. "Who needs to carry real money?" said
 the commercial real estate manager. "I often don't even carry a wallet with
 me anymore."

 Nashimoto is part of the latest trend in Japan, where society is rethinking
 commerce by doing away with the increasingly arcane concept of cash.

 Technology analysts say the use of electronic money amounts to a leap
 forward in commerce and shopping. Using cell phones that transmit infrared
 signals -- or, as in Nashimoto's case, a smart card that doubles as a set
 of electronic keys and lets him earn airline miles with each use --
 Japanese consumers are whisking through checkout lines, buying everything
 from sushi to furniture without ever yanking out their wallets.

 Users can add value to their cards or cell phones at thousands of automated
 docking stations around the country, where they insert paper money and get
 credit for e-cash. They can also use credit cards to replenish e-cash on
 the Internet.

 Electronic money emerged four years ago as a convenient tool for fast-paced
 train commuters. The Japan Research Institute, an economic research group,
 estimates that at least 15 million people here are now using e-cash, a
 figure projected to reach 40 million -- about one in every three Japanese
 -- by 2008. The number of e-cash transactions reached 15.8 million per
 month in 2005, more than double last year's figure, according to Japan's
 two largest electronic money providers.

 E-cash is being accepted at convenience stores, department stores, cafes,
 restaurants, newsstands and electronics retailers -- enabling users to go
 shopping carrying nothing but their cell phones. At some supermarkets, up
 to 40 percent of all purchases are made with electronic money.

 Vending machines that dispense sodas and snacks with a flash of a cell
 phone are popping up on street corners and inside office buildings across
 Japan. Tokyo's subway system -- the world's second busiest after Moscow's
 -- will begin accepting electronic money next year. Experts cite the rise
 of e-cash as a reason for a drop last July in the circulation of yen coins,
 the first decline since 1971.

 "Japan is moving toward the cashless society," said Makoto Yamada, an
 executive at bitWallet Inc., operator of Japan's largest virtual money
 service and a partnership jointly owned by the Sony Group, the Toyota
 Group, All Nippon Airways, two large Japanese banks and NTT DoCoMo, Japan's
 largest cell phone operator. "Electronic money is taking us there."

 The smart cards and phones used are embedded with antennas and integrated
 circuit chips that allow the devices to receive and emit electronic
 signals. When the devices are placed near a scanner at a checkout, for
 instance, a signal is emitted and e-money is deducted.

 Similar electronic money concepts are being tried in North America and
 Europe. Analysts say the Japanese version requires some fine-tuning before
 it can be exported.

 Many note that the idea works well here partly because concerns about
 safety and security are quite low -- in Japan, even lost wallets are often
 returned to their owners intact. So the loss of a card or a cell phone
 loaded with hundreds of dollars of e-cash represents a comparatively small

 Electronic money also banks on consumers who are willing to pay for their
 purchases in advance, the opposite philosophy of a credit card. That works
 well in debt-averse Japan, where only 9 percent of consumer transactions
 are settled by credit card. But would it work in a place like the United
 States, where 24 percent of transactions are made on credit?

 Some Americans, analysts note, are already using a version of e-cash to
 bypass toll lanes on highways. "In the U.S., use of credit cards and debit
 cards is already very well developed, so it's unclear how electronic money
 will take off there," said Shigeru Takamura, senior consultant at the Japan
 Research Institute, which is affiliated with the Tokyo-based Mitsui
 Sumitomo Financial Group. "Look for it in places where saving time matters,
 like parking garages and grocery stores."

 In Japan, electronic money is becoming part of the fabric of everyday life
 -- particularly for young professionals.

 One explanation is that using cash in Japan can be cumbersome. The lowest
 denomination of paper currency is the 1,000 yen note -- worth about $8.30.
 That means people lug around six different values of yen coins to make
 small purchases.

 The e-cash service exploded after DoCoMo added electronic money
 transmitters to its latest-generation cell phone last year, creating what
 has been dubbed a mobile wallet.

 "If I need to buy something quickly, I just grab my cell phone and run out
 the door," said Mihoko Iguchi, 43, a dress shop owner who was using a
 bright orange cell phone to buy a fashion magazine at a convenience store.
 "I don't have to sift around for coins and I can buy all sorts of different

 Most electronic money purchases are for less than $10, according to
 statistics. That amount is expected to increase, particularly after DoCoMo
 begins extending credits on phones and smart cards next month, doing away
 with the need to constantly replenish e-cash.

 Electronic money is helping urban dwellers save on another precious
 commodity -- time. One study by the Japanese convenience store chain AM/PM
 indicated that shoppers using e-cash completed their purchases 10 percent
 faster than those using real cash. The time savings was greater when
 customers were buying more than one item, and greater yet when compared
 with those paying by credit card.

 "During the lunchtime rush, we often have long lineups of 10 people or
 more," said Yoshihisa Okuma, AM/PM's head of strategic planning. "But we've
 been able to significantly reduce waiting times by using electronic money."

 After almost a decade of deflation in the world's second-largest economy,
 electronic money is also credited with playing at least some role in the
 economic recovery here. Thousands of businesses are purchasing the new
 hardware required to accept e-cash. More important, the system is subtly
 designed to encourage Japanese consumers to buy more.

 E-cash shoppers at AM/PM stores, for instance, are laying out about 15
 percent more per transaction than those paying with real cash. Shoppers
 view electronic money as money already spent, making it psychologically
 easier to buy extra items. Businesses are also offering incentives to spend
 e-cash, including a proliferation of programs that offer discounts or bonus
 points toward the cost of airline tickets, free DVD rentals and other

 Nashimoto, for instance, earns one mile on All Nippon Airways for each
 $1.66 worth of virtual money he spends. He also receives double points when
 he uses his traditional ANA credit card to recharge his electronic money
 card on the Internet.

 "Maybe I do spend a bit more with electronic money," he said. But since he
 began using the system three years ago, he has earned about 10,000 airline
 miles using the system. "So it still seems smart to me -- and kind of cool."

 Special correspondent Sachiko Sakamaki contributed to this report.

 R. A. Hettinga <mailto: [EMAIL PROTECTED]>
 The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
 44 Farquhar Street, Boston, MA 02131 USA
 "... however it may deserve respect for its usefulness and antiquity,
 [predicting the end of the world] has not been found agreeable to
 experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

--- end forwarded text

R. A. Hettinga <mailto: [EMAIL PROTECTED]>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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