comscore As e-money gains ground, so do local digital currencies | Honolulu Star-Advertiser

As e-money gains ground, so do local digital currencies

TOKYO >> With cashless payments finally gaining ground amid the pandemic in cash-loving Japan, some municipalities are taking the momentum to the next level by establishing community-specific digital money.

Regional currencies are intended to stimulate local economies that have been battered by the pandemic. They are also used to encourage community engagement and investment in community infrastructure.

A variety of virtual currencies have been introduced recently, including Setagaya Pay by Tokyo’s Setagaya Ward, Mina Coin by Mina­mishimabara in Nagasaki Prefecture and Morio Pay by Morioka, Iwate Prefecture.

Setagaya Pay, which launched last month, replaced paper vouchers that residents spent at area stores.

“Paper vouchers come with various costs — printing them and exchanging them with cash. These things need to be handled manually, which requires quite a lot of labor as well,” said Shige-yuki Nakanishi, director of Seta­gaya’s commerical division.

The vouchers were unpopular with stores because of the extra hassle, and only a third of about 8,200 stores accepted them.

Now, customers pay using a smartphone app to scan QR codes. So far, more than 400 shops accept the payment method. As a promotion, users receive 20% cash back at restaurants. That’s a good move, since the success of digital currency is tied to cash-back offers.

Over the past year, Setagaya has seen an increase in consumer spending within the ward.

“This is a good opportunity for residents to rediscover stores in their local areas,” said Nakanishi. “We’d like to reach young people” by introducing digital pay.

Nakanishi hopes Setagaya Pay will also improve services for residents. When Japan distributed 100,000-yen cash handouts last year, many municipalities were thrown into chaos. The system required that applications be printed out and checked manually, delaying distribution. The app would have sped things up dramatically.

“If we were to launch paper- based vouchers, it could take about a half-year to set up everything. But we could do it in a month via the app,” he said.

The ward also plans to offer points equivalent to virtual money for residents who do volunteer work or contribute to the community in other ways.

Many local currencies have been tied to social investment.

Aqua Coin, used in Kisarazu, Chiba Prefecture, is one. The city offers points for everything from walking 8,000 steps a day to taking part in beach cleanups. Launched in 2018, it had seen nearly 16,000 downloads as of February and is available for use at 654 stores in the city. Kisarazu has a population of about 135,000.

But experts say currencies need more than financial incentives to take root. In the case of Aqua Coin, services are not limited to shopping. City workers can also receive their salaries in the currency, and soon, residents will be able to use it to pay taxes.

For all that, experts are skeptical about the sustainability of local currency.

“After all, the fact that it can only be used within a community is a disadvantage,” said financial researcher Toshio Taki.

But Shuhei Kawata, president of Finnovalley Co., disagrees. The company provides platforms for Setagaya Pay, Aqua Coin and other currencies.

Kawata said currencies can play a key role in shoring up local economies beyond their payment function. For example, virtual tokens can be integrated into products offered by financial institutions, motivating people to invest money sitting in their savings accounts. That has impact locally.

“People’s financial assets are not really circulating in their local areas, so our next step is to do something about it,” he said.

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