The Zengin System is a nationwide electronic fund transfer network mainly for the customer payments. Almost all the financial institutions in Japan, approximately 1,400 institutions, participate in the Zengin System. As most of the payments made through the System are the consumer and commercial payments, the transaction volumes are huge, while the amount of each payment is rather small. In addition to the single payments, the Zengin System also supports the batch payments, such as the payroll and pension payments. The Zengin System is a DTNS system, where the final settlement of the net positions takes place at the end of the day. The Zengin System is planned to be upgraded to the sixth generation system in November 2011. The details of new mechanisms of the six generation system are described in the chapter.
TopIntroduction
The BOJ-NET and FXYCS are mainly for the interbank payments and characterized as a large-value payment system. On the other hand, the Zengin System is mainly for the customer payments and regarded as a retail payment system.
However, we have to pay some attention that some large-value payments are also processed in the Zengin System. The Foreign Exchange Act had stipulated that the international related payments should be processed by the FXYCS for the purpose of foreign exchange control1. As a result, the Zengin System is dedicated to the domestic payments, which include some large-value payments.
In other countries, the division of roles between payment systems is generally made by the value of the payments between the large-value payments and retail payments. In the case of Japan, however, the assignment of roles is made between the international payments and domestic payments due to the above legal reason. This was one of the features of Japanese payment systems.
The second feature was the delay in the reform of payment systems. The major advanced countries in Europe, North America and the Asia-Pacific region introduced the RTGS systems in late 1990s, but the BOJ-NET finally became the RTGS as late as in 2001.
Besides, the Hybrid systems and Integrated systems were introduced one after another in the US and European countries during 1996-2004, the Japanese payment systems showed little sign of the sweeping reform.
But at length, the BOJ enhanced its RTGS system to a sophisticated system in 2008. This project was called the “Next-Generation RTGS (RTGS-XG) project” of the BOJ-NET. As a result of this project, the Japanese payment systems caught up with the global trend and became one of the cutting-edge payment systems in the world.