STRATEGIC PARTNERS
January 27, 2002
TOKYO-- Japanese retail giant Ito-Yokado Co Ltd's planned entry into online banking could be delayed by a disagreement with several city banks over commission fees for an ATM network, according to the Nikkei Weekly newspaper.
While Ito-Yokado applied to the Financial Services Agency for an online banking license in November, the dispute could postpone the launch of its bank until after summer.
Banking officials interviewed by Nikkei Weekly said the disagreement centers around the commission fees paid within the BANCS ATM cash network, which Ito-Yokado is trying to become a member of in order to create its online banking network.
The BANCS ATM cash network allows customers of member banks to withdraw cash from the ATMs of fellow member banks, with the card holder's bank paying a commission of 100 yen (83 cents) to the bank where the withdrawal occurs.
Several city banks have reportedly nixed the idea of paying the full 100 yen commission to Ito-Yokado (IY) Bank, since IY Bank will have fewer branches and depositors than the city banks.
Further complicating the negotiations is the fact that agreements basically have to be reached with each member bank separately, rather than on a network-wide basis, according to an unnamed city bank official.
Membership in the ATM network is considered essential for Ito-Yokado to be able to launch its online banking network, the Nikkei Weekly reported.
Ito-Yokado's November application for a banking license followed the launch of Japan's first specialized online lender, Japan Net Bank, 50 percent owned by Sakura Bank, in October. Electronics giant Sony Corp also filed with the Financial Services Agency for a license in January to set up an online banking arm, and a conglomerate led by trading house Itochu Corp. hopes to begin operations of eBank, its own online banking entry, in June.
Despite this interest from major corporations, online banking is still in its infancy in Japan, partly due to the fact that many people are still reluctant to make payments online.
Morgan Stanley Dean Witter banking analyst Hideyasu Ban has estimated that Japan has some 1.5 million to 1.6 million online banking accounts, or about 1.5 percent of its total population. By contrast, some 10 percent of Americans have online accounts.
