Govt to allow salaries to be paid via apps

TOKYO (Jiji Press) — Japan is expected to allow businesses to pay salaries into employees’ accounts of cashless payment services provided via smartphone apps.

A subcommittee of the Labor Policy Council, which advises the labor minister, discussed the so-called digital salary payments at a meeting Tuesday.

At the meeting, the labor ministry presented a plan to put a ¥1 million cap on the amount of digital salary payments that can be made at one time and the balance of funds in cashless accounts used for such salary payments.

With no major objections raised, the ministry will work on details of the new method of salary payments. The ministry will make a necessary revision to ordinances by the end of March 2023 after receiving a policy proposal covering the issue from the council.

The labor standards law stipulates that salaries be paid in cash in principle. But companies are allowed to pay salaries into accounts held at banks and other financial institutions.

The labor minister will designate fund transfer service providers meeting certain criteria as those authorized to handle digital salary payments from companies to workers.

In Japan, the operators of the PayPay and Rakuten Pay services are major players in the fund transfer service industry.

Under the ministry’s plan, when companies make a digital salary payment exceeding the ¥1 million cap, the surplus portion would have to be transferred within the day to a bank account or elsewhere designated by the recipient beforehand.

Designated service providers would be required to allow digital salary recipients to withdraw cash for free at least once a month using automated teller machines or through other means, according to the ministry.

The ministry also envisions a system to fully protect funds that recipients hold in their digital salary accounts with designated fund transfer service providers even if such a provider goes bankrupt. In that case, the full amount would be paid back through a credit guarantee institution.

Companies would be required to gain employees’ consent before making digital salary payments. The conventional method of paying salaries into bank accounts will remain intact.