Asia Pacific

Japan has one of the world’s longest serving IP systems — yet, perhaps surprisingly, it’s still very much a developing landscape.

Launched in 1973, The Zengin System is Japan’s interbank domestic fund transfer system and plays a crucial role in Japan’s payments infrastructure — responsible for processing fund transfers between partner financial institutions. Zengin has gone through numerous updates over the years to reflect the changing needs of domestic consumers and the evolving payments business environment.

The latest seventh generation Zengin System launched in November 2019 and incorporates features such as enhanced capacity and processing performance, as well as improved safety and reliability. A prior upgrade to the system in October 2018 to incorporate IP support increased the availability of the system to a 24/7/365 basis for transfers with a value of less than JPY100m ($0.9M).

Only financial institutions can participate in the Zengin System and all deposit-taking banks currently participate. End users can initiate fund transfers through participating banks and can make P2P, C2B, B2B and B2C payments.



  • Consumers
  • Banks
  • Merchants
  • Billers



Population banking level


Number of debit, credit and charge cards per adult


Index to global average


Fully banked

Key statistics


IP launch year

Immediate payments types

Single instance

Initiation & authorization

Bank account

ISO 20022

Message standard









% of adults who have a mobile wallet and have used it in the past year

Share of volumes by payments instrument



Spend (USD)

  • Paper-based payments
  • Electronic payments
  • Immediate payments

Immediate payments volume and its share in overall NON-PAPER-BASED transactions, 2014-24f

% of total electronic payments transaction volume


Japan is a particularly interesting case study for IP adoption and its drivers. Despite IP capabilities existing in the market for decades now, adoption of IP has been gradual. This may be due to the country’s heavy dependency on cash, though the levels of paper-based payments in the market present an excellent opportunity for cannibalization by IP.

The most likely reason for minimal adoption is market perception and knowledge of the system. Current IP usage seems to be focused on high-value, low-volume transactions, such as wires. If the public’s understanding of Zengin’s capabilities is limited to wire transfers, it is unlikely that the network is even considered as a payments option when consumers are presented with a typical IP use case.

A recent upgrade to the Zengin System may see trends uptick due to increased availability, but usage will likely stay limited without additional public outreach and education. Moreover, for growth to truly accelerate, acceptance among merchants and billers must expand, IP initiation and authorization methods should diversify, and the types of payments offered to users need to grow.

ACI’s take

Although Zengin System has been upgraded many times and is now the seventh generation system, it is still ultimately a legacy system, and only allows connections from banks. Merchants and fintechs can’t connect to Zengin directly, and access requires users to provide bank ID, branch ID, account ID and user name information for all transactions — meaning it’s not easy/friendly for retail users’ usage.

If Zengin could support mobile ID like other countries and be more flexible to expand more usage for retailers, this could increase the share in spend. Japan will need to think carefully about how it updates its central infrastructure to really drive IP forward and enable new revenue streams that create the business case for participants.


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