Japanese government pushes for digital payroll over security concerns
The Ministry of Labor is advocating for companies to embrace digital payroll in the current fiscal year, although security concerns remain.
The reforms aim to promote a cashless society, especially during the pandemic, to help people avoid touching cash in order to minimize the transmission of the virus.
The measures would also help foreign blue-collar workers, who often have problems with setting up bank accounts, to get their wages without having to.
To enable digital payments through smartphone settlement apps, the ministry said a review of the ordinance would be needed. He also said it was essential for digital payments through apps to have security features.
The Department of Health, Labor and Welfare will assess which digital wage payment service providers can pass on the funds and base its decision on whether to compensate for losses that might be incurred by a business failure or illicit withdrawals.
The government aimed to finalize the details of the program during fiscal year 2020 which ended last month, but the program was delayed due to challenges involving ways of ensuring the security of payments from digital wages.
For the public, concerns about digital payroll security stem from the lax rules of money transfer companies compared to financial institutions. While the government’s repayment program can protect a maximum of 10 million yen ($ 92,393) per depositor in the event of bank failure, the regulations do not apply to remittances.
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In addition, security concerns have been raised regarding fraudulent withdrawals since cases targeting bank accounts linked to e-money services provided by leading mobile operator NTT Docomo Inc. were confirmed last year.
The banking industry opposed the proposal mainly because having accounts for the payment of wages helps them promote their businesses to customers, according to Kyodo.