Of of the interesting thing about about Japan is the use of digital money. I used to think that digital money was close to inconceivable because I much prefer the feel and sight of having cash in hand when making payments. The physical and visual queue of using money is that has greatly helped me in keeping my spending in check. After moving to Tokyo, I've become accustomed to the prevalence of using digital money.
The cafeteria at my office operates on a digital money system. We have several thousand employees at the research center so the lunch lines can get pretty long if you get to the cafeteria right at noon. When I was a university student, it would take a while to get your food and then take another long while as everyone fumbles with coins and bills to pay for the food. Credit cards are one solution to that problem, but I believe that digital cash cards are superior compared to credit cards.
One electronic cash card system being used here is called Edy, which is a wireless rechargeable cash card that are also integrated into some cell phones in Japan. These cash cards can be charged using recharge kiosks where you can place your card or cell phone on to and deposit money into the card. Another interesting feature for cell phones is that you can log into your bank account from the cell phone and have money wired into the chip in phone. One point of risk for the system however is hacking of the cards to digitally manipulate the amount of money stored. I am not entirely sure about the security features used in the card to prevent people from tampering with the device, however.
The Edy cards are currently accepted at nearly all convenience stores and some retail chains, so I would not say that market penetration of the cards for consumer usage is not that deep. However for mass transit usage (trains, buses and etc.) pretty everyone uses these cards as you do not need to look up train fairs and pay for it every time you go through the gates. Throughput of people in Japan through the train gates in Tokyo is quite amazing as a result of this.
The one nice thing about these digital money cards, is that they are not necessarily tied to the identity of the user, for example in the case of a credit card. The loss of a credit card usually incurs the headache of contacting the credit card company, deactivating the card and waiting for a new card to be made and sent to you. Without having this identity connection, a card loss is simply equivalent of physical loss of the money, meaning that you could just buy a new card (which is about $10 ish), reload it and start using it immediately.
One of those things I've been getting annoyed about recently is the size of my wallet with the number of cards I carry. Women, in particular, I notice have huge wallets to carry all the point and membership cards they use for shopping. As of recent, I've been thinking about how nice it would be to be able to carry a much less boated wallet with me.
The financial incentives for managing a digital money system is obviously there as money charged into these cards can be placed in a holdings account where the institution can make 1~2% interest in very low risk investments. When it comes to creating digital consumer ID cards, I am not entirely sure that there is sufficient incentive yet to make that jump yet, though I believe that work is trivial.
I would expect that ID information will eventually all become digital and embedded within an ubiquitous device like a cell phone. The interesting thing to ask is what are the risks of digitizing all ID and monetary data? Furthermore, I would wonder what kind of system would manage it? For it to be socially acceptable, I would be willing to venture a guess that the management system would have to be a decentralized one. Maybe we will see that transition in the next 5~10 years after the first "killer application" that drives this transition is created.
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