4. Special Feature: Dialog with a Customer
We also ventured into the acquiring business tobridge the gap between the banking and tourism
industries. We acquired licenses from international
credit card brands, such as Visa and MasterCard,
to oversee merchant development, evaluation, andmanagement. This has facilitated card usage bytourists, generated spending opportunities andboosted tourism.

“ITFOR, conversely,prioritized theunderstanding of ourscheme to ensure that itwould fulfill our desiredspecifications.”
Many small retailers and tourism operators dealt
primarily with cash transactions, so the challenge
was introducing them to card services. We addressed
this by establishing a daily payment system.
This change met substantial demand because
depositing daily card sales into the accounts ofcard-accepting merchants—establishments withpayment terminals for credit cards, debit cards, andsimilar payment methods—significantly improved
merchants’ cash flow. Offering card services anddaily accounting showcased the bank’s strengthand potential.

Right: Masanobu Tago, Bank of the Ryukyus, Limited
Left: Kazunori Kono, ITFOR Inc.

Regional Cashless Transformation
Pioneered by the Bank of the Ryukyus
Masanobu Tago

Kazunori Kono

Deputy Head of Payment
Business Department
Bank of the Ryukyus, Limited

Executive Officer, Head ofPayment Business Division
ITFOR Inc.

Kono:
ITFOR excels through empathy that sees it alignwith customer needs by engaging in discussions
and striving for satisfaction to achieve growth, forcustomers and itself. I have heard that collaboration
with the Bank of the Ryukyus has sparked innovation. Can you expand on this please?

16

capitalizes on the tourism appeal of the region’s
rich culture and natural environment, which attract
visitors from around the world to the main andsmaller islands.

Tago:

Cashless payment adoption in Okinawa, however,remains low, especially on the smaller islands. The
absence of cashless payment options, despitehigh tourist demand, risks missing opportunities
for regional economic growth and undermines
Okinawa’s immense potential.

The Bank of the Ryukyus has promoted a cashlessisland concept in Okinawa since 2015. ThisTo maximize regional value, we have initiated such
experiments as introducing a local currency.

User-friendly payment terminals that require nospecial training are vital to the widespread adoptionof card services. So we partnered with ITFOR tofine-tune every aspect of our card services businessto ensure a large-scale launch.

it. ITFOR, conversely, prioritized the understandingof our scheme to ensure that it would fulfill ourdesired specifications and enable us to realize ourcashless vision in its ideal form.
With the major credit card companies dominating
the market and banks their mere subsidiaries,
typically only managing credit card operations, theBank of the Ryukyus acted boldly. We obtained
licenses to engage directly in the acquiring business.
This allowed us to retain revenue, including fees,
within the prefecture.
We embarked on this and other new businesses
in part to offset the impact of Japan’s prolonged
zero interest rate policy. That policy led to declining
interest income from loans and returns on investments, such as government bonds. We needed tostrengthen our service-related income with, forexample, fee income. External factors were at play,
but our implementation of our cashless islandconcept greatly advanced Okinawa’s consumerdigital transformation (DX).

Kono:
The Bank of the Ryukyus and ITFOR had a strong relationship from previous system implementations.
But participating in your cashless island concept
presented ITFOR with a transformational opportunity involving the introduction of cashless payment
terminals (pictured) and a proposal for a terminalcenter.
ITFOR earlier had provided payment terminals andthe terminal center for the retail mission-critical

The Bank of the Ryukyus became an acquiring
business at a time when few Japanese banks
managed merchants. Major card companies
dominated these functions. As a newcomer, welacked the requisite system and could not afford tobuild one. We instead handled the central systeminternally and collaborated with other companies
for payment terminals.
By chance, we consulted ITFOR about payment
terminals. ITFOR, as it turned out, had plans to
expand the use of payment terminals by separating
their POS payment functionality. This aligned with
our needs. ITFOR’s multi-payment devices, whichhandle credit cards, electronic money, and QR
codes, were industry groundbreakers. Today, all-inone terminals are the industry standard.
We tried to partner with other leading system development firms, but most wanted just to adapt theirproducts to our scheme rather than truly understand17

4. Special Feature: Dialog with a Customer
system “RITS” (Retail Information Technology
System for Strategic Management), which it
sourced from Castles Technology Co., Ltd., inTaiwan for use by department stores. For the Bankof the Ryukyus, we utilized our technology and experience to develop a multi-payment terminal capableof processing 31 transaction types, including
electronic money, China’s UnionPay QR, Alipay, andWeChatPay. This was one of the industry’s mostextensively supported payment methods.
Some areas in Okinawa posed challenges because
they lacked broadband and relied on analog communication. But ITFOR’s communication technology
expertise made feasible their adoption of cashless
payment. Addressing such niche needs also contributed to our profile.
When the Bank of the Ryukyus launched its
acquiring business in 2017, ITFOR introduced
the multi-payment terminals “iRITSpay PaymentTerminal.” Looking back on our journey since thestart of our cashless island concept collaboration,
what stands out for you?

Tago:
Six years have passed since iRITSpay’s launch toa steadily expanding market share. Even remoteislands have adopted it through their chambersof commerce and tourism associations. Its
user-friendliness has led to its widespread use,even in family-run businesses. Yonaguni Island, forexample, boasts more than 40 cashless stores, andthe taxis on Miyako Island accept card payments,boosting their revenue.

Cashless adoption in Okinawa is leaving room formuch growth. With more than ten million tourists
annually by 2019, Okinawa’s need of cashless
payments is vital for increased consumption. The
adoption of Taiwan’s EasyCard boosts the region’s
cashless options and promotes a more vibrant local
economy, but more can be done.

also working on incorporating J-Debit transactions
using cash cards. The diversification and payment
center expertise that we’ve acquired stem largely
from our need to meet the bank’s needs. What
has resulted from the considerable enhancementin our capabilities are products aligned with market
demands.

And whereas regional banks often lack expertiseto start credit card businesses, the Bank of theRyukyus can now provide that knowledge. Entering
this field allows regional banks to boost local
economic revival for positive societal impact by thebanking industry.

Our collaboration with the Bank of the Ryukyus
has seen iRITSpay evolve and get picked up byother regional financial institutions. Under thedirection of the Bank of the Ryukyus, we introduced
iRITSpay to Hida Shinyo Kumiai (Hida Credit Union).
The success of iRITSpay at the Bank of the Ryukyus
likewise influenced other regional banks, including
Chiba Bank and Shizuoka Bank, to incorporate it
into their acquiring business projects. ITFOR isproposing iRITSpay’s expansion among additionalbanks.

“Collaboration with theBank of the Ryukyus has
sparked innovation.”
Can you outline the evolution of the ITFOR and Bankof the Ryukyus collaboration, which began with thecashless island concept, and offer your outlook forthe relationship?

Kono:

The expansion of iRITSpay as a result of ITFOR’sefforts to meet the expectations of the Bank of theRyukyus for multi-payment capabilities characterizes our collaborative journey. In addition to credit
cards, electronic money, and QR code payments,iRITSpay now supports Okinawa’s regional electronic money, OKICA, and Taiwan’s EasyCard. ITFOR is

Cashless payments contribute greatly to remoteisland revitalization and are aligned with ESG principles. We aim to further integrate technologies for
additional community betterment.

18

We propose multi-payment and multi-serviceoptions. Payment terminals now feature Android
functionality that extends their capabilities beyond
payments to POS apps, loyalty point systems, andattendance-tracking apps. Retailers thus see vastly
improved operational efficiencies.
The widespread adoption of cashless payments isexpected to boost regional economic activity andconsumer spending. Our addition of multi-service
solutions is meant to nurture thriving local businessenvironments. In Okinawa, we look to the Bank of
the Ryukyus for requests and insights to improve
our multi-service offerings in the same way thebank’s input helped us develop our multi-payment
terminals to meet the bank’s requirements.

The Bank of the Ryukyus entered the card businessthrough its affiliates Ryugin DC and OCS. With
ITFOR’s collaboration and the spread of its cashlessterminals, we were able to begin issuing Visa debit
cards. This gained us over 9,000 affiliated merchants
within six years.

“Cashless payments
contribute greatly toremote island revitalization
and are aligned withESG principles.”“Our partnership with thebank is our springboard
for providing ever-moreinnovative products andservices to invigorate
Okinawa’s local economies.”

Our partnership with the bank is our springboard
for providing ever-more innovative products andservices to invigorate Okinawa’s local economies.

displayed in leading the cashless island project.
Looking forward, we see the seamless integrationof services and applications, including merging
banking apps with multi-services, as an achievablegoal for generating value. DX initiatives that integrateusers, stores, and banks through value-added
services and banking apps are key to benefiting thelocal community and advancing the bank’s societalcontributions. As witnessed in Okinawa, cashless
payments boost convenience and contribute toenvironmental sustainability. We hope that ITFOR
continues to promote the cashless economy, here
and nationwide.

“DX initiatives that integrateusers, stores, and banksthrough value-added
services and banking
apps are key to benefiting
the local community andadvancing the bank’ssocietal contributions.”

Tago:
iRITSpay is a comprehensive cashless payment platform that provides
a secure and convenient payment solution for both businesses
and customers.

Early on, the Bank of the Ryukyus recognized thequality of and relied on ITFOR’s debt management
and call center systems. ITFOR’s track record wasagain demonstrated in the unique strengths it19