August 2024
No.FIN_015

Amendment of the Regulation for Enforcement of theBanking Act regarding Electronic Payment Services
1.

Introduction

On December 8, 2023, the Financial Services Agency issued a broad solicitation for opinions for thepurpose of amending the Regulation for Enforcement of the Banking Act, etc. regarding electronic payment
services with the aim of (1) deregulating the transmission of remittance instructions and obtaining deposit
account information within group companies, and (2) clarifying that banks and similar financial
institutions are required to publish policies regarding cooperation and collaboration with electronic
payment service providers, and to make efforts to open their APIs. These amendments were promulgatedon July 8, 2024 and came into effect on July 9. 1
Of the above amendments, (1) the amendment regarding deregulation of certain electronic payment
services (Article 1-3-3, etc. of the Regulation for Enforcement of the Banking Act) aims to exclude cash
management systems (CMS), within group companies from the scope of regulated electronic payment
services, which is considered to be of great practical significance. In this article, we explain regarding (2),the newly established "Measures to Promote Coordination and Collaboration with Electronic Payment
Service Providers" (Article 13-6-12, etc. of the Regulation for Enforcement of the Banking Act), as follows.
Although the amendments include amendments for business types other than banks (e.g., credit unions,etc.), we will focus on the amendments to the Regulation for Enforcement of the Banking Act.

2. Details and current status of electronic payment services
As fintech services have become more familiar to the public, electronic payment services were launched asa new system on June 1, 2018, with the aim of promoting innovation for banks while ensuring userprotection by clarifying the legal status of electronic payment services.
Electronic payment services are categorized into two types which are (1) receiving instructions from
depositors regarding funds transfer transactions and transmitting such instructions to banks and otherfinancial institutions (Service I), and (2) account information service in which account information is
obtained from banks, etc. and provided to depositors (Service II). Both services are expected to be provided
by using an electronic data processing system based on an entrustment by the depositor. Registration
under the Banking Act and other laws is required in order to conduct electronic payment services in Japan,
and electronic payment service providers are required to provide appropriate information to users andenter into contracts with financial institutions.
As of May 31, 2024, 122 companies have been registered as electronic payment service providers 2, and thecollaboration between banks, etc. and fintech companies has made API-based services widely available tousers. For banks and other financial institutions, collaboration with fintech companies has the advantageof expanding the functionality of their own apps and expanding their customer base, and mobile services
for individual customers of banks, etc. can provide integrated household financial management functions,
including information from other banks, etc., within a single app.
1
2

https://www.fsa.go.jp/news/r6/ginkou/20240708/20240708.html
https://www.fsa.go.jp/menkyo/menkyoj/dendai.pdf
1©Atsumi & Sakai 2024

August 2024
No. FIN_015

3. Measures to promote coordination and collaboration with electronic payment
service providers
With the amendment of (2) above, the Regulation for Enforcement now requires banks, etc. to establish
policies to promote coordination and collaboration with electronic payment service providers and to
publish such policies online or by other means without delay, and to do the same when such policies arerevised.
Banks, etc. should include the following points in the said policies.
① Basic policy on promotion of coordination and collaboration with electronic payment service
providers② Whether or not the electronic payment service provider will develop a system to enable it to operate
electronic payment services for the relevant bank without obtaining identification codes, etc. (suchas IDs and passwords for the banking service) from the users of the electronic payment service itoperates (i.e., implementation of open API 3), the reason therefor and the scheduled completion dateof the development.
③ If such system is to be developed, whether the bank designs, operates, and maintains the systemitself or has a third party perform such work, and other policies that are relevant to the developmentof the system.
④ Name and contact information of the department in charge of coordination and collaboration withthe electronic payment service providers.
⑤ Other information to which electronic payment service providers should refer when considering
coordination and collaboration with the relevant bank.
In addition, banks, etc. are required to make efforts to develop a system for implementing open APIs.

4. Background of the measures to promote coordination and collaboration withelectronic payment service providers
Pursuant to Article 10 of the Supplementary Provisions of the Act Partially Amending the Banking Act (ActNo. 49 of 2017), promulgated in June 2017, financial institutions were already required to establish andpublish their the policies to promote coordination and collaboration with electronic payment service
providers by March 1, 2018. On April 24, 2020, the Financial Services Agency compiled and published thepublication status of each financial institution 4.
In addition, pursuant to Article 11 of the said Supplementary Provisions, banks, etc., were required to makeefforts to develop a system to implement open APIs by the date prescribed in the Cabinet Order, with suchdate being within two years from the effective date of the amended Banking Act, etc.
However, it was unclear whether and when this obligation would apply to banks and other financialinstitutions that were newly licensed after the effective date of the amended Banking Act. Therefore, inorder to clarify the permanent measures to promote coordination and collaboration with electronic
payment agents, this most recent amendment has been clearly stipulated in the form of the Regulation for
Enforcement of the Banking Act, and is considered to be a permanent measure.
It is stipulated that policies published by banks, etc., prior to the effective date of this amendment will bedeemed to have been published in accordance with the amended Regulation for Enforcement of theBanking Act. Therefore, it is considered that banks, etc., that have already published such policies do notneed to take any special measures. On the other hand, banks, etc. that have not taken such publication
measures should do so as soon as possible.
It should also be noted that if a foreign bank obtains a license from the Prime Minister pursuant to Article
4, paragraph 1 of the Banking Act, the foreign bank branch offices are deemed to be a bank and are subject
to the Banking Act, and thus taking the above publication measures, etc. is necessary.

3 This means that the bank provides an API (application programming interface, a program that allows non-banks toconnect to the bank's system and use its functions) to other companies and grant access to the bank system(https://www.fsa.go.jp/common/about/pamphlet/dendaigyo_start.pdf).
4 https://www.fsa.go.jp/status/renkeihoushin/index.html

2©Atsumi & Sakai 2024

August 2024
No. FIN_015

5. Conclusion
The recent amendments clarify the obligation to publish policy decisions or changes regarding open API
initiatives, etc. As described above, banks, etc. that have not yet established and published their policies(or published their policy change, if any) must do so immediately. In addition, it is also necessary toprepare for prompt publication of any future policy changes.
End---------------------------------------------------------------------------------------------------------------------------THIS NEWSLETTER IS PROVIDED FOR INFORMATION PURPOSES ONLY; IT DOES NOTCONSTITUTE AND SHOULD NOT BE RELIED UPON AS LEGAL ADVICE.
----------------------------------------------------------------------------------------------------------------------------Authors/Contacts
Kenichi TanizakiPartner
E: kenichi.tanizaki@aplaw.jp

Yuri Suzuki
Partner
E: yuri.suzuki@aplaw.jp
Tomoko Fujita
Associate
E: tomoko.fujita@aplaw.jp

If you would like to sign up for A&S Newsletters, please fill out the sign-up form.
Back issues of our newsletters are available here.

--------------------------------------------

Atsumi & Sakai is a multi-award-winning, independent Tokyo law firm with a dynamic and innovative approach to legal
practice; it has been responsible for a number of ground-breaking financial deal structures and was the first Japanese law
firm to create a foreign law joint venture and to admit foreign lawyers as full partners. Expanding from its highly regarded
finance practice, the Firm now acts for a wide range of international and domestic companies, banks, financial institutions
and other businesses, offering a comprehensive range of legal expertise.
Atsumi & Sakai has an outward-looking approach to its international practice, and has several foreign lawyers with extensive
experience from leading international law firms, providing its clients with the benefit of both Japanese law expertise andreal international experience.
We are the only independent Japanese law firm with affiliated offices located in New York, London, Frankfurt, Brussels andHo Chi Minh City which, together with our Tokyo office and Fukuoka affiliated office, enables us to provide real-time advice
on Japanese law to our clients globally.

Atsumi & Sakai
www.aplawjapan.com/en/
Tokyo Office: Fukoku Seimei Bldg., 2-2-2 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011, Japan
Fukuoka Affiliate Office: Tenjin Bldg. 10F, 2-12-1 Tenjin, Chuo-ku, Fukuoka-shi, Fukuoka 810-0001 JapanNew York Affiliate Office: 1120 Avenue of the Americas, 4th Floor, New York, New York 10036
London Office: 85 Gresham Street, London EC2V 7NQ, United KingdomFrankfurt Affiliate Office: OpernTurm (13F) Bockenheimer Landstraße 2-4, 60306 Frankfurt am Main, GermanyBrussels Office: CBR Building, Chaussée de la Hulpe 185, 1170, Brussels, Belgium
Ho Chi Minh City Office: Bitexco Financial Tower, 2 Hai Trieu Street, District 1, Ho Chi Minh City, Vietnam

NOTICES
1. ABOUT ATSUMI & SAKAI
Atsumi & Sakai is a partnership consisting of Atsumi & Sakai Legal Professional Corporation, a Japanese professional corporation, a foreign law joint venture underthe Act on Special Measures Concerning the Handling of Legal Services by Foreign Lawyers with certain Registered Foreign Lawyers of our firm, a Japanese Civil Codepartnership among Japanese lawyers, represented by Yutaka Sakai, a lawyer admitted in Japan, and a foreign law joint venture with Janssen Foreign Law Office,represented by Markus Janssen, a foreign lawyer registered in Japan to advise on the laws of the Federal Republic of Germany. In addition to lawyers admitted inJapan, our firm includes foreign lawyers registered in Japan to advise on the laws of the US States of New York and California, the Republic of Korea, India, Englandand Wales*, and the State of Queensland, Australia. Foreign lawyers registered in Japan to advise on state laws also are qualified to provide advice in Japan on thefederal laws of their respective jurisdictions.

3©Atsumi & Sakai 2024

August 2024
No. FIN_015

Atsumi & Sakai has established an office in London operating as Atsumi & Sakai Europe Limited (a company incorporated in England and Wales (No: 09389892); sole
director Naoki Kanehisa, a lawyer admitted in Japan), an office in Brussels operating as Atsumi & Sakai Brussels EU (a company incorporated in Belgium; managing
partner: Etsuko Kameoka, a lawyer admitted in New York and a Registered Foreign Lawyer in Brussels**), an affiliate office in New York operating as Atsumi & Sakai
New York LLP (a limited liability partnership established in New York; managing partner Bonnie L. Dixon, a lawyer admitted in New York and a Registered ForeignLawyer in Japan), and an office in Ho Chi Minh City operating as Atsumi & Sakai Vietnam Law Firm (a company incorporated in Vietnam; sole director Katsunori Irie,a lawyer admitted in Japan).
We also have a partnership with A&S Fukuoka LPC in Japan (partner: Yasuhiro Usui, a lawyer admitted in Japan) and an affiliate
office in Frankfurt operating as Atsumi & Sakai Europa GmbH - Rechtsanwälte und Steuerberater, a corporation registered in Germany providing legal and tax advisory
services (local managing director: Frank Becker, a lawyer admitted in the Federal Republic of Germany**).
Atsumi & Sakai is not regulated by the Solicitors Regulation Authority for England and Wales.
**Not Registered as a Foreign Lawyer in Japan*

2. LEGAL ADVICEJapanese legal advice provided by Atsumi & Sakai and our global offices is provided by lawyers admitted in Japan. Advice provided in Tokyo in respect of any foreign
law on which one of our foreign lawyers is registered in Japan to advise, may be provided by such a Registered Foreign Lawyer. None of Atsumi & Sakai Legal
Professional Corporation, Atsumi & Sakai Europe Limited or Mr. Naoki Kanehisa is regulated by the Solicitors Regulation Authority for England and Wales, and none
will undertake any reserved legal activity as defined in the United Kingdom Legal Services Act 2007. Advice provided in Germany on the laws of Germany will beprovided by a lawyer admitted in Germany, and advice provided in New York on the laws of New York will be provided by a lawyer admitted in New York.

4©Atsumi & Sakai 2024