December 15, 2016

Japanese Bankers Association
Japanese Banks’ Payment Clearing Network

Update Regarding Major Enhancements to Payment Clearing Infrastructure Functions
At board of directors meetings held today, the Japanese Bankers Association (Chairman: Takeshi Kunibe, President &CEO, Sumitomo Mitsui Banking Corporation) and the Japanese Banks’ Payment Clearing Network (Board Chairman:Shin Takagi) resolved to make major enhancements to Japan’s payment clearing infrastructure functions. Specifically,
they have decided to establish a finance and IT network system, as outlined below, for the purpose of switching themessage format for inter-company transfers in Japan to XML1, which is the international standard for financialtransactions, and move forward with efforts to implement financial EDI2, which will enable commercial information tobe attached to domestic transfer messages.
1.

Major Enhancements to Payment Clearing Infrastructure Functions

1-1. Provision of Platform Compatible with XML Messages
A new finance and IT network system (“the new system”) will be developed as a platform in order to promptly
switch the message format used for inter-company transfers in Japan to an XML format and to move forward withefforts to implement financial EDI.
[Diagram of Finance and IT Network System (New System)]Transfer instruction(fixed-length data)

Addition ofEDIinformation

Sendingfinancial
institution

6’
Transferinstruction
(XML)

3

42

 Storage of additional EDI information +‘key information’ generation
 XML data for bank transfer informationis converted to Fixed-lengthReceivingfinancial
institution

ZenginSystem1’

1Paymentcompany

Transfer instruction(fixed-length data)

5
Bank transfer information and‘key information’(fixed-length data)

Transferredpayment(XML)

EDIinformation
receipt

6Receivingcompany

 Additional EDI information set
based on ‘key information’

New System(Finance and IT Network System) Fixed-length data for bank transfer
information is converted to XML

1' and 6' are cases where individual financial institutions choose to upgrade their own systems so that XML
messages can be received directly from companies (not via the new system).

Since the new system is a platform, individual financial institutions can adapt it to handle online banking
service requests, etc.

1 eXtensible Markup Language: a markup language which enables flexible setting and modification of text length, etc.
2 Electronic Data Interchange: the use of financial EDI is expected to improve efficiency (e.g., clearing of accounts receivable between companies).

11-2. Purpose of Developing a New System
The purpose of the new system is to make it possible to receive domestic transfer instructions from companies via
XML messages and attach commercial information to inter-company transfer messages, with the aim of improving
the efficiency and productivity of payment clearing operations (automatic clearance of accounts receivable, etc.) and,from the perspective of financial institutions, providing new payment clearing services and promoting innovation.
1-3. Service Provision Start Time
Based on the governmental report of the Financial System Council’s Working Group on Payment and Transaction
Banking “Strategies for Reforming the Japanese Payment Systems” published in December 2015 and the “Japan
Revitalization Strategy 2016: Towards the Fourth Industrial Revolution,” we recognize the need to implement
service provision as rapidly as possible, and therefore aim to start provision during 2018.3 However, properconsideration must also be given to safety and reliability, which are required of any infrastructure offered by thebanking industry.
Once the new system is operational, participation will be at the discretion of individual financial institutions.
However, we will pursue efforts to encourage all financial institutions to participate from an early stage, since thesystem will increase user convenience by enabling the use of the enhanced financial EDI through XML messaging
in a wide range of institutions.
2. Future Handling
2-1. Management Structure and Project Development of the New System
The new system will be managed by the Japanese Banks’ Payment Clearing Network (Zengin-Net). The project will
be launched at its office with further consideration given to specific actions.
In conjunction with this, the New XML System Working Group set up at Zengin-Net will manage the project’sprogress.
2-2. Initiatives to Promote the Use of Financial EDI
The JBA will pursue initiatives aimed at promoting the use of financial EDI in the banking industry in collaboration
with relevant government organizations and the business sector.
At the XML Messaging Transition Working Group, the JBA, as the executive body of the Group, will collaborate
with the business sector and the Ministry of Economy, Trade and Industry (METI) Small and Medium Enterprise
Agency, etc., on efforts to raise awareness ahead of the new system becoming operational. In addition, it will
collaborate on initiatives such as the testing of a common ordering system for SMEs to be implemented on behalf of
the Small and Medium Enterprise Agency4 and work closely with the public and private sectors to firmly establish
the new system as an IT platform that enables seamless coordination of commercial transaction and payment
clearing information in Japan. At the same time, the banking and business sectors will continue collaborating tofacilitate the enhancement of corporate financial and payment clearing processes through the implementation of IT.

3 The Financial System Council and the Japan Revitalization Strategy recommend switching the format for whole domestic
inter-company transfer instructions to XML by 2020.
4 To be implemented as an IT infrastructure development support project (research project on next-generation inter-company data) toimprove management of projects supporting future regional investment (Second Fiscal Supplementary Budget for FY2016).

2