Another barrier to digital immigration: is the cost of remittances
IT experts are said to be the bottleneck in promoting DX in Japan. International outsourcing is likely to be used to solve this problem. The problem here is the remittance cost when paying remuneration across borders.
Outsourcing through matching sites such as “Upwork,” which I mentioned last time, involves many one-off jobs. If you occasionally order this kind of work overseas, remittance costs may not be such a big issue.
On the other hand, if you move a call center to a foreign country, the local subsidiary can pay the salaries, so there is no need to send money each time from your home country.
However, in the intermediate case, where staff in a permanent employment relationship are scattered in various locations overseas, in the case of the internationalization of telecommuting (digital immigration), The cost of remittances becomes a major issue as people need to be paid their salaries by sending money internationally.
Old and expensive international remittance system
However, the current international remittance system is an old system.
I don’t have the space to go into detail here, but in addition to the banks that deal directly with the sender, there are “correspondent banks” that intervene between the sender and the receiver to exchange money into foreign currencies and secure liquidity. For this reason, administrative processing takes time and costs are high. There are also costs associated with exchange rates being set unfavorably to users.
It is surprisingly difficult for money to cross borders. Money is the least internationalized field. If the cost of remittances becomes high, the advantage of using cheap labor will be lost. This is a major reason why international digital migration is not progressing.
In the case of Upwork, payment methods include PayPal, credit cards, and bank transfers. PayPal transfers money using a credit card, but since PayPal acts as an intermediary between the sender and recipient, there is no need to inform the recipient of your credit card number or account number. For this reason, it is considered a safe system.
PayPal is not widely used in Japan, but in the United States, it is widely used for payments on e-commerce sites and web services. However, credit card systems are inherently expensive. Bank transfer is the recommended method for receiving compensation in Japan, but as mentioned above, this takes time and is expensive.
Electronic money cannot cross borders
So, can electronic money be used for international remittances? Similar to AliPay, which is widely used in China, and Sweden’s Swish, many electronic money systems in Japan accept QR code payments. Transportation cards such as Suica and convenience store cards are also electronic money.
Electronic money is a system based on bank deposits. Charge (deposit) money into your electronic money wallet (electronic wallet) from your bank deposit. Payment is made to the recipient by exchanging a QR code. This will increase the recipient’s bank deposits. It can be said that it is similar to direct debit, but made easier.
So, to pay with AliPay, you must have a savings account in a Chinese bank. This is why AliPay is not very popular in Japan. In this way, electronic money cannot cross national borders. This is the reason why even though electronic money has become widely used, it has had little impact on the international money system.
