JAPAN Trends and Developments Contributed by: Takaharu Totsuka, Keisuke Hatano and Tomoki Kashimura, Anderson Mori & Tomotsune
(i) The obligation of an obligor of a monetary claim held by a Beneficiary is not extinguished on or before funds are accepted as payment from such obligor or a person who makes pay - ment by entrustment from the obligor (includ - ing two or more phases of entrustment) or by any other method similar thereto (“Obligor” in Item (iii)) (or, if having another person accept the funds, on or before such other person accepts the funds as payment); (ii) If a monetary claim held by a Beneficiary has arisen from extending credit to an obligor of the said monetary claim by lending funds, making payment as one of joint and several obligors, or any other method similar thereto, the funds are transferred for the purpose of collecting such monetary claim; (iii) All of the following conditions are applicable: (a) In the case where a Beneficiary has an obligation to provide counter-performance to an obligor of a monetary claim held by the Beneficiary, the act concerned is not an act of accepting, or having another person accept, funds as payment from the obligor, of said monetary claim prior to, or simultaneously with, the counter- performance, and then transferring said funds to the Beneficiary after the counter- performance; and (b) The act concerned is not an act as a platform for concluding a contract which gives rise to a monetary claim to be held by a Beneficiary or otherwise having an involvement essential to forming such contract; accepting, or having another person accept, funds as payment from the obligor, of said monetary claim; and then transferring said funds, with consent
of the Beneficiary, in accordance with such contract.”
If the Beneficiary is an individual (excluding the case where the individual is a sole proprietor and acting as the Beneficiary for the purpose of their business) and any one of the conditions set out in Items (i) to (iii) of Article 1-2 of the Cabinet Office Ordinance is applicable, then the “Payment Collection Services” are deemed to be “Fund Transfer Services” and, accordingly, a banking licence or registration as a “Fund Transfer Service Provider” is required in order to engage in these services. To be more specific, if the obligation of an obli - gor is not extinguished after a “Payment Collec - tion Agent” receives the funds, then, because the obligor faces the risk of double payment, the “Payment Collection Services” are deemed to be “Fund Transfer Services” under Item (i) of Article 1-2 of the Cabinet Office Ordinance. In the past, the providers of bill splitting smart - phone applications were able to circumvent the regulations on “Fund Transfer Services” by structuring themselves as “Payment Collection Services” providers. Under the structure, the service providers deemed themselves as one of joint and several obligors and collected reim - bursements from other joint and several obligors after making full payment of their joint and sev - eral obligations. In order to prevent this circumvention, Item (ii) of Article 1-2 of the Cabinet Office Ordinance was established to provide that any “Payment Col - lection Services” designed for collecting mon - etary claims which have arisen from extending credit to an obligor of a monetary claim by lend - ing funds, by making payment as one of joint and several obligors and on behalf of other joint
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