What is digital wage payment? An explanation of the advantages and disadvantages, and how it works, based on information from the Ministry of Health, Labor and Welfare and other sources
Updated: July 2025, 7
Digital payment of wages (digital salary payment) is a system in which employee wages (salaries) are paid with electronic money, and was lifted in April 2023.
In this article, we will explain what digital payment of wages (digital salary payment) is, its advantages and disadvantages, and how to implement it.
What is digital wage payment (digital payroll payment)?
Digital payment of wages (digital salary payment) replaces the traditional bank transfer and cash payment.This is a new way to pay wages (salaries) via a cashless payment service provided by a money transfer company.
Electronic money allows you to receive your salary using a smartphone app or prepaid card, and is operated under conditions set by the Ministry of Health, Labor and Welfare.
Digital payment of wages (digital salary payment) has the advantage that it does not require procedures at financial institutions, which has the potential to reduce fees and transfer costs, as well as make it possible to receive wages more flexibly and quickly.
However, there are regulations and rules in place to protect safety and employee rights, and employee consent and the use of designated money transfer providers are required.
When will it be available? Background on digital wage payment
So when can this system be used?
Starting around 2020, the Labor Standards Act was revised and consideration began to be given to paying wages using electronic money.
With the spread of cashless payments and the diversification of remittance services, there is a growing need to use accounts at money transfer companies to receive wages.
In response to this situation, wage payments will be made to the accounts of money transfer businesses designated by the Minister of Health, Labour and Welfare.So-called "digital payment of wages (digital payment of salary)" will be permitted from April 2023.
According to an announcement by the Ministry of Economy, Trade and Industry,It is estimated that the ratio of cashless payments in Japan will reach 2023% by 39.3.("We calculated the cashless payment ratio in 2023."Than)
However, as of April 2023, money transfer business operators are only now able to apply for designation, and in order to actually implement and use the service, they must wait until the review of the designation application is completed and the service begins to be provided.
Money transfer businesses that plan to support digital wage payments (digital payroll payments)
On August 2024, 8, PayPay Corporation became the first company in Japan to be designated by the Minister of Health, Labour and Welfare as a digital salary payment company.
The digital salary payment system itself was lifted in April 2023, but the Ministry of Health, Labor and Welfare's designation review process appears to have been prolonged due to strict user protection measures.
In particular, important points to be reviewed include measures to protect users in the event that a money transfer service provider goes bankrupt, and free fees for salary withdrawals.
PayPay Corporation has announced that it will launch the "PayPay Salary Receipt" service for employees at 10 SoftBank Group companies who wish to receive the service, starting with their September salary payments.
The company is preparing to make the service available to all PayPay users (more than 2024 million people) by 6,400.
others,A type 2 fund transfer business operator"Recruit MUFG Business Co., Ltd."Three companies were designated: "Rakuten Edy Co., Ltd." and "au Payment Co., Ltd."As of April 2025, 4.
Advantages and disadvantages of digital wage payment (digital salary payment)
We will explain the advantages and disadvantages of introducing digital wage payments (digital payroll payments) for both companies and employees.
Benefits for companies
+Cost (fee) reduction
By using digital wage payment (digital payroll payment),The fees may be cheaper than bank transfer.
Even if you have a large number of employees or use a bank account separate from the company's, you can reduce transfer fees and hope to cut costs.
+Improve your company image
Introducing a new system will allow companies to demonstrate their flexibility and innovative attitude.
This will increase your company's credibility and improve your image.
+Recruiting and securing diverse human resources
As cashless payment services become more widespread, employees are showing increasing interest in paying their wages digitally (digital payroll).
The introduction of this payment method is expected to help secure talent, especially those who prefer digital services, and expand employment opportunities.
Disadvantages for companies
-Increased workload
With the introduction of digital wage payment (digital salary payment),If each employee has a different payment method, payroll processing becomes more tedious.
If some employees prefer traditional bank transfers and others choose to pay digitally, you'll need to accommodate each.
In addition, if part of the salary is paid digitally, multiple transfer procedures will be required for one person's salary, further increasing the workload.
-Rising management costs
Introducing digital wage payments (digital payroll payments) will require the management of new employee information and account data.
This may require a review of management structures and the introduction of new systems, which could result in increased management costs.
It is necessary to establish a system for properly managing information based on each employee's payment method and the proportion of digital payments.
-System integration costs incurred
In order to accommodate digital payments of wages (digital salary payments), the payroll system needs to be linked to a designated money transfer service provider.
Depending on your existing payroll system, you may need to renovate or build additional systems, which will incur costs.
In particular, if only part of the salary is paid digitally, the system will need to be adapted, which could increase integration costs further.
Employee benefits
+Improving the convenience of cashless payments
By using digital wage payment (digital payroll payment), your salary is paid directly into the account of a money transfer service provider.
ThisThis eliminates the need to transfer funds or charge money from a bank account to a cashless payment account, improving convenience for employees who use cashless payments on a daily basis.
+You can choose to receive a portion of your salary
When using digital wage payment (digital payroll payment), you can receive only a portion of your salary digitally.
For example, employees can flexibly set how they receive their monthly salary, such as receiving part of their salary digitally and having the rest deposited into their bank account.
+No need to worry about recharging with cash
Digital wage payment (digital salary payment) allows wages to be transferred directly to a cashless payment account,This eliminates the need to recharge your card with cash every time.
Furthermore, You can withdraw money once a month with no fees, making it easy to cash out.
+Compensation for salary balance
Even if a designated money transfer business operator goes bankrupt, there is a system in place where the remaining salary balance will be paid by a guarantee institution.
This allows employees to pay their wages digitally (digital payroll payment) with peace of mind.
+It's easier to manage your money
By taking advantage of digital wage payments (digital payroll payments), it becomes easier to separate and manage living expenses and savings according to purpose.
For example, you can manage your salary in a way that suits you, such as receiving your living expenses electronically and having your savings deposited into a bank account.
Disadvantages for employees
-Your desired money transfer provider may not be available
When receiving digital wages, the only money transfer companies that can be used are those designated by the Ministry of Health, Labor and Welfare.
If the cashless payment service that employees normally use is not available, they will need to open a new company-specified account.
As of April 2025, 4, PayPay Corporation,Recruit MUFG Business Co., Ltd.The four designated funds transfer companies are Rakuten Edy Co., Ltd., au Payment Co., Ltd.
Even if there is another cashless payment service you would like to use, you will not be able to use that cashless payment service.
-There is a limit to the amount of money you can deposit into your account
There is a deposit limit of 100 million yen for money transfer service provider accounts.
If your salary or bonus exceeds this limit, the excess amount will be automatically transferred to your pre-registered bank account, however transfer fees may apply.
In addition, PayPay Corporation, which was designated on August 2024, 8,The maximum amount that can be deposited into the account is set at 20 yen.
The background to this is related to the following regulations, which are thought to be intended to keep the amount of guarantee in the event of bankruptcy within the range that can be raised.
② The amount of the guarantee that may be required (estimated as a general rule to be 100 million yen multiplied by the maximum number of accounts set as designated fund transfer business accounts) must be within the range of the amount that can be raised (loans from financial institutions and funds on hand at the guarantor institution, etc.). In addition, since all designated fund transfer business accounts should be covered by the guarantee, the above maximum number of accounts (the upper limit on the number of accounts into which wage payments are permitted) will, in principle, be set as a condition when applying for designation. ("Guidelines for Money Transfer Business Operators Concerning Wage Payments to Money Transfer Business Operator Accounts"Than)
Points to note when introducing digital wage payment (digital payroll payment)
The introduction of digital wage payment (digital payroll payment) is optional for companies, but there may be cases where it becomes necessary to consider introducing it at the request of employees.
There are a few important points to keep in mind when implementing this.
① Designation of designated funds transfer business operators
When introducing digital wage payments, the first step is to determine which money transfer providers can support the system.
Money transfer businesses that can be used for digital wage payments are limited to "designated money transfer businesses" designated by the Minister of Health, Labour and Welfare.
At present, the number of designated money transfer companies is limited to four (as of April 4, 2025), but this number may increase in the future.
When selecting a money transfer service provider, it is important to consider factors such as fees, whether it can be integrated with existing systems, and employees' willingness to use it.
You will need to confirm with your employees whether they would like their wages paid digitally and understand which money transfer provider they would like to use and their needs.
② Concluding a labor-management agreement
When introducing digital payment of wages (digital payroll payment), a labor-management agreement must be concluded between the company and employees.
The agreement will be concluded with trade unions or those representing the majority of employees and aims to agree on specific details regarding the introduction of digital wage payment (digital payroll).
The labor-management agreement will also stipulate the scope of employees eligible for digital wage payments (digital payroll payments) and the amount of wages that will be eligible.
It is also common for details such as the selection of the money transfer company to handle the transaction and the start date for salary payments to be included in the agreement.
③ Submission of consent form
Employees who wish to have their wages paid digitally (digital payroll) must submit a consent form in advance.
This agreement may be submitted only by those who wish to do so after the labor-management agreement has been concluded, and is not mandatory for all employees.
The agreement mainly includes the following items:
- The amount of salary you would like to receive through digital wage payment (digital salary payment)
- Funds transfer service provider account number
- Desired payment start date
- Alternate account details (must be submitted to receive excess funds)
The format of the consent form has not yet been finalized, but the Ministry of Health, Labor and Welfare has posted sample formats on its website, so it is likely that most will be created based on these."Agreement for wage payments to a money transfer service provider account (example)"Than)
④ Reflection in work regulations
If digital payment of wages (digital payment of wages) is introduced, it is necessary to reflect this in the company's rules of employment.
The method of payment of wages is considered a "mandatory item" and must be clearly stated in the company's rules and regulations.
We will add rules regarding payments using money transfer services and matters regarding the use of these services in conjunction with bank accounts.
The contents required in the consent form must also be reflected in the regulations.
In addition, any changes to the work rules must be notified to the Labor Standards Inspection Office.
The opinion of the trade union or the person representing the majority of employees must be heard and a statement of opinion must be attached to the submission.
Please be careful, as failure to file a report may result in a fine of up to 30 yen.
Future outlook for digital wage payments (digital payroll payments)
Digital payment of wages (digital payroll payment) will be legalized in April 2023 and is expected to become even more widespread in the future.
With PayPay Corporation, Recruit MUFG Business Co., Ltd., Rakuten Edy Co., Ltd., and au Payment Co., Ltd. already designated as such, it is possible that other money transfer businesses will also receive similar designation, which is expected to further increase the convenience of cashless payments.
When companies introduce digital wage payments (digital payroll payments), they will be able to ensure a smooth implementation and reduce their workload by conducting surveys and interviews to confirm employees' intentions and by establishing a management system for post-implementation.
It will be necessary to continue to closely monitor how the system is being implemented and the reactions of users, and flexible responses will be required according to the situation.
For consultation regarding funds transfer business, please contact Support Administrative Scrivener Corporation
At Support Administrative Scrivener Corporation, we provide application support and consulting regarding the Fund Settlement Act for both those newly entering the funds transfer industry and existing funds transfer companies.
Funds transfer business registration is highly specialized and can be said to be one of the fields in which there are few administrative scriveners who can handle it.
We provide legal services related to the funds transfer industry based on the know-how and track record that we can accumulate because we are administrative scriveners who handle applications and negotiations with administrative agencies on behalf of companies on a daily basis.
The first consultation is free of charge.
Please contact us using the phone number or inquiry form below.
Certified AML Specialist
Yu Shimizu
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