The move is expected to result in the Edy contactless cash system becoming an industry standard.
The seven companies that have decided to adopt the Edy system on their credit cards are UFJ Bank, Life, Daiei OMC, DC Card, Kokunai Shinpan, Sumitomo Mitsui Card and Sony Finance International.
The Edy system, which is based on Sony's Felica contactless integrated circuit card, does not require the card to be inserted into a special reader. The system can be activated for money debits when the card is placed within 10 centimetres of an Edy sensor. As money is stored on the card beforehand, the payment process takes 0.2 seconds to complete. The in-store terminal communicates with the Edy data centre once or twice a day to reconcile transactions and to check for fraud.
The system is targeted at places like convenience stores where small cash payments are typically made, said Makoto Yamada, a senior manager of business planning at BitWallet. By embedding the Edy system on the credit cards, which are usually used for the payments of large amounts, these seven companies hope to add value to their credit cards by allowing them to be able to use as a substitute for cash, he said.
BitWallet expects to circulate 8.5 million Edy-embedded cards by the end of 2003, and hopes about one-third of them will be issued by these seven companies, Yamada said. "As there is no competitor in the industry at the moment the Edy system is likely to become the standard," he said.
By mid-July, BitWallet had issued around 250,000 Edy contactless integrated circuit cards. The cards can be used at stores in several areas in Tokyo. Over a thousand AM/PM convenience stores across Japan are now accepting Edy contactless integrated circuit cards, Yamada said.