Five questions before using a new payment method — Whose liability? Ledger? Pay now or later? Reversibility? Contact for issues?

When to use　When recommended a smartphone payment app, a new card, a point balance, crypto-assets, or dollar-pegged coins.

The names of payment methods increase every year. Distinguish them not by name, but by these five questions. The procedure is to consider that if you cannot answer even one of the five, it is not yet time to use it.

How to answer the first question

Cash is a liability of the Bank of Japan, account deposits are a liability of the bank, and e-money balances are a liability of the issuing company. Dollar-pegged coins are also a liability of the issuing company, not dollars themselves or deposits. Bitcoin is not a liability of anyone. Japanese law divides electronic value into three boxes: "prepaid payment instruments," "electronic payment instruments," and "crypto-assets." The criterion for division is not the underlying technology, but the presence or absence of a promise related to a currency.

How to answer the second question

The Bank for International Settlements poses three tests for money: Does it pass as the same one yen everywhere? Can it be increased when needed? Is it difficult to use fraudulently? The reason bank deposits pass as the same one yen at any bank is that interbank payments are settled on the central bank's books. Issuing companies' balances and coins do not have such books.

Questions three to five

With "pay-before" methods, the money is in the issuing company's hands before you use it. With "pay-after" methods, you bear the liability until the withdrawal date. Cash transactions are final the moment you hand it over and are non-reversible. If the only point of contact in case of trouble is the issuing company's help desk, it means you have nowhere to go if that company collapses.

In your own case

Choose one payment method you currently use and apply the five questions in order. Any question you cannot answer becomes the next thing to research.

Procedure

1. Whose liability is it?Central bank, bank, issuing company, or no one. State one of these four, not a specific name.
2. Is it settled on the central bank's books?The basis for it passing as the same one yen everywhere. Bank deposits have it, issuing companies' balances do not.
3. Pay before or pay after?Where the money is now. If you pay before, it's in the issuing company's hands; if you pay after, it's your liability.
4. Can it be reversed?Cash is not returned. For cards, you can consult the card company about unrecognized charges. Sent coins are not returned.
5. Who do you turn to in case of trouble?Besides the issuing company's help desk, there is the Consumer Hotline 188 and the Financial Services Agency's counseling office.

In other countries

The principles are the same in every country. In the U.S., a law enacted in July 2025 required issuers of dollar-pegged coins to hold one-to-one reserves for the circulating amount and not to pay interest to holders. The central banks of the Eurozone and the UK state on their pages that they "have not decided to issue" their own digital currencies.

Bibliography

• Annual Economic Report 2025, Chapter III: The next-generation monetary and financial systemBank for International Settlements
• What are the means of settlement?Bank of Japan (Tell me! Nichigin)
• What is electronic money?Bank of Japan (Tell me! Nichigin)
• Payment Services ActGovernment of Japan (e-Gov Law Search)
• Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), Public Law 119-27United States Congress（Government Publishing Office）
• Consumer Affairs Centers, etc., NationwideNational Consumer Affairs Center of Japan

Related Lectures and Notes

P7　P1　Three steps when solicited — Hang up, Verify, Talk.