Can Existing Payment Structures Continue to Be Used in Japan?
Korean e-commerce companies and platform operators often use local payment agents or collection agencies in Japan to collect payments made by Japanese customers for goods and services.
However, amendments to Japan’s Payment Services Act and related subordinate regulations took effect on June 1, 2026. Under the revised framework, a business that does not participate directly in the underlying transaction but collects and transfers funds across borders may, in principle, fall within the scope of regulated fund transfer services.
If the relevant exemption requirements are not satisfied, the business may need to consider whether registration as a fund transfer service provider is required.
Under the amended rules, the key question is not simply how the service is described in the contract, but rather the actual payment flow and the role performed by each business operator.
1. Why Cross-Border Collection Agency Services May Fall Under Fund Transfer Regulation
A collection agency arrangement generally refers to a structure in which an agent receives payment from a debtor on behalf of a creditor and then transfers the funds to the creditor.
Historically, not every such collection arrangement was treated as a regulated fund transfer service.
However, as collection agency structures increasingly appeared in areas such as overseas online casinos and investment fraud schemes, concerns arose regarding consumer protection and anti-money laundering risks.
The amended Payment Services Act therefore introduced cross-border regulations for certain collection agency structures, while excluding arrangements that are considered to present relatively low risks to users.
As a result, even where one of the businesses involved is located outside Japan, the Japanese Payment Services Act may still apply where part of the relevant activity is conducted in Japan.
Key Factors for Determining Regulatory Applicability
Regulatory applicability is generally assessed based on factors such as:
- whether the payer and ultimate recipient are located in different countries;
- whether the service provider receives payment on behalf of the recipient;
- whether the provider participates in the formation of the underlying goods or services transaction;
- whether the funds are settled across borders after receipt; and
- whether the business operates under an entrustment arrangement with a bank or registered fund transfer service provider.
Even if the agreement describes the service as a collection agency, settlement agency, or payment support service, the arrangement may still be regulated if its actual function constitutes cross-border fund transfer.
2. Business Models That Require Regulatory Review
The amended rules may affect not only traditional remittance businesses, but also the settlement structures of e-commerce companies, platforms, subscription businesses, and payment intermediaries.
Collection of Overseas E-Commerce Sales Proceeds
This refers to a structure in which a Japanese business collects payments made by Japanese consumers and then transfers those funds to a Korean seller.
Where a Korean brand sells products without establishing a Japanese entity, or receives Japanese sales proceeds through a local payment service provider and settles them back to the Korean headquarters, the actual payment flow should be reviewed carefully.
Marketplace Seller Settlement
A platform may collect payments from users and later remit those funds to overseas sellers or service providers.
Where the platform does more than simply transfer funds and plays an essential role in determining transaction terms or forming contracts, it may be possible to consider whether an exemption applies.
Subscription Services and Digital Content Payments
Structures where a local payment intermediary collects subscription fees for SaaS services, games, digital content, or other recurring services from Japanese users and transfers them to an overseas service provider should also be reviewed.
Merchant Settlement Agency Services
A payment service provider may collect funds in Japan on behalf of overseas merchants or settle sales proceeds received by Japanese merchants through overseas payment methods.
As a general rule, the less the service provider is involved in the underlying transaction and the more it merely receives and forwards funds, the more likely the structure is to fall within fund transfer regulation.
3. Exemptions Depend on the Operator’s Role and Contractual Structure
Not all cross-border collection agency arrangements are subject to fund transfer registration.
Relevant subordinate regulations exclude certain structures that are considered to pose relatively low consumer protection risks.
Examples may include:
- entrusted structures connected to banks or registered fund transfer service providers;
- escrow structures where payment is released only after confirming receipt of goods;
- platform collection structures where the platform is essential to forming the underlying transaction;
- structures where the recipient and the collecting entity are economically integrated, such as within the same corporate group;
- payment structures supervised under other regulatory frameworks, such as credit card regulation; and
- structures operated under delegation from an exempt operator, bank, or registered fund transfer provider.
However, merely fitting the form of one of these categories does not automatically remove the business from regulation.
Where the recipient’s obligation is not discharged at the time payment is made, where there is a risk that funds will not reach the recipient due to insolvency of an intermediary, or where funds related to gambling or certain securities and derivatives transactions are handled, the fund transfer rules may apply again.
Accordingly, exemption analysis should be conducted together with the following materials:
- agreements among sellers, platforms, and PSPs;
- consumer terms of use and payment terms;
- timing at which funds are collected and the debtor’s payment obligation is discharged;
- bank accounts and settlement routes by country;
- subcontracting and foreign payment service provider structures; and
- the platform’s actual degree of involvement in forming the transaction.
4. Existing Businesses and New Businesses Are Treated Differently
Businesses that were already operating regulated cross-border collection agency services when the amended rules took effect on June 1, 2026 may be eligible for transitional measures.
In principle, existing operators may continue the relevant business for up to six months from the effective date.
If they apply within that period for fund transfer registration or modification of an existing registration, additional transitional measures may apply within the statutory limits.
By contrast, a company launching a new business after the effective date cannot automatically rely on these transitional measures.
Before commencing a new service, the company should review:
- whether the revised law applies to the proposed cross-border collection structure;
- whether the arrangement falls within a statutory or regulatory exemption;
- whether fund transfer registration is required;
- whether the business can instead be structured through a registered provider; and
- whether the underlying business model or contract structure should be modified.
Simply showing that the company had been providing some form of related service before the effective date may not be sufficient to qualify for transitional treatment.
It is therefore important to retain records that can demonstrate the actual contracts, transaction history, and operational track record as of the effective date.
5. Response Options for Businesses Potentially Subject to Regulation
Where the fund transfer rules may apply, companies should first reassess whether the existing payment structure can continue unchanged.
Consider Fund Transfer Registration
If registration is required, the business should review the applicable category of fund transfer service and registration requirements based on:
- transaction amounts;
- settlement method; and
- business model.
The registration process may require preparation of:
- business plans;
- fund transfer flow diagrams;
- user protection measures;
- asset safeguarding arrangements;
- AML controls; and
- outsourcing management standards.
Sufficient lead time should therefore be expected.
Restructure Through a Registered Provider
A bank or registered Japanese fund transfer service provider may handle the actual movement of funds, while the company outsources the relevant payment function to that regulated provider.
However, merely using a PSP does not automatically result in an exemption.
The PSP’s exact regulatory status, the nature of the outsourcing relationship, and allocation of responsibilities between the parties should be confirmed in the agreement.
Reorganize the Business Model to Fit an Exemption
The business model may also be reviewed based on factors such as:
- whether the platform substantially participates in forming the underlying transaction;
- whether escrow requirements are satisfied; and
- whether the payer’s payment obligation is discharged when the payment is received.
However, merely amending contractual wording or adding a nominal receivables-assignment structure for the purpose of avoiding registration is unlikely to be sufficient.
Japan’s Financial Services Agency has indicated that regulatory applicability will be determined based on the substance and economic reality of the transaction, rather than contractual labels alone.
Adjust or Discontinue the Relevant Service
If the cost of registration and internal controls is disproportionate to the scale of the business, the company may also consider:
- discontinuing the Japan-based collection agency function; or
- changing the payment and settlement method.
Japan Cross-Border Collection Regulation: Start with the Payment Flow
The 2026 amendments to Japan’s Payment Services Act do not affect only traditional payment and remittance businesses.
Korean e-commerce companies, SaaS providers, and platform operators selling goods or services to Japanese customers may also be affected if their structures involve collecting and settling sales proceeds across borders.
The first step is to map the entire flow of funds, from the consumer’s payment through final settlement to the seller.
At each stage, the company should identify:
- which party receives funds on behalf of whom;
- when the payer’s payment obligation is discharged;
- whether an exemption may apply;
- whether registration is required; and
- whether the structure should be redesigned.
DECENT Law Firm’s Global Business Practice Team advises companies entering the Japanese market on:
- cross-border collection agency regulation;
- payment and settlement structure analysis;
- applicability of fund transfer service regulation; and
- restructuring of contractual and business models.
This content is provided for general informational purposes only and does not constitute legal advice for any specific matter.