Friday, October 25, 2013

Choosing a bank for a small business in Japan

I'm currently going through the process of incorporation with the help of a lawyer (updates to follow!). Once you're incorporated you can open a company bank account. I've been calling and visiting banks in Tokyo, looking into a few options and thought I'd share some of the findings.

Firstly, opening a bank account for a business in Japan usually requires a kind of 'applying to apply' - a vetting procedure, through which some applicants will be rejected. It is an anti-fraud measure, and is all about proving that you are a legitimate business.

There are two main types of high-street bank in Japan 都市銀行 / toshi ginko "mega banks" like Mizuho and Resona, and 地方銀行 / chihou ginko (or 第二地方銀行 / dai ni chihou ginko) which are regional banks such as Chiba Ginko or Kansai Urban Ginko. According to this (other and very informative) blog about setting up a business in Japan, the mega banks currently appear to be less difficult to get an account with than the regional banks.

In either case, initial documents to submit for opening a business bank account in Japan usually include the following (though they will of course will vary by bank):
  • 履歴事項全部証明書 / rireki jikou zenbu shoumeisho - Certificate showing the complete records of your company to-date, from your local legal affairs bureau (法務局 / houmukyoku).
  • 法人の印鑑証明書 / houjin no inkan shoumeisho - Official company seal certificate, also from the legal affairs bureau from within the last 3 months.
  • ご本人を確認する公的資料 / go honnin wo kakuninsuru kouteki shiryou - Officially recognised proof of identity of the person submitting the application (such as a driver's license or Japanese medical insurance card).
  • 社員証等 / shainsho tou - Proof that you are employed by your company (company ID card, a business card, possibly a copy of your contract or employment agreement - 雇用証明書 / koyou shoumeisho or certificate of enrollment 在籍証明書 / zaiseki shoumeisho - especially if you're a small company and don't have an official company ID card).
The above listed documents should be originals rather than copies. If the company is new, they are also likely to ask for the following:
  • 定款の写し / teiken no utushi - Copy of your certificate of incorporation.
  • 法人設立届出書 / houjin setsuritsu todokedesho - notification of incorporation as submitted to the tax office, probably by your accountant when you incorporated.
  • 給与支払事務所等の開設届出書 / kyuryou shiharai jimusho tou no kaisetsu todokedesho - the tax report for commencement of payroll as submitted to the tax office by your accountant when you incorporated.
  • An explanation of your company's activities and what you plan to use the bank account for.
Once they've had a look at these (which I believe can take up to 2-weeks), they may contact you for additional information to help your application - this could be administration documents such as invoices/purchase orders, pay slips, or promotional materials such as company brochures, and even to see the tenancy agreement for your premises, or actual products you make or sell etc.

If you are successful in applying you will be able to go and pick up your bank book and open your account. If your application is rejected then try to find out why and try again at a different bank, as requirements vary.

Depending on the size of your business and what you do, there will be various things to consider when choosing who to try applying with first:

Japanese Q+A sites often recommend that small business owners just choose the bank that is closest to your business, as you may have to (or want to) physically visit the bank to make transfers and do payroll etc. Indeed, closeness is usually a requirement from the bank too - if you want to open a Mizuho account for example you will need to go to the nearest branch to your company address for them to accept your application. If you are using a virtual office, make sure to check your plan's details to see if you are allowed to use that address to open a bank account.

Aside from location then, here are some additional points you may want to consider and ask your prospective bank about, or discuss with your accountant:
  • What are the fees for making domestic bank transfers? (Compare wire transfer charges for the same vs. other banks)
  • What are the fees for sending and receiving international bank transfers?
  • Do they have good ATM coverage in your area, what are the daily transfer limit options and transaction fees at ATMs?
  • Will you need online banking, is there a monthly fee for the service? 
  • Will it be easy for your customers to do bank transfers to this bank (does it show up on the bank list of your personal online banking for example)?
  • Is there a fee for creating a cash card? Mizuho's cash card costs a one-off fee of 1,500 yen, MUFG cards are free.
  • Do they offer a corporate credit/debit card and is there a fee?
  • Can you check your account on your phone to quickly confirm payments received etc?
  • Do you have to keep a minimum amount in the account?
  • Can you set up auto payments/standing orders?
  • How do you pay salaries, and is there a limit on the number of staff for each service tier?
  • Will you need to export information directly to any accounting software?
  • Do they offer any financial advice for small businesses?
  • What are the company's future needs and ambitions? Will you be asking for a loan?

It's worth knowing that although there are usually no basic monthly costs for having a corporate bank account, Internet banking is usually an add-on service for the big banks, and is not included by default when you open an account. Differently to their personal Internet banking services, the high-street banks usually charge monthly fees for corporate Internet banking.

Here are a couple of the main "mega" Japanese banks, along with information about their online banking services for business:
Considering the free Internet banking 'light' service and no charge for a cash card, MUFG appears to be the least expensive option.

Another cheap and handy option could be using an Internet bank (often referred to as ネット銀行 or ネットバンク/ netto ginkou or nettobanku) where the monthly online banking service fees are often 0 yen, ATMs are widely available at convenience stores, and most of the transactions are also cheaper than the online banking services of regular high-street banks, as you can see if you enlarge the table below.

Comparing online bank transfer charges - click to enlarge

Here are a couple of the main Japanese online banks:

If you're a small business, the cost of making transfers for payroll, partners and suppliers can add up to a considerable expense - a company I know of in Tokyo with just under 10 staff spends an estimated 50,000 yen a year on transfer charges alone. In fact, some large Japanese firms have their new employees open a bank account with the same bank the company uses so that the company can benefit from reduced transfer costs.

Another advantage with using an online-only bank is that if you're wanting to set up a bank account before you've found a permanent location you could start off with an online bank and then open an account at a high-street bank once you know your new address.

However, bear in mind that depending who you plan to do business with, it is possible that having an account at a large high-street bank may feel more reassuring for your partners and customers than an online-only bank, this is probably the biggest down-side to consider. Some Internet banks such as Rakuten Bank also require that you have an existing high-street bank account before you can open a net-banking account with them.

This information was correct to the best of my understanding at the time of writing, but I imagine the fee data in particularly will quickly be out of date, so please do check the links to the banks' own sites for the latest figures.


  1. Hi Stacey....a very useful article. I run a small business incorporated as a KK and bank with Mizuho. If you use their mobile business banking app, then there is no monthly charge. The downside of this bank, and perhaps all other of the high street majors, is that if I invoice an overseas company, when the payment arrives at Mizuho they will not immediately deposit into my company account. They insist on phoning me first, then I have to fax them the invoice as evidence. They say it is an anti-money laundering thing. The problem is that I travel overseas often and am unable to answer their phone calls which means the money doesn't get deposited. That is very bad form if one is running a business and needs to watch cash flow. Also Mizuho say they are unable to contact me by email. Phone and fax seem so analogue in this day and age. I am looking to see if other banks have this same rule.

    1. What gets me is how online banking only works during business hours on weekdays..! :)