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  5. Cabinet Decision on the Bill for the Act for Partial Revision of the Installment Sales Act

Cabinet Decision on the Bill for the Act for Partial Revision of the Installment Sales Act

March 3, 2020

On March 3, 2020, a cabinet decision was made on the Bill for the Act for Partial Revision of the Installment Sales Act, and the bill will be submitted to the 201st ordinary session of the Diet.

1. Purpose of the revision

Amid the advancement of payment transaction technologies, diverse payment transaction services and service providers have been appearing. In light of this trend, the government considers it necessary to develop an environment in which businesses are able to address new technologies and services and users are able to smoothly complete diverse means of payment transactions in a safe and secure manner.

From this viewpoint, the government decided to establish a new system to register specific businesses providing small-installment/deferred-payment services and also to permit registered businesses to introduce into their services sophisticated methods for examining users in setting a credit limit  based on analysis of accumulated data and other information. In line with this, the government will take measures for newly requiring QR-code-payment companies and other businesses to properly manage users’ credit card numbers and other personal information as well as other measures.

2. Outline of the bill

(1) Introduction of regulations for small-installment/deferred-payment services

The revised Act is to newly establish a registration system targeting businesses providing small-installment/deferred-payment services setting a credit limit of 100,000 yen or less.

This system stipulates certain requirements that such service providers should satisfy, e.g., a net assets requirement (such provider should achieve a goal derived from the formulation of (assets - debts) ≥ capital, etc. x 90/100 across its group companies or within five years) and a requirement for conducting a proper examination of users in setting a credit limit. The revised Act is also to impose on such providers regulations equivalent to the existing regulations for consumer protection and those for cybersecurity imposed on credit card companies.

(2) Actions for requiring service providers to use sophisticated examination methods

The revised Act is to create a new system in which the Minister of Economy, Trade and Industry approves  sophisticated methods for examination of users in setting a credit limit based on analysis of accumulated data and other information. Approved service providers are permitted to make use of the approved examination methods instead of the existing methods of investigation into the expected amount payable.

In this system, prior to issuing an approval, the government should confirm such service providers’ examination methods and their internal management systems. After the issuance of an approval, it also should check that such providers use approved methods properly by requesting such providers to submit regular reports and other documents. If the government finds any material inappropriateness in the methods of approved service providers, it should issue an order for improvement, rescind the approval or take other measures for the service providers.

(3) Enhancement of cybersecurity measures taken by QR-code-settlement companies and other businesses

In addition to the credit card companies, brokers for third-party payments and credit card affiliated stores under the existing Act, the revised Act is to require businesses newly entering services handling a large number of credit card numbers in their settlement systems, such as settlement service companies, QR-code-settlement companies and electronic-commerce shopping-mall companies, to appropriately manage users’ credit card numbers and other personal information.

(4) Other measures

  1. Revision of the requirements for businesses’ issuance of written documents to users
    Concerning the requirement that credit card companies should issue written documents to their users, the revised Act is to enhance flexibility in issuance methods, such as requiring information provision by certain methods including electronic ones.

  2. Introduction of an order to suspend business
    The revised Act is to newly introduce an order to suspend business, which is not stipulated in the existing Act, as a means for supervising credit card companies, from the viewpoint of taking effective measures for securing the performance of such companies.

Related materials:

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Commerce Supervisory Division, Commerce and Service Industry Policy Group

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