Japan's Credit Card Woes: Payment Processor Bankruptcy Sparks Traveler Concerns

A Japanese credit card payment processor's bankruptcy is causing significant disruption for businesses and travelers across the country. Gentoshin, which specialized in serving smaller businesses and those who struggled to pass credit checks with larger companies, filed for bankruptcy on June 6, leading to the effective suspension of credit card payments for many merchants.

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I need to bring more cash when I travel to Japan.

The company's collapse leaves an estimated 20,000 transactions, valued at 5.3 billion yen (approximately $34 million USD), unpaid. Merchants may not recover these funds for years, and the amount recovered could be significantly less than the original sales. Gentoshin has also failed to provide clarity on how payments made through its terminals after June 6 will be handled.

Established in 1987, Gentoshin had expanded nationwide, boasting over 200,000 affiliated stores by 2018. Its lower fees and less stringent approval process made it a popular choice for small businesses, particularly in entertainment districts and smaller eateries. However, the company's financial troubles were deeper than initially apparent, with evidence suggesting fraudulent accounting practices dating back over two decades, potentially increasing its estimated debt of 115.1 billion yen (approximately $770 million USD).

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Even if Gentoshin's credit card terminals are working at affiliated stores, the service cannot be used, so please be especially careful.

The fallout is expected to hit small businesses particularly hard, as they face immediate cash flow problems and potential difficulties in future operations. One restaurant owner in Tokyo's Shinbashi district reported being unable to recover 140,000 yen (approximately $930 USD). The situation also impacts financial institutions like Towa Bank and Daiko Bank, which lent billions of yen to Gentoshin. Tourists visiting Japan may also experience inconvenience, with some establishments now displaying signs indicating "cash only" or "PayPay only."

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Due to Gentoshin's bankruptcy, I won't be able to recover about 140,000 yen. With foreign tourists mostly paying by card these days, it seems difficult because the terminals suddenly stopped working.