A Japanese railway group launches a social experiment using a virtual community currency

On September 7, Kintetsu Group Holdings Co., Ltd., a company listed in Japan that primarily operates a railway connecting major cities in the Kinki and Tokai regions with tourist destinations, announced the launch of a social experiment using the virtual community currency Kintetsu Harukas Coin as part of a new smartphone-based shopping system employing blockchain technology. The experiment will be carried out in cooperation with Mitsubishi Research Institute, Inc., a Japanese think tank. This is the second experiment following one conducted in September 2017, and the company appears to be aiming at the full-scale launch of Kintetsu Harukas Coin in FY2019.

The social experiment will be conducted between October 1 and December 10 at roughly 400 stores, including Kintetsu Department Store Main Store Abeno Harukas, Harukas 300 (Observatory), and Abeno Harukas Art Museum. Users of the Kintetsu-affiliated credit card and the KIPS Card, which grants reward points for shopping at Kintetsu-affiliated stores, who are interested in the service appear to be able to participate in the experiment. Kintetsu Group’s official website is now accepting applications to participate in the experiment.

To make payments, participants download an application to their smartphones in advance and simply scan a QR code with the application at participating stores. Users are able to transfer coins among themselves, while participating stores are able to analyze the users’ customer base and shopping data, which can be used for sales promotions.

In an interview with The Nikkei conducted in October 2017, Mr. Kazuhito Fujita, manager at the Business Development Division, Kintetsu Group Holdings, expressed his enthusiasm for the social experiment, saying: “We have developed communities along railway lines by expanding the railway infrastructure. Going forward, we’d like to activate residents and workers who use trains with financial infrastructure.”

In the first social experiment, roughly 90% of participants responded that they did not know anything about virtual currencies. However, over 85% of participants responded that the payment operation was easy and they want to continue using it in the future. Whether the experiment will lead to the full-scale use of the virtual community currency is attracting increasing attention.

Several virtual community currency projects are now up and running in Japan. The Hidashin Association in Gifu Prefecture started a social experiment using Sarubobo Coin in May 2017 and officially started services for the general public on December 4. Sarubobo Coin is a regional cryptocurrency developed jointly by Hidashin Association and iRidge, Inc., a smartphone application development company. The coin is available only in Takayama-shi, Hida-shi, and Shirakawa-mura and uses blockchain, which is a basic cryptocurrency technology. Users are able to make payments using the smartphone application at retail stores and restaurants.