The Japanese Postal Savings System

Will had to sign off in the midst of a question about the Japanese Postal Savings System, so I thought I'd just throw up a few words here instead of writing an email.  Also, this is written entirely from a consumer's perspective.  There's no economic analysis here.

First, let's get one thing straight.  The Postal savings system IS NOT A BANK!!  (Never you mind the ATMs, annual interest rate on deposits, home/personal loans, and automatic monthly payments to other companies/accounts of your choosing.  IT'S NOT A BANK!)

OK, I'm glad we got that out of the way.

So Will's question was, "Isn't the personal banking system in Japan essentially a monopoly?"  To which I sought clarification, "A monopoly as in, only one bank for anyone to use?"  (I know it seems like an uff-duh question, but in fact it's not a monopoly at all so I wanted to be sure we were still talking about the same thing.)  "Yeah.  Isn't the postal system your only option?"

The postal savings system here is the largest personal banking money storage system in Japan.  It's larger than any bank by many hundreds of times.

Why?

Size.  There's a post office in every town of Japan.  When you travel, you can access your money at any post office ATM, and for about a $3 handling fee, even make withdrawls in most convenience store ATMs.

Why is that such a big deal?  Well with the regular banking system, once you leave your bank's region you can't access your money anymore.

A personal annecdote:

Yoko, Leif, Kevin, and I had plans to visit a small town near Mt. Fuji.  We would take a three hour bus ride from Shinjuku, get a room at a Ryokan, visit an amusement park and a local lake for some paddleboating.  We left home very early so the ATMs weren't open yet (ATM hours are roughly 8am to 11pm -- 24hour ATMs are unheard of.)  I didn't have any money, but figured I'd just get some when we arrived in Shinjuku before getting on the buss.  In Shinjuku we searched high and low for an ATM that would take my card.  No bank ATM would be useable - very few banks have interoperability arrangements.  That meant I had to find a convenience store ATM.  Lawson?  No dice.  FamilyMart?  Sorry.  AM/PM?  Go fish.  Finally we found one that had my bank's logo on it.  Now this is promising!  I put in my card, and was promptly told that I couldn't do anything because the ATM system was down for scheduled maintenance.  Scheduled monthly maintenance is pretty much standard on all kinds of systems such as this, even for major banks and web services.  I can't remember how we got through the issue anymore - I think perhaps Yoko ended up making a cash withdrawl against her parent's credit card - but whatever it was it certainly DIDN'T involve me accessing the money in my bank account.  This is in Shinjuku mind you.  Hard-core downtown Tokyo.  Not podunks-ville.  I remember being a little miffed when Leif walked into a nearby post office branch, put his Wells Fargo card into their ATM, and withdrew money directly from his account in Japanese Yen.  (IT'S NOT A BANK!!)

While nothing has happened to me personally yet, I imagine one could get themselves rather screwed in a country where your money is inaccessible after 11pm, and the only place you can use credit cards is major department stores.  A word to the wise: in Japan, always be sure you have enough cash to get you through the night.

So ultimately, accessibility has to be the number one best reason to have a postal savings account.  I'm pretty sure it was shortly after returning from this very trip that I opened one.  There are some things that you can't do at the post office, and some things the post office can do that other banks can't, but I'll cover those in another post.