Technical Innovation of Ledger-Free Payment Systems
This paper presents a comprehensive technical verification of "electronic cash" systems that differ from conventional ledger-based payment systems, including empirical experiments using smartphones. The authors are from a joint research team comprising the Institute for Monetary and Economic Studies (IMES) of the Bank of Japan, NTT, and NTT Data, conducting detailed analysis of practical feasibility under 2025 technological standards.
Basic Structure of Electronic Cash Systems and Differences from Conventional Systems
Current payment systems adopt a "ledger-based" approach where service providers record and manage all transactions. In contrast, electronic cash systems directly transfer electronic data from sender to receiver, completing payment in a manner similar to physical cash transactions. In this system, service providers only participate during user registration and electronic cash issuance, while the sending and receiving process is completed solely through communication between the parties involved.
Technical Advantages and Empirical Experiment Results
Electronic cash systems offer multiple technical advantages over conventional systems. These include server failure resilience (minimizing the impact of server downtime), network failure tolerance (enabling payments without internet connectivity), high processing efficiency (depending on terminal processing capacity rather than provider servers), and transaction privacy protection (no requirement for providers to understand transaction details). While empirical experiments in the 1990s struggled to ensure practicality due to technological constraints, this research demonstrated high practicality under current technological standards through smartphone-based empirical experiments.
Programmability and Security Features
Electronic cash systems provide advanced programmability, enabling "programmable money" functionality that incorporates unique rules such as usage period settings and usage scope restrictions into electronic cash during issuance. However, from a security perspective, user terminals require Tamper Resistance capabilities, specifically assuming the utilization of embedded Secure Elements (eSE) in smartphones.
Convenience Enhancement Technologies and Future Prospects
The research team proposes splitting and merging functions for electronic cash to enable arbitrary amount payments, as well as privacy enhancement methods that make tracking transactions by the same user difficult. Future considerations include leveraging advanced encryption capabilities of 6G communication systems and deploying TEE (Trusted Execution Environment) in edge networks to mitigate risks associated with terminal loss.
While this research focuses specifically on technical aspects and does not examine legal systems or social feasibility of practical implementation, it is positioned as a technical contribution to building stable payment infrastructure in achieving the government's goal of 80% cashless payment ratio.