An ultimate guide: transferring money to Japan

Japan and Hong Kong have been important partners for each other in terms of tourism and commerce. As one of Hong Kong’s major exporting countries, Japan is expected to see moderate growth in merchandise exports from Hong Kong in 2024, according to the Hong Kong Trade Development Council. With the continuous depreciation of the Japanese Yen, many Hongkongers have seized the opportunity to convert their currency into Yen with the low exchange rate. This article will teach you how to transfer money to Japan at low costs to maximise your business profit. You’ll also learn how to transfer money to Japan more safely and efficiently.

Why do merchants need to pay in Japanese Yen?

The Japanese Yen has repeatedly hit new lows in recent years. The conversion rate of the Japanese Yen to the Hong Kong dollar was as low as 0.0514 as of 21 March 2024. Many Hongkongers took advantage of the weak Yen to exchange currency for travel, investment and commercial purposes. We can also see a growing number of local merchants reaching out to Japanese companies or suppliers for business opportunities. If companies in this sector can directly pay their bills in Japanese Yen without going through any currency exchange processes, they’ll be able to save on handling fees and avoid extra costs resulting from the fluctuations in exchange rates. Their partners in Japan can also handle the payments more efficiently, speeding up the completion of transactions.

 Four common ways to transfer money to Japan

• International remittance services in banks (telegraphic transfer/ online banking): This method directly sends funds from your bank account to the account of Japanese suppliers or companies. However, the exchange rates set by banks are usually higher than the market rate, and handling fees might be involved. The time needed for the transaction to be completed also depends on the transfer amounts as well as the cut-off time for processing. It often takes 1 to 5 days for the funds to arrive at the recipient’s account.

• Money changers (currency exchange shops): some money changers in Hong Kong provide remittance services but come with rather complex procedures. The remitter may be required to pay the transfer amount to the shop in the first place through the Faster Payment System (FPS), or with cash or cheque. However, this method may result in higher costs as the exchange rate will be based on the real-time rate with other handling fees applied, and it’s often hard for the transaction to be completed on the same day. It usually takes at least one day. Therefore, this method is more suitable for small transfers to Japan. Businesses should note that they may be required to provide documents such as Business Registration Certificates during the process.

• Remittances to Japan Post Bank account: According to Japan Post Bank’s official website, the remitter will have to create a Japan Post Bank account and transfer the money in US dollars or euros through an intermediary bank (either Deutsche Bank Trust Company Americas NY or Deutsche Bank AG Frankfurt) first. Then, he/she will have to exchange the funds into Japanese Yen at the rate provided by Japan Post Bank before sending it forward to the recipient. The remitter will have to bear the handling fees and currency conversion costs resulting from the conversion between US dollars, euros and Japanese Yen.

• Third-party remittance platform: Airwallex is an all-in-one leading global financial platform to manage everything from payments, remittance, currency exchange and beyond. You can transfer money to Japan conveniently, efficiently and at low cost through Airwallex. The platform emphasises no account opening fees, monthly charges or hidden fees. There is also no requirement for minimum deposit. It supports a wide range of currencies, including USD, GBP, EUR and JPY, and allows businesses to open Japanese Yen corporate accounts in Japan so that they can save on currency conversion costs when marking transactions. According to Airwallex, 70% of the global transfers can be credited on the same day.

Costs for transferring money from Hong Kong to Japan

The costs for transferring money from Hong Kong to Japan vary depending on which remittance method is used. The costs usually include multiple types of handling fees, currency conversion fees and exchange rates set by different banks.

Comparing different ways to transfer money to Japan

Things to consider before making large transfers from Hong Kong to Japan

Before making large transfers to Japan, you should consider the following points:

• Payment procedures: Understand the maximum transfer limit of different remittance methods. Learn what kind of information you should provide, such as the purpose of remittance and any specific supporting documents.

• Real-time exchange rates and handling fees: Study the trend of the JPY-HKD exchange rate and find the best currency conversion and remittance timing. Then, compare the exchange rates and the amount of handling fees of different banks. Or, choose a third-party financial platform, such as Airwallex, which offers competitive exchange rates and does not charge handling fees.

• Efficient transaction processing: The transaction processing lead time of different banks and third-party remittance platforms varies. Businesses may have to make urgent payments sometimes. Therefore, they should consider a platform or remittance method that can offer large convenience and high efficiency in completing transactions. 

• Security (Licences): Carefully choose a bank or third-party remittance platform that is reputable and trustworthy. Make sure your personal and financial information is protected by professional security systems.

• Risks associated with different remittance methods: Select a bank or platform that allows you to track the status of the remittance online or through a mobile application so that you can reduce risks that could be caused by remittance delays.

Challenges Hong Kong wholesalers face when importing Japanese goods

When importing Japanese goods, Hong Kong wholesalers have to comply with rules, such as import restrictions, inspection standards, licence and product labelling requirements. Since Japan began releasing treated radioactive water from the Fukushima Daiichi Nuclear Power Plant in 2023, Hong Kong has issued a Food Safety Order which prohibits all aquatic products, sea salt and seaweeds originating from 10 metropolis/prefectures, including Tokyo, Fukushima and Chiba. This poses significant challenges for Hong Kong wholesalers importing Japanese food products.

Meanwhile, the wholesalers also have to bear the risk caused by exchange rate fluctuations. Although the Japanese Yen slid continuously last year, the Bank of Japan raised its interest rate in March 2024 for the first time since 2007, ending its 17-year run of negative interest rates. This increases the unpredictability of the Yen’s trend. Furthermore, as Japan’s inflation rate showed an upward trend, many are concerned if there’ll be further rate hikes, which can affect the Yen’s trend. Therefore, Hong Kong wholesalers are advised to adopt risk management measures, such as choosing a cost-effective third-party remittance platform, to cope with the cost pressures brought by exchange rate fluctuations.

Third-party financial and transfer platform: Airwallex

Airwallex is an all-in-one leading global financial platform for modern businesses including wholesale trading founded in 2015. It allows users to create business accounts in just a few minutes to save time and costs. The platform is a licensed money service operator (MSO License No. 16-09-01929) regulated by the Hong Kong Customs and Excise Department. It provides cross-border payment collection and remittance services.

Features of Airwallex’s international remittance services

After creating an account on Airwallex, a Japanese corporate account can be set up for payment collection, along with the local bank code, branch code and dedicated account number. Hong Kong merchants can receive payments in Japanese Yen from their clients immediately. When transferring money to Japan, they can convert their currency to Japanese Yen at preferential exchange rates, without having to worry about transfer limits and cut-off times. Airwallex, which emphasises that 70% of remittances can be credited on the same day, promises more convenient and efficient transfer processes compared to telegraphic transfers in banks.

On the other hand, Airwallex users who have a Global Account can save up to 3% in currency exchange on each transaction as they can directly receive funds in Japanese Yen. Hong Kong businesses can eliminate exchange fees by directly using the received Japanese Yen when paying other Japanese companies.

Time needed for transferring money to Japan through Airwallex

Airwallex provides low-cost international remittance services. In general, 70% of remittances can be credited on the same day, speeding up your transactions to Japan.

Cost of transferring money to Japan through Airwallex

Airwallex emphasises no account opening, monthly, maintenance and hidden fees for its corporate account users. Exchange fees only come with a small markup as low as 0.2% above the interbank exchange rate.

Frequently asked questions about transferring money to Japan

1. Will there be any delays when transferring money to Japan through Hong Kong banks?

Delays are possible. Remittance speed varies across different banks, depending on multiple factors, such as processing efficiency and the timing of the remittance, which can be affected by different cut-off times for bank transfers.

2. Are there any transfer limits for remittance to Japan?

Yes. If you are choosing telegraphic transfer, each bank has different daily limits for the transfer amounts. There are also differences between the transfer limits for registered and non-registered recipients. However, Airwallex as a financial platform itself doesn’t impose transfer limits.

3. What payment methods are available for transferring money to Japan?

As mentioned above, there are four common methods – through bank telegraphic transfers, money changers, third-party remittance platforms and transferring to Japan Post Bank accounts.