Japan’s largest shipping line, Nippon Yusen Kaisha (NYK), has plans to create its own digital currency to pay crew members. The move will make it easier for employees to change money into their own local currencies, send money home, and for seafaring staff to make cheaper transactions for daily goods while at sea.

A report by Bloomberg cited unnamed sources who have revealed the development ahead of an official announcement by NYK. The plans could be another step towards the adoption of digital cash, a progression critical to the wider acceptance of cryptocurrencies as a form of money comparable to fiat cash.

Helping multinational crews access their money faster

Reports initially suggest NYK’s digital currency could be pegged to the U.S dollar to avoid price volatility, making it a “stablecoin”. The extent of blockchain use, or if the currency will be a cryptocurrency per se, has not been revealed.

Shipping crews across the globe are paid in a fiat currency set by their employer. However, crews are often made up of multiple nationalities whose home fiat currency is different to that of their employer. This leaves them incurring costs and time-lags to access their pay. The hope with a digital currency is to take advantage of oft-touted lower transaction fees and faster remittance times, ensuring workers are paid in a timely manner.

According to Bloomberg reports, NYK’s initiative will be smartphone-based and will be ready in the first six months of 2019. The Japanese shipping line employs around 16,000 seafaring crew across its approximately 800 vessels, so this would be a large undertaking in the crypto-payments space.

The company is working with banks and software developers to ensure the ease of conversion and the technology has been tested with shipboard telecommunications to ensure that employees will be able to use it while they are at sea. The Bloomberg sources also reveal Nippon Yusen is seeking to patent its technology and is looking to develop it into a platform that can be used by other shipping companies.

The future of cashless ships

Following Bloomberg’s reveal, NYK published an announcement titled “NYK Looks to FinTech to Realize Cashless Ships.” NYK said the cashless ship initiative is part of their digitalization and green strategy and is the consideration of a new network to enable electronic onboard financial settlements. NYK detailed both the challenge for employees and for sea captains who have to manage cash transactions which amount to around $800 million (approximately $1 billion CAD) across its fleet in salaries and daily expenses.

“The captain must allocate time to oversee payment, inventory, and orders, and crew members must handle cash on board and pay overseas remittance charges to send funds to family members in home countries,” explained NYK who added that “cost, time and risk can be reduced through electronic transactions.”

The announcement by NYK confirmed a testing partnership with Japan Card Network Co. Ltd examining the feasibility of “e-money” to replace cash on ships and a patent pending application for the management of digital currency.

“Many issues remain to be addressed before a cashless ship can be realized, but NYK is forging ahead to construct a viable system,” said NYK, though it did not confirm the 2019 schedule revealed by Bloomberg’s sources.

Many companies are investigating how to use blockchain to improve efficiencies, save money, and improve profitability.

Feasible examples of digital currency development for more everyday instances of wages payments are less common. In this way blockchain development is accelerating ahead of digital cash or cryptocurrency. The plans of NYK, if they indeed emerge into a workable system in 2019, could set an important precedent for global economies in the advent of mainstream digital cash usage.

 

Image credit: Wikimedia Commons

 

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