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TOKYO – Japan's leading bank, Mitsubishi UFJ Financial Group, will write off about 100 billion yen ($ 893 million) worth of credit card transactions as it abandons a tedious restructuring of the system in the face of increasing competition cashless payments.
The Tokyo-based Mitsubishi UFJ Nicos subsidiary was developing a new system to merge the now separate management of the three credit card brands of this 100% owned unit.
The project started in 2016 and about 75 billion yen had already been invested out of a total of 150 billion yen invested in planned spending throughout the year ending March 2022.
However, competition in the field of cashless payments has intensified over the last year, as competitors introduced new mobile services, including those using scannable codes rather than credit cards. The upgrade of the system can not take into account such changes in payment technology.
MUFG decided that the project might lose the time needed to track the innovation. In addition to the write-down, MUFG will also record restructuring costs related to the year ended March 31.
MUFG is expected to maintain its forecast of a 4% drop in net profit to 950 billion yen for the year ended March 31, despite Nicos' burden. The group has made better than expected progress in reducing fixed costs by improving efficiency.
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