Not Someone Else’s Problem — A Payment Processor Collapses with Over ¥100 Billion in Debt
In July 2026, Zentoshin Co., Ltd. (Osaka), a credit card payment processing company serving restaurants, received a bankruptcy commencement order from the Osaka District Court. Total liabilities exceeded ¥100 billion, making it the largest corporate bankruptcy of the year in Japan. Across more than 200,000 member stores nationwide, deposits of sales proceeds came to a halt, forcing businesses to switch to cash or QR code payments.
Why were so many business owners caught up in this? According to media reports, Zentoshin’s selling point was that it could sign contracts even with stores that failed screening elsewhere — a strength that drew broad support from owners rushing to expand across multiple locations, as well as newly opened businesses with limited track records. In other words, the victims were not simply “poorly managed” stores; rather, the owners most drawn to this scheme were often those who were proactive about business expansion and focused on capital efficiency. For growth-oriented business owners, this is by no means someone else’s problem.
Zentoshin was founded in 1987 as a cooperative association of restaurant owners in Osaka’s Minami district and was incorporated in 2006. It grew rapidly through its “early payment service,” which advanced funds to member stores without waiting for payment from card companies, and by 2018 had surpassed 200,000 member stores. However, the COVID-19 pandemic caused a sharp drop in transaction volume among its core restaurant clientele, worsening its cash flow. In 2024, a former executive was arrested over fraud related to member store contracts, and the resulting loss of confidence proved decisive, making it impossible to raise further financing. According to the bankruptcy trustee, unpaid sales proceeds amount to at least 20,000 claims, totaling approximately ¥5.3 billion.
The Ripple Effects Reach Far Beyond Restaurants
The impact of this bankruptcy extends beyond member stores to financial institutions as well. According to a survey by Tokyo Shoko Research, Zentoshin’s financial creditors include 63 regional banks, shinkin banks, and credit unions. The largest exposure belongs to Kinki Sangyo Credit Union, at ¥21.9 billion. Towa Bank (¥8.0 billion), Sanjusan Bank (¥5.0 billion), Taiko Bank (¥1.5 billion), Kochi Bank (¥1.2 billion), and Shimane Bank (¥0.8 billion) have also successively announced a “risk of non-collection or delayed collection” of their claims. The Financial Services Agency has launched a fact-finding survey into the financial impact on regional banks and shinkin banks, illustrating how the failure of a single payment processor can ripple through regional finance.
On July 10, Japan’s Ministry of Economy, Trade and Industry (METI) established special consultation counters at 378 locations nationwide and announced an expansion of eligibility for safety-net loans through the Japan Finance Corporation. In parallel, procedures have begun toward applying “Safety-Net Guarantee No. 1,” designed to prevent chain bankruptcies, under which credit guarantee corporations would guarantee 100% of loan amounts through a separate framework from the standard quota, with preparations underway for an official gazette announcement. However, support measures such as Safety-Net Guarantee No. 1 are ultimately mechanisms that make it easier to obtain “loans” from financial institutions — they do not return the unpaid sales proceeds owed by Zentoshin itself. A credit guarantee corporation acting as guarantor merely makes loan approval easier; the borrowed funds must still be repaid with interest by the store. Meanwhile, the unpaid sales proceeds owed by Zentoshin are treated as “bankruptcy claims,” and whether they can actually be recovered depends on future distributions — full recovery cannot realistically be expected. It should also be noted that many support measures only become available after administrative procedures such as “eligibility certification” or “designation,” meaning there will likely be a time lag before funds actually reach affected businesses.
The scale of this response underscores that the bankruptcy is not confined to a particular industry or region, but is an issue touching the broader economic infrastructure.
“Too Good to Be True” Terms Always Come With a Catch
Zentoshin’s selling points were lenient screening, low fees, and unusually fast payment cycles — deposits as often as twice a week. Some view this combination as inherently precarious.
Payment processors advance funds to member stores before actually receiving payment from card companies. The faster the payment cycle, the more the processor itself must rely on short-term borrowing from banks and continuously roll over large amounts of working capital. As the number of member stores grows, so does the amount advanced, deepening the company’s dependence on financing. In fact, Zentoshin has also been suspected of accounting fraud, including inflating its reported deposit balances, suggesting that behind its apparent growth, its finances were approaching their limit. In short, the “speed and low cost” that benefited member stores were the flip side of the processor’s own precarious, hand-to-mouth financing.
Choosing business partners based solely on immediate cost or convenience is a pattern that often reflects a company’s own management judgment more broadly. Business owners who never pause to ask “why are these terms even possible?” before jumping at low prices or speed risk falling into a similar trap again, in a different form, down the road.
Put It Into Practice! Three Financial Defenses to Protect Your Company
① Diversify Risk
Do not rely on a single payment processor. Always secure both a primary and a backup provider. The top priority is building a structure in which your cash flow does not grind to a halt immediately if one provider stops functioning.
② Maintain a Healthy Cash Buffer
Relying on early payment services for cash flow effectively means running your business on “someone else’s credit.” Keeping at least three months’ worth of fixed costs in cash within your own company at all times builds a management structure resilient to external factors. The more aggressively you expand across multiple locations, the more critical this buffer becomes.
③ Stay Alert on Credit Management
In Zentoshin’s case, a clear warning sign had already appeared in 2024, when a former executive was arrested over fraud involving member store contracts. Without ongoing monitoring of your business partners, news of scandals or emerging credit concerns can easily go unnoticed. For key business partners, it is important to have a system in place for regularly checking financial results and industry reputation.
Building a Company That Keeps Growing for 10, 20 Years and Beyond
During phases of business expansion, attention naturally gravitates toward “how quickly can we turn over cash” and “how much can we cut costs.” But Zentoshin’s case illustrates the risk that pursuing short-term profit and efficiency alone can, in unexpected ways, undermine the very foundation of a business.
If you aim to grow your business over the long term, attention to financial safety is just as essential as growth speed itself.
Even a profitable company cannot survive if its cash flow is cut off. What the Zentoshin case shows is that external risks exist which cannot be fully prevented through management effort alone — but the preparation that minimizes their impact can be significantly strengthened through everyday management decisions made in ordinary times.
At small and medium-sized businesses, the daily demands of operations often mean that while attention is paid to sales and profit management, there are few opportunities to reexamine the business from the perspective of “what happens if our cash flow stops.” Yet what truly protects a company is not a profit plan alone, but ensuring sufficient cash on hand, building structures that avoid excessive dependence on any single business partner, and developing a financial strategy that anticipates risks that may arise in the future.
The role of our accounting firm is not limited to preparing financial statements and tax filings. We believe our essential mission is to objectively analyze cash flow and financial health based on management figures, to think through future risks together with business owners, and to support sustainable growth.
Financial statements are not merely a record of the past — they are also an important management tool for detecting future business risks early. Not just “producing” numbers, but “putting them to use in management,” is the role accounting must play going forward. We aim to be a partner who walks alongside business owners on the financial front, so that they can continue to take on new challenges with confidence.