Photo/Illutration The electronic stamp service developed by Shachihata Inc. (Provided by Shachihata Inc.)

The Japanese practice of requiring documents to be stamped with an official "hanko" seal is posing a problem for companies endeavoring to comply with teleworking to thwart the spread of the new coronavirus.

It means that some people in management positions must still go to the office to authenticate important company records.

Ever-resourceful information technology companies are, however, striving to break free from the mold by using electronic signatures in place of the name stamps for the many documents that must be submitted to government offices and which still require personal approval in the form of a name stamp.

Mercari Inc., which pioneered a flea market app and other online retail services, has in principle closed all of its offices to prevent further infections of COVID-19.

On April 8, the company moved to a policy of abolishing name stamps for contracts with business partners and using signatures or electronic signatures instead.

Although Mercari already implements a paperless system in-house, it found that other companies still insist on name stamps on contracts. In an average month, the company has to stamp between 200 and 250 documents.

Mercari employees for the most part have been working from home since February. Those in the legal affairs department that manages the company stamp have set up a rotation system to commute to the head office simply to attach the stamp on official documents.

A survey by freee, a Tokyo-based information technology company, asked respondents the reasons they had to go to the office. While respondents were allowed to give multiple answers, 22.2 percent said they had to go to attach name stamps on documents, while 17.1 percent said they had to stamp internal documents.

Mercari decided to ban name stamps because of the health crisis. It will move to a system using electronic signatures or handwritten signatures on contracts converted into PDF files. In either case, the signatures can be created on a smartphone.

But Mercari officials said only half of their business partners had agreed to go along with the ban. One official admitted that major companies were among the strongest defenders of the name stamp system, a practice borrowed from China in the ancient past.

“We cannot force other companies to go along, so it will be difficult,” an official said.

An employee in the legal affairs department must still go to the office once a week just to attach the company stamps.

But there is clearly demand for doing away with name stamps.

Shachihata Inc., which is known for its easy-to-use name stamps, began a free electronic stamp service from March. As of April 22, the company had received around 143,500 applications to use the service. An electronic stamp is attached to documents created on a computer and the PDF file can be viewed by others over the internet.

Bengo4.com Inc., which operates Cloudsign, an electronic contract service, noted a 1.7-fold increase among companies in March that installed the service in comparison to the same month a year ago.

“For most business transactions, not having a name stamp poses no legal problems, but some companies still hold concerns about transactions with other companies," said Daichi Tachibana, a board member with Bengo4.com Inc. "It seems the time has come to change business practices (in Japan) in general.”

At the same time, some types of private-sector contracts are required by law to be on paper. Real estate contracts must be drawn up and presented in face-to-face situations, while paper contracts are also required for investment trust or land leasing contracts as well as for door-to-door sales.

Numerous documents submitted to government offices also still require name stamps.

A Mercari official said lobbying by an IT industry group will seek to ask the government to revise the requirements for name stamps on documents.

(This article was written by Yoko Masuda and Fumiko Kuribayashi.)

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