In Cash-Loving Japan, a Shift Continues to Take Place


Japan, long a bastion of cash, is seeing a pronounced shift toward cashless payment options, a Nikkei report indicates.

Citing data from the Bank of Japan, the Japan Consumer Credit Association, and the Payments Japan Association, Nikkei reported that cashless purchases hit 111 trillion yen ($838 billion U.S.) in 2022. That’s a 17% increase, breaking the 100-trillion-yen barrier for the first time.

Even with the gains, Japan’s cashless payments totaled only 36% of consumption in the country, a share well below that of most Western markets and starkly different from neighboring South Korea, where nearly eight out of 10 people indicated a preference for cashless payments a few years ago (a number that has surely risen along with a general worldwide movement toward non-cash payments).

Behind the Numbers

Some of the cashless highlights, per the Nikkei report:

  • Credit card usage, the most popular non-cash option in Japan, went to 93.7 trillion yen, a 16% increase.
  • QR code payments reached 7.9 trillion yen, a 50% rise.
  • E-money payments were at 6 trillion yet, up 2%. It was the first time QR platforms exceeded e-money usage in the country.
  • Debit card payments were at 3.2 trillion yet, a 19% increase.

As has been seen worldwide, the COVID-19 pandemic spurred much of the shift toward cashless payment options. But even as society has opened up again and in-person shopping has returned, cashless behavior has persisted. Japan has provided incentives to those who sign up for My Number personal identification cards, with the Myna points attached to the cards eligible for redemption on cashless payment services.

According to PayPay, a Japanese company that develops electronic payment services, 200 billion yen in points had been charged through December. “There are quite a lot of people who started using cashless payments with the points,” a PayPay representative told Nikkei.

The Historic Clinging to Cash

A range of factors—economic and cultural—informs the longstanding preference for cash in Japanese society.

Memories of what happened in the late 1980s, when equity and real estate took a mighty tumble, persist even now.

Further, the past 25 years have been largely an era of low or negative inflation in the country, which provides a strong incentive to holders of cash, who have been able to expect their money to go farther tomorrow than it does today. The pandemic changed that, as it has worldwide. In January 2023, the country’s annual inflation rate hit a 41-year high of 4.3% (which fell to 3.3% a month later, though both figures remain well above the deflationary norms that preceded the pandemic).

Finally, financial literacy in Japan lags behind. A 2016 survey by the Central Council for Financial Services Information found that the percentage of correct answers given to common true-false literacy questions in Japan was 7% lower than in the United States and 7-9% lower than in Germany and the United Kingdom. That lower literacy rate would manifest, in part, in a dogged dedication to cash when other methods might carry benefits of usage.

Incentives to Move Beyond Cash

Daniel Keyes, Senior Analyst for Merchant Services at Javelin Strategy & Research, noted that, beyond the pandemic, consumers often find incentives to keep going with cashless payments once they try them.

“If consumers can earn rewards when using a card, that will incentivize them to continue to use that payment method,” he said. “And noncash payments are generally smoother than a cash payment, as consumers no longer need to take out the right amount of cash, wait for change, then put that change away.

“As consumers experience more convenient payment processes, they’re likely to stick with them in the future.”


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