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Cashless payments to reach 60% by 2027, already popular among young

South Koreans' awareness of mobile payment high

Japan is embracing cashless payments wholeheartedly, and the government’s target to reduce the ratio of cash to other mechanisms to 40% by 2027 could be reached early.

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Even so, cash remains king for small retailers, restaurants and even convenience stores.

METI says it wants to reduce cash transactions in the economy to just 40% of the total by 2027. This is half the rate of 2015, and with retailers eager to move away from cash as quickly as possible, METI could well exceed that target much sooner.

Recent data shows that the use of cash is falling rapidly, although there are still major variations across the country. Older people still rely on cash, while younger people are used to paying with e-wallets. While no exact figure is available, between 60-70% of all transactions online are made with a credit card already, even though it is fairly simple in Japan to pay by cash on delivery or even at a nearby convenience store.

By retail sector, payment methods vary significantly too. Last year a Dentsu survey of consumers’ usual payment methods by sector found that 76% used cash in small stores. Small retailers accept few other payment options simply due to the cost. In the restaurant and cafe sector too, 64% of people use cash, although 53% also use credit cards on occasion where accepted.

E-wallets were used by 32% of people for trains and buses, but outside the major cities, cash remains dominant, used by 48% to buy tickets. 50% of respondents also used cash at convenience stores.

Interestingly, however, the survey reported that already credit cards are more commonly used than cash at both supermarkets and department stores. 62.5% of people used cards at supermarkets, compared to 49.5% using cash, and 71.5% used cards at department stores, compared to 40.5% using cash.

The boom in mobile payments will accelerate the shift to cashless systems. Most of the new systems link customer accounts back to bank accounts or credit cards, with the only major change being that customers can pay by scanning codes on their phones.

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This obviates the need for expensive in-store hardware and, for most retailers, an obvious and cost-cutting way forward, and one that most will embrace enthusiastically.

 

(Source: JapanConsuming)

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