50
Payments Regulation in Asia
Japan
PAYMENTS MIX
In vanishingly fewer countries, cash is the dominant payment method. Japan, among a small group of countries such as Indonesia and India, is still a cash dominant economy, with 51% of POS spending made with cash in 2023. 128 In fact, according to the 2023 Global Payments Report, WorldPay reported Japan to be only one of three countries where cash remained the dominant payment method. In Japan, this attachment to cash is, in part, attributed to Japan’s aging population, with nearly 29% of the population aged 65 or older in 2021. 129 The Ministry of Economy, Trade, and Industry (METI) released a Cashless Vision in 2018 with aims of increasing cashless payments to 40% by 2025, in time for the 2025 Osaka World Expo. 130 This included the government announcing in 2022 the ability for companies to pay employee salaries via digital wallets and a 2019 program to rebate businesses 5% of the collected consumption tax for cashless payments. 131 In the immediate aftermath of some of the early government initiatives, from 2018 to 2019, the share of in-store spending made with a credit card rose from 26% to 31%, making it the fastest growing payment method over that period. In addition, cash spending fell by nearly the same amount, falling from 68% of in-store spending to 64% (Figure 19). 132 As many POS transactions are made with cash, debit’s share of spending has remained below 5%. Cash in ecommerce channels is falling as well, with cash-on- delivery falling to just 2% of ecommerce spending in 2022 and PostPay, a cash-oriented ecommerce payment method, falling from 20% of ecommerce spending in 2017 to 6% in 2022. In parallel, the share of ecommerce spending on digital wallets grew six-fold, from 3% in 2018 to 18% by 2022. Driven in part by the government’s Cashless Vision initiative and the COVID-19 pandemic shift to online, by 2022, credit cards represented the primary payment method for ecommerce payments and were second to cash for in-store payments. 133 Consumers point to the convenience, security, and rewards associated with credit card spending as their primary appeal. Merchant acceptance of credit card payments is also driving consumer demand for credit card use. While Japan’s digital wallet penetration (inclusive of pass-through, stored value, and staged digital wallets) lags its regional counterparts, such as South Korea, Singapore, and the Philippines, the digital wallet share of ecommerce spending more than
128
WorldPay-FIS Global Payments Report (2023)
129
https://www.stat.go.jp/english/data/handbook/c0117.html
130
https://flow.db.com/cash-management/japan-joins-the-journey-to-a-cashless-society
131
https://www.thebanker.com/Japan-seeks-to-shake-off-cash-1627897177
132
WorldPay-FIS Global Payments Report (2018-2023)
133
WorldPay-FIS Global Payments Report (2023)
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