Japan presents a paradox in the global payments landscape. Despite being a technological powerhouse, the country still uses cash heavily, with a low cashless ratio relative to neighbouring countries. This mix of traditional and modern payment preferences creates challenges and opportunities for businesses entering the Japanese market.
Japan's payment landscape includes cash, convenience store payments, digital wallets and credit cards. This guide will help you make sense of these methods — covering common payment methods in Japan and offering insights for businesses entering the market.
In Japan, cash is vital for daily transactions, especially for small businesses and rural areas. Despite Japan's advanced technology, cash remains the go-to payment method for in-person purchases, leading to a low cashless ratio of 39.3% in 2023.
Cash is still very much preferred for in-person payments in Japan
Japan's preference for cash is rooted in trust, cultural norms, and accessibility. Many older Japanese people trust banks and cash more than digital options. Cash is often the most accessible choice for seniors who lack guidance or live in rural areas. Cultural norms also make them less likely to embrace cashless payment options.
Japan's Konbini (convenience) payment system promotes the use of cash in e-commerce. Japan has over 55,000 konbinis (convenience stores), including 7-Eleven, Lawson, and Family Mart. Shoppers can order online, then pay in cash at a nearby konbini. This method suits users who are uneasy with digital payments, yet appreciate its convenience.
Despite this cash-centred inertia, Japan's shift toward digital payments continues to pick up pace. The government aims for a 40% cashless adoption rate by 2025, by promoting digital payment solutions to reach this goal. Additionally, it has established policies ensuring safe and efficient transactions to encourage businesses to move towards digital payments. Improved smartphone and internet access make this change easier.
Japan's e-commerce market is the world's fourth largest and growing fast, especially in business-to-business (B2B). The B2B sector alone is worth over 420 trillion yen, with online sales making up nearly 40%. Meanwhile, B2C e-commerce, though smaller, is on the rise.
Sectors like transportation, food delivery, and entertainment play a major role in driving this trend toward cashless payments by increasing demand for seamless local payment options across various settings.
In Japan, consumers have a variety of digital payment options to choose from. From credit cards to e-wallets to prepaid cards, each method serves different needs, making shopping — both online and in-store — more accessible.
Credit and debit cards are popular in Japan, particularly for e-commerce, travel bookings, and high-value purchases.
In 2023, credit cards made up 57% of e-commerce transactions, though this number is expected to drop slightly to 52% in 2027. For point-of-sale (POS) transactions, credit cards account for 34% of purchases in 2023, but is expected to fall to 28% by 2027.
Debit cards are less popular, making up only 4% of e-commerce transactions and 3% of POS transactions in 2023. This is not expected to change much by 2027.
Visa is the market leader in credit and debit cards. It handles 40% of all e-commerce and POS transactions. Following Visa are JCB (34%), Mastercard (20%), and American Express (5%). Other cards, like Discover or Diners Club, make up the remaining 1%.
E-wallets, or digital wallets, have gained popularity in Japan, especially among younger consumers. These wallets make everyday transactions quick and easy, and users can link them to loyalty programs for rewards. However, e-wallets aren't accepted everywhere and some users are concerned about security risks.
In the Asia-Pacific (APAC) region, high cart abandonment rates are often due to unfamiliar or inconvenient payment options; offering e-wallets as part of a local payment selection can encourage more customers to complete their purchases.
Despite persistent concerns, e-wallets made up 20% of online sales in 2023. This is expected to rise to 27% by 2027. In stores, e-wallets accounted for 17% of purchases in 2023. This is projected to jump to 34% by 2027.
Japan's most popular e-wallet is PayPay, with over 63 million users as of 2023. Other popular e-wallets include LINE Pay, Rakuten Pay, and Apple Pay. These platforms let users pay by scanning a QR code with their mobile phone. They can also top-up using their debit card, credit card or bank account.
Japan also uses prepaid cards called IC cards, or "integrated circuit" cards. These cards are used for small purchases such as public transportation fares, vending machines, and convenience store items.
Due to a global semiconductor shortage, Japan experienced a temporary pause in the issuance of IC cards. In 2023, IC cards accounted for 1% of e-commerce transactions and 3% of POS transactions. These percentages are expected to stay mostly the same in 2027.
Suica (Super Urban Intelligent Card) is Japan's most popular IC card, accepted in over 1.63 million stores. As of October 2023, over 95 million SUICA cards have been issued. Pasmo is another well-known IC card used for similar purposes.
Other common payment methods in Japan include bank transfers, POS financing, Buy Now, Pay Later (BNPL) schemes, and cash on delivery, but they are not as common as the methods mentioned above.
Japan's payment system includes cash, cards, and digital wallets. Businesses should understand these to meet customer preferences.
Antom provides secure solutions for both global and local payment methods. This helps businesses boost sales by aligning with customer preferences. Additionally, Antom offers strong fraud protection, ensuring safety and building trust.
For businesses looking to expand into Japan, Antom can be your trusted partner. Contact us to learn how our solutions can help your business thrive.