Japan's preference for cash declines as e-commerce takes hold

Although Japan is a largely cash-based economy, e-commerce has created significant opportunities for banks and mobile wallet providers .

The pandemic has boosted demand for internet shopping in Japan , with Japanese consumers showing a preference for paying with credit cards and other digital payment methods.

Before the pandemic , about 75% of payment transactions in Japan were still settled in cash, according to a Frost & Sullivan blog . However, this is not necessarily the case for online shoppers, who are a vital part of retail , and Japan is the world's fourth-largest e-commerce market, after China, the United States and the United Kingdom, according to the United Nations .

Due to the impact of the epidemic , Japan's e-commerce market achieved strong growth in 2020, resulting in payment amount growth exceeding expectations , reaching an increase of about 10%, compared with the pre - epidemic forecast of 7.2%.

According to data from the Global Data Bank and Smart Payment Center, Japan's e-commerce market was estimated to have a total payment volume of more than US$197 billion in 2020 , and it is expected that by 2024, Japan's e-commerce payment volume will increase to approximately US$263.5 billion, a year-on-year increase of 34%.

The proportion of households shopping online increased to 50.5% in 2020, up from 42.3% in 2019, meaning online shopping usage increased by 19%.

According to data from the Payments Yearbook by cross-border payment solutions provider PPPRO, the Japanese market is closer to the United States and the United Kingdom in terms of credit card ownership, banking levels and internet access than other Asian countries such as China and India.

For example, 68% of Japanese adults have a credit card, slightly higher than the 66% in the U.S. and 65% in the U.K. In contrast, only 21% of Chinese adults and only 3% of Indian adults have a credit card, leading developing countries like India and China to rely on the use of mobile wallets like Alipay and Paytm for e-commerce transactions.

The average Japanese adult owns 2.8 credit cards, and there were about 293 million credit cards in circulation as of March 2020, according to the nonprofit Consumer Credit Association of Japan.

Amid the epidemic, Japan is determined to follow the world trend and move towards a "cashless society". Coupled with the promotion of the Japanese people, mobile payments in Japan will develop rapidly in the future.

Japan

cash

E-commerce