Going cashless, Japan economy is facing big challenges

The Japanese government is determined to promote cashless payments and has set a policy target to reach 40 per cent use of cashless payment by 2027, up from 18.4 per cent in 2015. This still lags far behind other countries such as South Korea and China, each with a higher rate of cashless transactions totalling 89.1 per cent and 60 per cent, respectively.

The government’s outlook on promoting a cashless society includes the issuance in 2018 of a policy document titled ‘Cashless Vision’ and the start of a massive subsidisation program to promote cashless payments  in October 2019. This subsidy aims to promote the transition to cashless payments while also mitigating a drop in consumption caused by the consumption tax hike from 8 per cent to 10 per cent that came into effect the same month.

Parallel to government initiatives, Japanese consumers are witnessing fierce competition among cashless payment providers. This particular market has seen the entrance of a significant number of smartphone-based payment providers such as PayPay, LINE Pay and Merpay. This is in addition to traditional cashless methods such as Suica or Pasmo card for public transportation, and various brands of credit cards.



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The cashless society from an ethical point of view

The debate about the move towards a cashless society has been at the center of the scene for several years, now. Various angles have been taken by economists, politicians, banking institutions and sociologists. Beyond the technicalities of the debate, lies the question of freedom, of inter-citizen solidarity and of governmental responsibility. The debate cannot remain in the hands of financial specialists, it is first and foremost an ethical, political and societal issue.

The cashless society from an ethical point of view