Japan, known for its technological advancement and rich cultural heritage, presents a unique payment landscape in Asia. Despite being the first country to introduce instant payments in 1973, cash still holds a significant place alongside modern digital payment methods. This blend of tradition and innovation offers valuable insights into the coexistence of old and new financial practices.
Despite the rise of digital payments, cash transactions remain prominent, accounting for approximately 60% of all consumer transactions as of 2023. However, the country's advanced infrastructure, high internet penetration (with over 85% of the population online), and tech-savvy population have fostered the growth of various payment options.
Payment method distribution
Credit and debit cards
Credit and debit cards continue to play crucial roles in Japan's dynamic payment landscape, offering convenience, security, and a plethora of benefits for both online and offline transactions. Credit cards accounted an outright majority 57% of e-com transaction value and 34% of POS spend in 2023, combined more than $820 billion.
JCB
JCB (Japan Credit Bureau) is a leading credit card issuer and acquirer in Japan, known for its extensive acceptance network and strong rewards programs. With about 158.5 million cardholders, JCB cards facilitate seamless transactions at millions of merchants nationwide.
Mitsubishi UFJ Financial Group (MUFG)
MUFG, through its subsidiaries including MUFG Bank and Mitsubishi UFJ NICOS, offers a comprehensive array of credit and debit card options tailored to diverse customer needs. MUFG olds an 8.1% share of domestic loans and 11.7% of deposits in Japan, solidifying its dominant position in the Japanese banking market.
Sumitomo Mitsui Banking Corporation (SMBC)
Sumitomo Mitsui Banking Corporation (SMBC) offers a comprehensive range of credit and debit cards renowned for their robust security features and attractive rewards programs. SMBC Direct, the online banking service of SMBC, had around 21 million customers subscribed by March 2024, showing growth from previous years.
Digital wallets
Digital wallets are becoming increasingly popular in Japan, offering convenience and enhanced transaction security. As they continue to evolve with advanced technologies and expanded functionalities, their impact on Japan's retail and financial sectors is expected to grow.
PayPay
PayPay, a top digital wallet in Japan launched by SoftBank and Yahoo Japan, has a user base of approximately 61 million, also equally to one in every two smartphone users in Japan. This platform enables quick QR code payments, enhancing online and offline shopping experiences.
Line Pay
Line Pay, integrated with Japan's popular messaging app Line, serves 92 million users. This seamless integration allows payments, money transfers, and financial services within the Line app. Additionally, the Japanese platform tops the list of communication apps on Google Play and ranks fourth on the Apple Store in Taiwan.
Rakuten Pay
Rakuten Pay, part of the Rakuten ecosystem, provides a comprehensive digital wallet solution in Japan. It enables seamless online and offline payments for over 50,000 merchants. Its user base is growing steadily, thanks to Rakuten's brand penetration and financial technology innovation.
Mobile payments
Mobile payments are witnessing rapid growth in Japan, fueled by the widespread adoption of smartphones. The Japanese mobile payments market is expected to reach USD 211.13 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 31.04%, reaching USD 815.79 billion by 2029. These advancements are reshaping how consumers manage transactions in both retail and digital environments.
Apple Pay
Apple Pay is popular among iPhone users in Japan, offering secure, convenient payments. It supports various credit and debit cards from major Japanese banks for seamless transactions. As of 2024, Apple Pay's penetration in Japan includes 20% for online transactions and 9% for in-store transactions as of 2024.
Google Pay
Google Pay offers Android users in Japan a seamless and versatile mobile payment experience. Supporting a diverse range of payment methods, Google Pay simplifies transactions across online and offline channels. The penetration rate for Google Pay is about 9% for in-store transactions and 20% for online transactions. This indicates a higher preference for using Google Pay for online payments.
E-money
E-money has become a popular payment method in Japan, one family member using e-money in 32.5% of households in Japan in 2023. This payment method facilitates seamless transactions at retail outlets, online stores, and service providers.
As a result, e-money is significantly contributing to the reduction of cash usage and enhancing the efficiency of everyday transactions across the country. Moreover, the growing network of e-money compatible merchants is further boosting its popularity.
Suica
Suica is a rechargeable smart card initially designed for public transportation but now widely accepted at retail outlets across urban Japan. As of October 2023, 95.64 million Suica cards have been issued, and 1.63 million stores accept payment via Suica's digital currency.
Highlighting its importance in daily life, the company recently announced the launch of the Welcome Suica app in 2025. This app will enable international visitors to obtain a digital Suica card and link it to their foreign credit cards, enhancing convenience for travelers.
Rakuten Edy
Rakuten Edy represents a prepaid e-money service within the Rakuten Group. It can be used at over 400,000 member stores across Japan. It is accepted at various locations, including convenience stores, restaurants, vending machines, and more. The widespread availability of Rakuten Edy makes it a convenient and versatile payment option for everyday purchases.
Looking ahead
Despite being a pioneer in instant payments since 1973, cash remains deeply ingrained in the daily lives of Japanese consumers, accounting for 60% of all consumer transactions in 2023. However, the country's advanced technological infrastructure, high internet penetration, and tech-savvy population have catalyzed the growth of various digital payment methods.
Looking ahead, Japan's payment ecosystem is poised for further transformation, driven by the increasing adoption of digital wallets, mobile payments, and e-money solutions. The projected growth of the mobile payments market, expected to reach USD 815.79 billion by 2029, underscores the rapid shift towards digitalization in consumer transactions.
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