Japan moves toward a cashless society
Credit to Author: Tempo Desk| Date: Thu, 17 Jan 2019 16:20:12 +0000
IN April 2018, Japan’s Ministry of Economy, Trade and Industry (METI) compiled a set of proposals that included hiking the ratio of cashless payments to 40 percent of all transactions by 2025 from less than 20 percent in 2016, and to 80 percent in the future.
In Japan, cashless payments are limited because of easy access to ATMs, the crime rate is low and counterfeit bill are rare, so people feel safe carrying cash. Furthermore, while many convenience stores and large retailers allow various payment tools, many small enterprises only accept cash. Smaller outlets are reluctant because of the cost to process credit card and e-money transactions, noting credit card fees can cut into their profits. Credit card fees can average 3.09 percent, according to a research company.
However, the country wants more consumers to engage in cashless transactions using credit cards, debit cards and electronic money ahead of the 2020 Olympics. The government and businesses consider it essential to substantially reduce society’s reliance on cash to stimulate spending by those expected to visit Japan for the Olympics and other international athletic events.
Estimates by the government using 2015 Japan’s cashless rate was only 18.4%, while that of China was 60 % ,South Korea’s 89.1 %, United States and European countries are over 50 %.
This would also “lead to unmanned and labor-saving stores” that are needed in a society with a dwindling population, METI said. The cost of handling cash related expenses including ATM management and labor costs at retailers are huge. A substantial increase in cashless payment should create economic benefits.
The financial industry is already stepping up efforts. The top three banking groups have agreed to unify QR (quick response) code especially for cashless payments and are calling for regional banks and other smaller institutions to join them.