Money is king in Japan, and even more so for Japan's aging population, which is still deeply reluctant to adopt new forms of payment.
Prime Minister Shinzo Abe's move to make more Japanese - the world's most dedicated money accumulators - switch to cashless payment is producing some success, but not as much as desired. A growing number of retired senior citizens in the country are resisting change, which could lead Japan to fall further behind its neighbors in adopting payments for mobile apps and e-money.
Tokyo wants to double the ratio of cashless purchases to 40% by 2025 and 80% eventually to boost labor productivity. Japan pales in comparison to other countries - 96% of transactions in South Korea and 66% in China are broke, show industry data from the Japan Payments Association.
Adoption of digital transactions will help Japan cope with a shrinking population and tight labor market. Cashless payments will also allow stores to automate sales estimates and banks to reduce automated teller networks.
Buyers were recently encouraged to exchange cash for e-money after the government introduced a rebate program to reduce criticism following an increase in sales taxes on October 1.
Buyers receive a refund in the form of points if they use cashless payments at convenience stores and trades.
Jumping on the wave
Major technology companies have responded with aggressive campaigns to promote their e-money payment systems, including SoftBank Group, Yahoo Japan, e-commerce company Mercari, and messaging application operator LINE Corp.
Some had early success. The PayPay QR code payment app - jointly owned by SoftBank and Yahoo Japan - has seen memberships grow by 5 million since August to 15 million, thanks in part to the government campaign.
East Japan Railway Co. has also seen adherence to the railroad's electronic settlement system reach 11 million, more than one million since September.
“Customers benefit from the convenience of electronic payment while receiving fees and reducing costs,” said Tomoyuki Soyama, deputy general manager in charge of IT business development at East Japan Railway. "It's a win-win situation."
The direct cost involving cash transactions, including payroll labor, totals about $ 73,60 billion per year, estimates the Mizuho Financial Group, suggesting that digital movement will drastically reduce these costs.
Satoshi Kumagai, senior vice president in charge of financial services and digital business at convenience store chain operator Lawson Inc., said the proportion of cashless sales payments increased to 25% from October, compared to 20% previously.
"It would be ideal to view all transactions like this due to labor shortages and the need to increase convenience for our customers," Kumagai told Reuters.
"On the other hand, we need to find a way to help older people who may find it difficult to shop without money."
Japanese households hold more than half of their cash assets and deposits. This proportion increases with the elderly, some of whom cling to money as a way to avoid unnecessary spending.
“Everyone likes money, don't they?” Asked a 65-year-old woman in Tokyo while looking at a cashless payment application banner.
“I'm not interested in that. I will be uncomfortable with this in case I lose my cell phone. It's also unclear how much I spent compared to taking money out of my wallet. ”
Many small businesses are also struggling to switch to cashless payments or see little benefit in doing so.
Less than half of the nearly 2 million small businesses deemed eligible for cashless subsidies were recorded in the government campaign, due to the cost of introducing machines and high transaction fees.
A low crime rate, very low interest rates and a national ATM network have made money attractive in Japan, giving people little incentive to switch to cashless payments.
The trend, however, may gradually change as commercial banks consolidate their ATMs, reducing consumer access to cash.