Infcurion’s 2024 First-Half Japan Payment Trends Survey

Infcurion’s “Payment Trends 2024 First Half Survey” paints a vivid picture of Japan’s rapidly transforming payment landscape. Cashless transactions are no longer a trend, but a firmly established reality, driven by the widespread adoption of QR code payments and the burgeoning use of contactless technology.

The Cashless Consumer Takes Center Stage

The survey unequivocally demonstrates the ascendancy of cashless payments in Japan:

• 65% Identify as “Cashless”: This represents a significant 4% increase compared to the same period last year, underscoring the accelerating pace of cashless adoption.
• QR Code Payments Surge: 59% of respondents reported increased use of QR code payment apps compared to the previous year, highlighting their role as a primary driver of cashless growth.
• Cash Usage Declines: 39% of respondents acknowledged reducing their cash usage, reflecting the growing viability and preference for alternative payment methods.

QR Codes: A Reign Marked by Competition

QR code payment apps enjoy unprecedented popularity, achieving an all-time high usage rate of 68%. However, the landscape is not without its nuances:

• PayPay Dominates: Continuing its reign as the most popular service, PayPay boasts a commanding 51% usage rate, signifying its strong market penetration.
• Rakuten Pay and FamiPay Climb: Rakuten Pay records a 23% usage rate, a 3% increase from the previous survey, securing its place as a strong contender. FamiPay also experiences growth, steadily expanding its user base.
• Challenges Emerge: The survey reveals a decline in usage rates for some previously popular QR code payment services, although specific names are not disclosed. This suggests a maturing market where consumers, having overcome initial adoption barriers, are becoming more selective, favoring platforms offering superior user experience, relevant rewards programs, and wider merchant acceptance.

Contactless Payments: Poised for Disruption

The survey identifies contactless (tap) payments as a potential game-changer:

• Significant Daily Usage: 50% of credit card holders and 35% of debit card holders utilize contactless payments daily, highlighting its convenience and growing acceptance.
• Future Growth Potential: As businesses increasingly invest in contactless payment terminals, the usage rate is projected to rise further, potentially impacting the dominance of QR code payments and introducing a new layer of competition in the cashless ecosystem.

Industry Insights: A Tale of Varying Adoption

Cashless payment adoption patterns vary significantly across different sectors:

Cashless Champions:

• Electronics Retailers: 85% of respondents primarily use cashless methods.
• Clothing Stores: 82% demonstrate a strong preference for cashless payments.
• Department Stores: 78% favor cashless transactions.

Cash Strongholds:

• Hospitals: 71% of payments are still made in cash, highlighting the need for tailored solutions in this sector.
• Prescription Pharmacies: 63% of payments remain cash-based.
• Beauty Services: Cash is used for 57% of transactions.

These figures underscore the need for targeted strategies to encourage cashless adoption in sectors where cash remains dominant, while also acknowledging the rapid shift towards cashless methods in sectors traditionally reliant on credit cards and electronic money.

The Financial Literacy Gap: A Cause for Concern

Despite the growing prevalence of cashless transactions, the survey uncovers a concerning lack of financial literacy:

• Insurance Knowledge Gap: While recognized as the most important financial knowledge area by 72% of respondents, only 15% acquired it through formal education.
• Cashless Payments: A Self-Taught Skill: 68% of respondents consider knowledge of cashless payments essential, yet 62% learned about them through self-study or informal channels.
• Asset Management Knowledge Lacking: 65% deem asset formation knowledge important, but a mere 12% received formal education on the subject.

These figures highlight an urgent need for improved financial education initiatives:

• Formal Education Integration: Incorporating financial literacy into school curricula is crucial for equipping future generations with essential financial management skills.
• Workplace Financial Wellness Programs: Employers can contribute by offering comprehensive financial wellness programs, empowering employees to make informed decisions about budgeting, saving, and responsible use of financial products and services.
• Government-Led Initiatives: Public awareness campaigns and accessible financial education resources are vital to bridge the knowledge gap and promote financial inclusion.

Key Takeaways for Businesses

• Embrace Cashless Solutions: Businesses, particularly those in sectors with low cashless adoption, must prioritize integrating a variety of cashless payment options to remain competitive and cater to evolving consumer preferences.
• Strategize for QR Code Evolution: While promoting QR code payment options, businesses should closely monitor user preferences and platform trends to ensure they offer the most relevant and convenient solutions.
• Prepare for Contactless Growth: Investing in contactless payment infrastructure is crucial to capitalize on the anticipated surge in this payment method.
• Champion Financial Literacy: Businesses can play a vital role in promoting financial literacy by collaborating on educational initiatives, offering employee training programs, and providing clear and accessible information about their payment options.

Key Takeaways for Consumers

• Explore Cashless Options: Familiarize yourself with various cashless payment methods, comparing their features, benefits, and security measures to identify the most suitable solutions for your needs.
• Stay Informed: Keep abreast of emerging technologies and trends in the payment landscape to make informed decisions and protect yourself from potential risks.
• Prioritize Financial Education: Seek out reliable resources and educational opportunities to enhance your understanding of personal finance, including cashless payment systems, budgeting, and responsible financial management.

Please follow us to read more about Finance & FinTech in Japan, like hundreds of readers do every day. We invite you to also register for our short weekly digest, the “Japan FinTech Observer”, on Medium or on LinkedIn. Our global Finance & FinTech Podcast, “eXponential Finance” is also available through its own LinkedIn newsletter, or via our Podcast Page.

Should you live in Tokyo, or just pass through, please also join our meetup. In any case, our YouTube channel and LinkedIn page are there for you as well.