Japan Payments

FIS and Worldpay have just published their “Global Payments Report” for 2021. For those not inclined to read through 138 pages, we have quoted the sections relevant to Japan below. Shouldyou prefer the comprehensive global view, please download the report from the Worldpay website.

E-commerce

E-commerce is projected to grow 13% annually through 2024. In 2020, APAC e-commerce transaction value exceeded U.S.$2.4 trillion and is projected to exceed U.S.$3.9 trillion by 2024. Expansion will be driven largely by mobile commerce, growing from 59.3% of regional e-com in 2020 to 64.1% by 2024.

Growth in China’s e-commerce market will continue through 2024 with 14.1% projected annual growth. By 2024, China’s e-commerce transaction value will exceed U.S. $3.1 trillion, larger than the rest of APAC combined. APAC e-com growth rates through 2024 will range from a high of 19.1% in Indonesia to a low of 7.5% in Japan. Indonesia, Vietnam, The Philippines and India will all see e-com growth rates above 15% through 2024, with less than 10% growth projected for the more mature economies of Australia, Japan, New Zealand and Singapore.

Point-of-Sale

As was the case throughout the world, the economic impacts of COVID-19 were felt most acutely at the point of sale. The pandemic contributed to significant drops in POS transaction values in India (-8.1%), Singapore (-10.4%), Thailand (-9.2%) and Japan (-7.4%).

While the ultimate path of the pandemic globally adds additional uncertainties, strong growth is projected to a recovery of 2019 POS volumes by late 2021 or 2022. China projects 6.2% growth from 2020 through 2024 — including 9.7% growth in 2021 — growing to represent over U.S.$22 trillion in 2024. The Philippines forecasts the largest growth rate regionally through 2024 at 9.4%, followed closely by India (8.9%) and Vietnam (8.8%). The more mature economies of Japan (2.8%), South Korea (4%) and Australia (4.6%) project the lowest POS growth rates through 2024.

Cashless

Payment methods at the point of sale are undergoing a dramatic change away from cash and toward mobile wallets, a global trend led by consumers in APAC with the help of some government initiatives. In Japan, the government actively offered discounts for retail purchases when consumers paid with a non-cash payment method. While the shift away from cash was in motion long before 2020, the pandemic greatly accelerated the trend. 2020 witnessed large shifts in POS transactions with cash, dropping from 30.3% in 2019 to 19.2% in 2020, a decline of 36.6%. Sparked by COVID-19, the accelerated decline in the use of cash in 2020 alone exceeded our pre-pandemic projections for 2023.

Much of the POS spend previously dedicated to cash shifted to mobile wallets. Mobile wallets share increased by 12% in 2020, rising from 35.9% in 2019 to 40.2% in 2020. Mobile wallets approached a three year acceleration in 2020, nearly reaching the 45.1% projected for 2023. Prepaid cards also gained significant POS share in 2020, rising from 0.8% in 2019 to 3.5% in 2020.

Looking ahead to 2024, we see a continuation of these trends at the point of sale, with cash continuing to decline across the region, projected to fall an additional 43.8% from 2020 to 2024, when cash will represent only 10.8% of transactions. Cash will persist as the leading POS payment method in Indonesia, The Philippines, Vietnam and Japan, yet the decline of cash will be near total in some markets, falling to 5.9% in China, 2.1% in Australia and just 1.6% in Hong Kong.

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