One of the most tech-savvy countries in the world, Japan, wants to go cashless. Despite its numerous technological innovations, the payment market is still very much focused on cash. Reuters reports that cash is still King in Japan, even more so for the country’s fast-ageing population. The elderly are still deeply reluctant to give cash up.
Prime Minister Shinzo Abe is pushing the Japanese to switch to using cashless payment methods. As the Japanese population is known for its dedicated cash-hoarding, the results are far from promising. There have been some minor successes, but not nearly as much as desired. Especially the nation’s elderly pensioners are resisting change, which could result in Japan fall further behind its peers in adopting mobile app payments and electronic money.
The Japanese government aims to double the ratio of cashless payments to 40% by 2025. It has set a final goal of 80% cashless payments to eventually spur labour productivity. Compared to neighbouring countries, it becomes more clear that the Japanese payment market is still focused on cash. 96% of transactions in South Korea and 66% in China are already cashless.
Ease up the transition
Cashless payments will allow stores to automate sales estimates and banks to cut back on costly automated teller machine networks. Shoppers were recently encouraged to switch from cash to e-money after the government sweetened the deal by introducing a rebate program to ease the pain of a sales tax hike on October 1st. Funded by $2.57 billion earmarked for subsidies, shoppers get a refund in the form of points if they use cashless payments at small shops and convenience stores.
Mizuho Financial Group estimates that the direct cost involving cash transactions, including labour at checkout counters, amounts about $73.60 billion a year. The group suggest that going cashless will dramatically reduce these costs. Large tech companies support the change to a cashless society, though the general consensus is that there is a need to find a way to help the elderly make the change.