Earnest efforts are underway in both the public and private sectors to promote cashless payments ahead of the 2020 Olympics.
Credit cards, electronic money and other cashless systems account for 20 percent of all consumer payments in Japan, compared with 40 percent to 60 percent in the United States, European countries and China.
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.
The long-rooted custom of using checks to pay in North America and Europe meant they smoothly and quickly embraced credit cards and other cashless means of payment.
In Sweden, where transporting cash is difficult in wintertime, most people are said to use a smartphone-based system called Swish, and an increasing number of stores are no longer accepting cash.
In China, mobile payments based on QR (quick response) codes are in wide use due to widespread counterfeiting problems.
In Japan, however, cashless payments are limited by easy access to ATMs and fewer problems with theft and counterfeiting.
But the social cost of handling cash is huge. Related expenses, including ATM management and labor costs at retailers, are estimated to total ¥8 trillion, according to Mizuho Financial Group Inc. A substantial increase in cashless payments would create economic benefits of ¥10 trillion via such consequences as streamlining and stimulated consumption, Mizuho said.
Slashing cash-management costs would be a boon for financial institutions at a time when they are struggling with weak earnings from rock-bottom interest rates. In fact, the situation has pushed the nation’s biggest banks to draw up automation plans that will reportedly entail the loss of thousands of jobs.
Cashless payments would also free consumers from carrying much money in wallets.
In addition, analysis of the big data that would inevitably accumulate would help companies develop new products and services.
In April, the Ministry of Economy, Trade and Industry compiled a set of proposals that included hiking the ratio of cashless payments to 80 percent of all account settlements in the future. This would “lead to unmanned and labor-saving stores” that are needed in a society with a dwindling population, METI said.
The financial industry is already stepping up efforts. Mizuho, Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. have agreed to unify QR code specifications for cashless payments. The three hope to prevent different specifications from inconveniencing stores and consumers.
The top three banking groups are calling for regional banks and other smaller institutions to join them. “Ideally, we should achieve the widespread use of QR code-based payments,” Mizuho Bank President Koji Fujiwara said.
In a related development, retail giant Aeon Co. plans to introduce 100,000 units of a machine by 2020 that automatically processes payments when credit cards are held over it.