Every few meters along a shopping street near towering Tokyo Skytree, signs with the words “PayPay used here” can be seen promoting the availability of an electronic payment option, an option that remains a relatively uncommon offering in cash-obsessed Japan.

Despite its reputation as one of the homes of forward-thinking technology, the country remains reluctant to move in a cashless direction — tradition, demographics and a wariness of change all add up to people reaching for notes and coins in the check-out line.

But in a bid to accommodate foreign visitors from countries that have moved away from cash in favor of credit cards or payment apps, Sumida Ward, home to Tokyo’s tallest tower and one of the city’s most popular tourism destinations, has begun working with PayPay Corp.

PayPay, which entered the cashless market in October last year and is backed by Yahoo Japan Corp. and SoftBank Corp., started a trial of its mobile payment service at 300 shops in December.

Although the central government hopes consumers will eventually embrace the future, or even the present, and become comfortable with credit cards, debit cards and electronic transactions, it is proving to be a hard sell, especially among older people, who make up an increasingly large percentage of the country’s population.

Cash remains king in the country, with contactless transactions, including payments by credit cards and smartphone apps, accounting for just under 20 percent of personal spending.

By comparison, about 90 percent of such transactions were cashless in South Korea, 60 percent in China and 45 percent in the United States, according to 2015 data from the Ministry of Economy, Trade and Industry.

At shops along Oshinari Shotengai, one of the shopping districts participating in Sumida’s cashless payment project, PayPay’s red “P” logo is now ubiquitous.

“The number of customers who use PayPay has increased significantly, with one-fifth of our sales now coming from PayPay,” said Matsuhiro Ito, 41, a staff member at a soba restaurant in the area. “Payments using PayPay are easily done … and there are no mistakes made” compared to handing out change.

Using the app, customers can scan QR codes displayed at stores with their smartphones to complete payments or they can let sales staff scan a barcode displayed on their screen.

PayPay’s tie-up with Alipay, an online payment service provided by Chinese e-commerce giant Alibaba Group Holding Ltd., has raised hopes among some Oshinari Shotengai storekeepers that the ease of payment will lead to an influx of foreign tourists.

“I think (PayPay) will lead to sales growth as more foreign visitors, especially from mainland China and Taiwan, use Alipay,” Ito said.

But not everyone is excited about the prospect of cashless payments becoming the new normal.

Some store operators and workers, especially older individuals, said the new technology has left them confused or worried that transactions are not being completed correctly.

“I have been doing business only through cash for more than 50 years,” said Sachiko Takahashi, a 71-year-old woman who works at a senbei (baked rice cracker) shop in the Oshinari shopping district.

“Although (money paid via PayPay) finally flows into the bank account, I am somewhat worried,” she said, explaining that she is concerned about how to handle such transactions if an error occurs.

Takahashi said her shop will continue with the PayPay service after the end of the March trial period because her customers are now used to it.

A worker at a nearby bakery said adopting the PayPay service was an easy choice since there was no setup charge during the trial period. But she added the priority must be on making sure local customers and the elderly, most of whom are accustomed to using cash, are comfortable.

Hsu Tien-in, 50, a Taiwanese man on a weeklong trip to Japan with two friends, said he uses cash all the time in Japan and sees no need for anything else, unlike in China where even the most basic purchases are often made via mobile payments, including at small local grocery stores.

More and more companies from various industries, such as online retailer Rakuten Inc. and mobile carrier NTT Docomo Inc., have joined the domestic cashless payment market and are expanding their services.

Fast-food chain Yoshinoya Co. in December introduced Origami Pay, one of the country’s pioneer mobile payment service providers, in almost all of its 1,200 shops, allowing customers to pay by smartphone.

The Kanagawa Prefectural Government said in November that it will promote cashless payments under the “Cashless City Kanagawa” campaign. Payments for property taxes and various other taxes can be made by Line Pay, a smartphone payment method offered by Line Corp. The service began in January in the prefecture.

Among mega-banks, Mizuho launched a smartphone app that can work as both a debit card and as a Suica prepaid e-money card.

In a bid to grab market share amid intensifying competition, PayPay launched a campaign in February to give users reward points worth a total of ¥10 billion until May 31, following a similar campaign in December.

However, it remains an uphill battle to get people to buy in.

A Bank of Japan survey, conducted in March last year, said consumers use cash mainly because it is convenient: Nationwide acceptance, the ability to complete payments on the spot and the absence of commission fees were seen as factors. Consumers are also concerned about security and worry that their credit card information could be compromised.

Industry officials and analysts said 2018 marked the “first year” for the spread of cashless payments. The trade ministry unveiled its “Cashless Vision” in April 2018, aiming to raise the ratio of cashless payments in Japan from 20 to 40 percent by 2025.

The government is also putting its money where its mouth is as it hopes to boost consumption ahead of the 2020 Games and the 2025 World Expo.

Government steps to bolster consumption, implemented to mitigate the impact of the impending increase in sales tax from 8 to 10 percent in October, will serve as a major driving force for the spread of cashless payments, officials hope.

The government plans to give reward points of up to 5 percent of purchase amounts for a period of nine months to consumers who make cashless payments at small and medium-sized retailers.

During the period, cashless payment service operators will be required to cap their fees for such stores at 3.25 percent, lower than ordinary fees, in order to receive subsidies for the rewards program.

Yuuki Fukumoto, a chief researcher at NLI Research Institute, said one of the key factors in the spread of cashless payments is whether there will be a mechanism to ensure small and medium-sized retailers continue to move away from cash even after the government’s nine-month program concludes.

Fukumoto stressed the importance of having more smartphone charging stations and free Wi-Fi to make it easier for customers to go cashless. But he also said older people need to embrace a post-cash world for it to stick.

“It is natural to think digitalization is better since it’s a hassle to carry paper money. I think our society will go cashless sometime, in the long run,” Fukumoto said.

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