The government has made a move toward a cashless society by announcing it will issue new paper money and replace the old bank notes by 2024. Even though the Finance Minister said the purpose is to prevent counterfeiting, the decision suggests that a transition to a cashless society may not be far behind. Here’s why.
In Sweden, the government updated the paper money in 2017. While cashless payments (credit and debit cards and mobile application payments) were spreading even before the change, updating the bank notes boosted the country to go cashless faster because the government could reduce the number of bills in circulations and it was easier for stores not to accept cash than to prepare their equipment to automatically count and distribute a whole new set of bank notes. Also, the introduction of new bank notes decreased public affection toward cash.
The move to cashless societies is a worldwide trend. The Ministry of Economy, Trade and Industry expressed concern in its 2018 report titled “Cashless Vision” that Japan’s cashless ratio is only 18.4 percent, as compared with 45 percent in the United States and 89.1 percent in South Korea.
Many developed countries have achieved cashless ratios of 40 to 60 percent. The ministry commented that Japan is losing substantial opportunities to boost its stagnating economy by increasing consumption and convenience through cashless payments.
If Japan does want to make the transition to a cashless society, my research on the subject suggests that the government can take the following additional steps to achieve this goal:
Give incentives such as tax deductions to those who do not use cash; establish a government-supported mobile payment platform; charge extra fees on cash transactions; and move to a coinless society.
The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.