Cashless payments, primarily those made through credit cards, electronic money and QR codes, are becoming increasingly widespread in Japan.
Such payment methods now account for over 40% of all personal spending in the country, reflecting a growing trend of consumers carrying little or no cash with them when going out.
A number of issues still need to be addressed, however, especially a growing risk of unauthorized use of cashless payments and the potential disruption of services during disasters.
In late March, the Ministry of Economy, Trade and Industry reported that cashless payments in Japan totaled ¥141 trillion ($980 billion) in 2024, marking an 11.3% increase from the previous year. The share of such payments in personal consumption surpassed 40% for the first time, reaching 42.8%. The government’s target of around 40% of spending to be made via cashless payments by 2025 was therefore achieved ahead of schedule.
Cashless payments have continued to grow steadily year by year, with the total for 2024 reaching 3.7 times the ¥38.3 trillion recorded in 2010. A breakdown of the 2024 figures shows that credit cards accounted for the largest share of the total, at 82.9%, while payments based on QR or other codes have expanded rapidly, making up 9.6%.
While electronic commerce has grown, an increasing number of brick-and-mortar stores now accept contactless credit card payments and smartphone-based apps such as PayPay, creating an environment more conducive to cashless shopping.
The COVID-19 pandemic also accelerated the adoption of cashless payments, as consumers sought to minimize physical contact during in-person transactions.
From a global perspective, however, Japan’s cashless payment penetration remains relatively low. According to the Payments Japan Association, South Korea recorded by far the highest share of cashless payments in 2022, at 99.0%. Japan also trailed significantly behind China’s 83.5%, Singapore’s 65.6%, Britain’s 64.2%, and the United States’ 56.4%.
The government aims to raise the domestic share of cashless payments to 80% to put the country’s rate among the highest globally. Officials note that expanding cashless payments will not only enhance user convenience, but also help reduce cash-handling costs and alleviate labor shortages.
Still, achieving the government’s target will require overcoming several challenges.
One major hurdle is the high cost borne by retailers, including expenses for installing cashless payment equipment and the commissions charged by service providers. The government has called on related industries to collaborate on easing financial burdens wherever possible.
In addition, credit card fraud remains a serious concern. According to the Japan Consumer Credit Association, losses from unauthorized use reached a record ¥55.5 billion in 2024, with over 90% of the total attributed to stolen card numbers.
In response, eight credit card companies in Japan announced a joint initiative in March to crack down on phishing websites.
Moreover, natural disasters can pose a significant risk to cashless payment systems. A powerful earthquake that struck Hokkaido in 2018 triggered a regionwide power outage, the first of its kind in the country. With cash registers unable to read product information or verify credit card details, cashless payments could not be made at many stores.
People without cash were unable to purchase essentials such as food and beverages, underscoring the risks of relying too heavily on cashless payments.
In a report released in late March, the government announced new damage forecasts for a potential large-scale earthquake along the Nankai Trough, off the Pacific coast from central to western Japan. The report warned of the possibility that many consumers could become “shopping refugees,” stranded without access to essential goods due to power outages and communication failures.
The report emphasized that measures to ensure the continuity of payment systems “must be implemented on an ongoing basis.” It also cautioned that system failures “could affect not only disaster-hit regions but the entire country,” effectively urging consumers to keep cash on hand in case of emergencies.