Japan ponders cashless options as banknotes fadeーNHK WORLD-JAPAN NEWS
It’s been one year since Japan brought new bank notes into circulation, but the shiny bills are keeping a surprisingly low profile. Yuko Fushima from our Bizesk is here to explain why. So, Yuko, I remember people were so excited about the new bills, right?
Yes, they were. And events were held everywhere, including at the Bank of Japan. Some people went out to exchange their old ones on the first day. Look at these brand new bills. I tend to be cashless, but I didn’t want to miss out. I still use cash. I came here for the new notes to commemorate their coming into circulation. They have the unique smell of bank notes just printed. Fast forward one year and enthusiasm has waned. The Bank of Japan says new banknotes accounted for less than 30% of all bills in circulation at the end of May. Compare that to 2005, one year after Japan’s previous currency facelift. New notes comprise 60% of all bills in circulation. One reason is the total volume of bank notes in circulation. The BOJ says it’s up 50% from 2004. That pushes down the share of new bills. The central bank also points out that people are shifting to cashless methods. The country’s rate of cashless payments exceeded 40% in 2024, a year earlier than the government’s target. I talked to analyst Morio Katsyoshi. He works for a leading fintech company promoting cashless payments in Japan. He thinks the introduction of new bank notes has actually discouraged people from using cash. There are lots of vending machines where people buy tickets for noodles beforehand or uh at train stations. Many small institutions like noodle stands for example uh still use older vending machines that doesn’t accept new banknotes but then it’s a hindrance for for people to use cash. So um overall the introduction of new banknotes had a negative impact on the cash usage. But while cashless payment rates are on the rise, the trend lags behind other countries. Japanese are still using a lot more cash compared to people in neighboring South Korea and China. Morioa says this can be explained by the huge number of cashes payment methods in Japan. In addition to credit cards and debit cards, shoppers are presented with a wide range of payment app options and QR codes. One problem is that is that there’s no universal one cashless payment that you can use everywhere. Then that means uh these cashless people including me have to decide which payment method to use depend on where I am. But uh so it’s okay for me and for many people but uh many people who still prefer cash say that cash is easier because you can just use cash everywhere. It’s universal method.
What is the characteristic of cashless payments here in Japan compared to other countries? Of course, Japan uh you can use credit card almost everywhere and also it’s we are one of the developed nations but uh compared to for example North America or Europe it’s very interesting that we have cash uh we have card payment but also QR code payment app QR code payment is is very popular in China and also Southeast Asia. If you look at the global market, I think that the QR code payment is more for development emerging nation thing. We’ve seen cashless payment u increase over the years. What is your outlook for cashless payments going forward?
Yes, I have a very bright perspective on Japan’s cashless payment. This digitalization of movement and digitalization of economy as a whole will continue but the market structure will keep changing. So right now the credit card is quite dominant on the payment volume perspective and the payment apps are quite dominant on the number of transactions for example and this mix of payment method will will definitely keep changing. Well, Morioa doesn’t see cashless payments merging into one dominant system anytime soon. Consumers in Japan will continue to juggle different cards and apps, but he says you can bank on one thing. Fewer people will be re reaching for
Paper money is losing its appeal, but the country continues to lag in the global shift to cashless payments. One surprising obstacle: shoppers face too many options at checkout. #japan #business #banknotes
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