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The promotion of cashless payment in Japan is encouraged by the tax raising policy

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The promotion of cashless payment in Japan is encouraged by the tax raising policy

Cashless payment as an alternative payment methods

The diffusion of cashless payment can be examined slightly in Japan. Compared to the rest of the world, especially the rest of East Asia, China and South Korea, it is still far behind of the usage of cashless payment, but at least it has some progress in the present days.

The biggest factor that stimulates the expansions of cashless payment, is a tax raising policy. This sounds wrong that the tax raising has influence on the promotion of spending money in any ways. However, it is really happening in Japan.

How does the tax raising policy make the promotions on cashless payment in Japan?

Japanese government had declared that the tax raising will have be done in October 2019. The consumption tax (equivalent to VAT or sale tax) is the subject of it this time. The consumption tax is deeply related to the people's life. Because of that, the recession and backlash of the people are expected to happen.

In order to prevent the recession and the direct hits to the people's consumption, the cabinet had stated to introduce the reducing tax policy on certain products and even on the ways of payment. This reducing policy includes that 5% of discount on every cashless payment in small and medium-sized businesses. By using the cashless payment such as credit cards, debit cards and smartphone payments (incontact payment), people can get 5% discount on their purchase.

The tax will be risen from 8% to 10%. However with this reducing policy, people can gradually get used to the higher tax rates, as the cabinet member says. This policy lasts for 9 months, from October 2019 until the Tokyo Olympic.

In order to get the 5% discount on the purchase, there are 2 main regulations.

    • Use the cashless payment:credit cards, debit cards, code payments, smartphone payments
    • Limited to the payment in small and medium-sized business shops

People need to know how to use the cashless payment and the size of shops. Furthermore they also have to know where the cashless payment can be used. The bigger the companies that own shops, the more the cashless payment equipment is secured. On the other hand, the smaller shops that are the subjects of the discount of 5%, barely had equipped the system for cashless payment.

The government is now required to encourage those small and medium-sized business companies to introduce the cashless payment system. There are only 8 months left. The implementation of the system will promote the usage of cashless payment in Japan as well.

The gradual promotion of cashless payment in Japan

How is the cashless payment service looking like in Japan now? There are many kinds of cashless services released these days, such as LINE Pay, Rakuten Pay, PayPay and more. Credit card service is the most widely used cashless payment method in Japan. It is said to be  likely 90% of people hold the credit cards in current Japan while there are less than 20% of people using code payments or smartphone payments.

Under the tax raising related policies, the securing the systems of code payments and smartphone payments is imperative. What kind of services are popular in Japan?

LINE Pay

LINE is the most used SNS application in East Asia (like What's up). This, LINE, had released the cashless payment method, called "LINE Pay". LINE Pay provides the service of code payment, using the QR code on the screen of the smartphone. LINE Pay is accessible from the application of LINE. This makes it easier for the users to try the code payment for the first time.

Furthermore, LINE Pay has its own points-giving system, which pays users back the certain amount of money as points, depending on the amount of money they spent on LINE Pay. The more you spent, the more you can get points. 1 point is equivalent to 1 yen. Just by using this LINE Pay, the users can earn 2~5% of points as pay-back.

This is clearly a better method than cash. Apparently the users can spend less money. When it provides the users of campaign, the pay-back rating is even 20%. Eventually, the users can get 20% discount on daily spendings.

Rakuten Pay

Rakuten Pay is the similar code payment as LINE Pay. The huge cooperation of online shopping network in Japan, Rakuten, provides this code payment.

Rakuten Pay has a lot of campaigns that provide "Rakuten Point". Rakuten Point is the point that can be used in the Rakuten online market, and the other shops. Compared to the pay-back of LINE Pay, Rakuten Points have more multiplicity of use. Since Rakuten is a big cooperation, there are many other services that you can spend Rakuten points that you earned by using Rakuten Pay. It is also possible to earn Rakuten points by using other Rakuten services.

More shops are expected to introduce Rakuten Pay due to its multiplicity of use.

PayPay

The newest code payment in big code payments method is PayPay. This service has become pretty famous, surpassing LINE Pay and Rakuten Pay. The reason why PayPay got to be used by so many people is because a release campaign. The campaign was to distribute 10 billion yen to every single person who used PayPay in the campaign period.

10 billion yen distributing campaign

This campaign was the opening campaign of PayPay. Since PayPay was released far after LINE Pay or Rakuten Pay or any other well known services, PayPay needed some remarkable campaign to keep the eyes of consumers on. Then they decided to spend 10 billion yen to distribute for each payment.

Two main rewards were

  • Get pay-back for 20% on every payment
  • win the full price pay-back once to several times (random)

This campaign got spreaded through SNS, There had been a lot of newly registered users, aiming to win tremendous amount of pay-back.

However, a lot of errors had been reported in the period due to the too many accesses in short term. The server of PayPay had shut down for nearly half days, the credit cards fraud had occurred, and the point pay back system had collapsed for some people. Even though a lot more people got to use the cashless payment, these errors had made people reluctant to the use of new payment method.

It is difficult to tell when Japanese people prefer the cashless payment in daily life.

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この記事のライター:Maya Shinoda / ポモチ専属ライター

Maya Shinoda / ポモチ専属ライター

Maya Shinoda / ポモチ

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