Will COVID-19 end Japan's love affair with cash?

Despite Japan's reputation for using highly advanced technologies - both wonderful and weird - when it comes to the adoption of electronic payments Japan is lagging behind. Even with government-backed discounts and incentives and a plethora of payments options and services, only about twenty percent of transactions are electronic. This compares poorly with Korea, where penetration is around 90% and China which stands at around 60%.

Whether growth is hindered by high merchant transaction costs, consumer fears of data breach/fraud or just the the belief than cash is simpler and fast, the Government's plan to double usage by 2025 looks ambitious. Nowhere is this target more challenging than outside metropolitan areas, where populations are older and cash is the norm.

COVID-19 potentially changes this. In rural areas (where face masks are ubiquitous and social distancing is now the norm) people are extremely wary of the virus's potential impact, which is not surprising given the older age demographic. In simple terms, people no longer want to touch cash.

We could see a very rapid adoption of e-cash, similar to that of DSL in the late 90's. Japan, initially slow to adopt DSL, quickly switched from ISDN making high speed internet and FTTH universal.

Audeamus Consultants is working with a number of payments companies and service providers in Japan and Asia to support market entry and growth. We help develop strategic plans and build the network of business relationships necessary to leverage this immediate opportunity.

If you need support for market entry, would like help to find the best business and solution partners, or would like to tap in to our industry knowledge and experience, please contact us.

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