The share of cash in the overall payment transaction volume in Japan is set to decrease over the next five years, as users are increasingly considering currency notes to have the potential to transfer the deadly coronavirus (Covid-19) infection, according to GlobalData, a leading data and analytics company.
Subsequently, the pandemic is expected to push digital payments transaction value and volume among consumers and merchants as they shift away from cash payments to avoid exposure to disease vectors such as cash and POS terminals. According to GlobalData’s revised forecasts, while the number of card payments will grow by 2.6%, there will be a decline of -5.5% in ATM cash withdrawals in 2020.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “In order to avoid exposing themselves to disease vectors, increasing number of consumers are switching from in-store to online purchases. This will potentially benefit online payment solutions such as Konbini, Amazon Pay and PayPal.”
GlobalData also observed a sharp rise in the cancellation of flights, hotel booking, and even the postponement of 2020 Olympic and Paralympic Games due to the Covid-19 pandemic. There is expected to be a decrease in consumer spending in 2020, particularly in sectors like travel and tourism, hospitability, accommodation, and food & drinks. These will in-turn impact cards and payment industry growth.
Sharma concludes: “As Japan imposed state of emergency involving social distancing and other restrictions until 6 May 2020, domestic spending will continue to remain weak with the deterioration in transaction volume during April-May. Payments sector is expected to revive towards end of Q2 2020 once the restrictions are completely lifted. Consumers are expected to defer on some of the high value purchases by few months at least till they have better view of the situation.”