Japan is among the handful of countries that effectively controlled the COVID-19 pandemic with swift measures. A rise in consumer spending is expected with the country now moving towards normalization with the easing of restrictions, which in turn will support card payments growth, according to GlobalData, a leading data and analytics company
According to GlobalData’s revised forecasts, the value of card payments in Japan is estimated to grow by 2.1% in 2020. The value is expected to reach JPY91.2 trillion (US$839.4bn) by 2023, at a compound annual growth rate (CAGR) of 6.0% between 2020 and 2023.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “Japan has been traditionally a cash-based country, with cash accounting for 73.3% of the overall payment volume in 2019. The frequency of card payments remains low in Japan at just 0.8 transactions per card per year in 2019, which is mostly due to the country’s traditional preference for cash transactions. However, the fears of COVID-19 spread through cash handing and growing preference for electronic payments are likely to push payment cards use.”
As a result of the COVID-19 outbreak, consumers are increasingly shifting from cash to electronic mode of payments, especially contactless payments. To support this trend, in June 2020, popular retailer Seven-Eleven Japan made contactless card acceptance available at all its stores in the country. Shoppers can use contactless payment with debit, credit and prepaid cards from major brands – Visa, Mastercard, JCB, American Express and Diners Club.
Cards issuers are making payment settlement process faster for card accepting merchants (especially the smaller merchants) by encouraging them to accept more card transactions. In July 2020, Sumitomo Mitsui Card introduced faster payment cycle for its merchants, allowing them to receive the proceeds from their sales made via credit cards within just five days compared to a month or more in the past.
Mr Sharma concludes: “While cash will continue to be the dominant payment mode, expanding payment infrastructure, rising card acceptance among SMEs, and the growing consumer preference for non-cash transactions due to COVID-19 will accelerate the adoption of electronic payments over the next five years.”