Guide to Cashless Payments in Japan: Is Cash Still Important?

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In the past, cashless payment in Japan just wasn’t marketable in its cash-based society. Despite being an uncontested market leader in robotics and automation, Japan can often be slow to adapt to modernization. Beneath Shibuya’s blinding neon billboards and mountainous piles of Akihabara’s electronic gadgets, a different picture emerge: cash-loving oji-san (おじさん), outdated financial habit and cash-only mom-and-pops.

Now, contactless payments brimmed to a new level of urgency due to COVID-19. Usage of credit cards and mobile cash apps, as well as other digital payment methods, become more widespread. The ever-trendy Kitasando Coffe, nooked in a hip neighborhood of Shibuya, was one of the first pioneers of an all-cashless shop— and this trend was soon trailed by other establishments in Tokyo.  

Either way, you’re lagging behind if you think only carrying hard cash and coins is the way to go in modern-day Japan. Here we’re walking you through the most common electronic payments methods and apps in Japan.

Cashless Trend in Japan 

In 2019, Japan levered its consumption tax, which was soon followed by a massive official promotional campaign to expand cashless transactions. The government announced that it planned to double cashless transactions by 40 percent of national consumption by 2025. Despite this, initial strides were slow. Old folks weren’t s keen on cashless technologies, after all.

Following the stay-at-home trend, things began to change. June 2020, coincidentally during one of the peaks of the pandemic, marked the end of the cashback scheme. The country saw a huge success; there are now over one million stores in Japan accepting contactless payment methods. More consumers rely on internet shopping. Japanese people avoid physical contact. Even local governments were eager to jump on the digital payment trend. 

The government announced that it planned to double cashless transactions by 40 percent of national consumption by 2025.

Now, a cashless economy is seemingly on the horizon. Mainichi Shimbun estimated that over half of the people under the age of 50 are using cashless payments.

Contactless transactions are so much more than credit cards. It covers a variety of payment options from cards and mobile payment apps to IC cards, digital wallets and virtual cards. A lot of them use NFC (near-field communication), which allows your devices to transfer data when in close proximity, but QR codes are getting common too. 

cashless payment in japan

Why You Should Go Cashless in Japan 

A lot of cashless payment methods in Japan come with a reward scheme. You can collect points, which can be used to make future purchases. You can even get a small discount and coupons. Really, to say that Japan and financial companies were aggressive in their cashless scheme and campaigns wouldn’t be an overstatement. 

LINE Pay, for example, has partnered with SMBC for a Visa LINE Pay credit card. Linking your bank account, mobile and physical credit card, the mobile remittance and payment service arms you with a 3% reward point system. 

Then there’s the next talk of the town: convenience and safety. Going cashless is arguably more hassle-free in comparison to rummaging your wallet or pocket for small coins. Something about swiping a card or pulling out your phone for QR just makes going through your day a breeze. And while debit cards and phone gets stolen, banks are equipped with sophisticated financial security systems to protect you from major damage. 

You can even pay your rent and utilities in Japan with cashless payments: utility bills, national tax, life insurance premiums and hospital bills. Contactless payment is time-efficient, less effort and more simple — that’s it. 

COVID-19 also gives way for a more cashless-friendly society. Gone are the days of handing down filthy yen paper bills (rumor has it that they carry more germs than household toilets). With more people getting conscious of hygiene and contamination, just the thought alone can make anyone switch to credit. 

cashless payment in japan commuter ic card

IC Cards: The Original Cashless Payment in Japan

Japan is taking the word “convenience” unlike any other. Commonly known as IC cards, transportation cards were initially used to well, tap against the card reader when passing the ticket gate. But now, IC cards — Suica and PASMO being the big two — can be used as a form of payment beyond Japan’s sophisticated public transportation system. 

From vending machines and konbini chains to high-end restaurant and shopping departments (AEON), using an IC card is perfect when you’re shopping for a coffee during the morning rush. 

Where to purchase: Train stations in Japan, particularly Tokyo, are virtually everywhere. That means you can literally top-up anywhere. Just head to their ticket machine and set an amount to charge the card. If you don’t have an existing IC ard, you’d have to pay an additional deposit of 500 yen. 

You can also add your Suica and PASMO to your iPhone or Apple Watch wallet in Japan. It’s also possible to download Suica and PASMO on smartphone apps to your Android or other mobile devices. This means that you can quickly pay for rides with just a tap of your device and make purchases in stores. 

Credit Cards in Japan

Arguably the easiest route for anyone, credit cards are the most universal cashless payment method. It’s tougher luck if you’re a foreigner looking to make a credit card in Japan. 

The most widely accepted credit cards in Japan are VISA and Mastercard

While credit cards from banks in Japan have tight screening, Rakuten, Epos Card, JCB and Visa LINE Pay cards have a reputation for having fewer hurdles for international residents, and they remain top picks for anyone looking to get an easy pass. 

You might also want to consider a credit card with a built-in IC card. The system works by automatically recharging whenever the balance gets low, so you’ll never have to turn back from the ticket gate to the ticket machine (and possibly miss your train). 

Japan’s Mobile Payment Apps (QR Code-based)

mobile payment app in japan merpay linepay rpay paypay

There’s a surge in smartphone app payments in Japan. With most commuters and workers holding on to their phones most of the day, it’s only natural that this route is the most convenient and preferable. Depending on the app, you can make payments by scanning the QR code displayed or showing your own barcode on the app to be scanned. 

Like credit cards, you can redeem your points and get benefits for future purchases. A great thing about digital payment apps is it’s much easier to have smartphone-based apps than a credit card; there are fewer restrictions on age and nationality. Another great thing is that sending and receiving money from anyone else on the same app is just one click away

LINE Pay

English support: Available
Reward point system: 1-3%; occasional campaigns

Live in Japan long enough and you’ll naturally download the country’s biggest messaging service LINE.

You can easily sign up LINE Pay. Purchases using LINE PAY then gives you up to 3% of point rewards. Topping up is also convenient; you can pay cash at a convenience store or connect it to your bank account

Another thing that’s so great about LINE Pay is its versatility. Because it’s integrated into the messaging app (and because most of your friends already use LINE), you can seamlessly send or request money and split bills with your LINE friends. 

If you use LINE mobile as your mobile network service, you can also use LINE Pay for yur monthly phone bill. 

Download on App Store or Google Play

PayPay

English support: Available on website
Reward point system: Occasional campaigns

Although newer than LINE Pay, PayPay was quick to gain popularity because of its marketing campaigns, generous discounts and abundant reward bonuses. It comes as no surprise that the Softbank and Yahoo! Joint venture became the most widely accepted cashless payment app (now linked to over 32,000 stores).  

You can create a PayPay account that can then be linked to your bank account for transfers. You can also connect it to your Yahoo! Wallet or receive money from a gift card (usually available at konbini). 

Download on App Store or Google Play

Rakuten Pay

English support: available 
Reward point system: up to 1.5% points

Another big name in the cashless payment scene in Japan is Rakuten Pay, otherwise known as R Pay. Unlike other cashless payment giants that hold irregular campaigns, Rakuten Pay promises point rewards all the time. Every purchase earns you a small portion of Rakuten points, which will then double if you also have a Rakuten credit card. Applying to this foreign-friendly credit card will also get you a 5,000 point bonus immediately. 

Rakuten also has other financial service extensions besides Rakuten Pay, including Rakuten Edy and Rakuten Check.

Download on App Store or Google Play

MerPay

English support: Not available
Reward point system: Occasional campaigns

You’ve probably already heard the name Mercari, one of Japan’s e-commerce behemoths that rivals Rakuten — think Amazon and Alibaba. In 2017, Mercari established Merpay to focus on financial services and credit businesses. Soon after, it bought Origami Pay in 2020, an up-and-coming virtual payment service that’s available to use at large retailers like IKEA and PARCO. 

Download on App Store or Google Play

Contactless Payment Services by Japan’s Mobile Carriers

Mobile carriers in Japan are catching up to the market competition. Recently, they’ve expanded their mobile to contactless smartphone payments. You can also pay your monthly mobile phone bill, too. 

dBarai

English support: Not available
Point reward system: Available

It’s a great choice if you’re opting to have NTT Docomo as your mobile provider. Although it’s similar to popular smartphone payment services in terms of features, dBarai is less common and only available in Japanese. 

Download on Docomo website (dAccount is required to apply)

au Pay

English support: Available
Reward point system: Available 

Mobile cellular service au has several financial services: au PAY app and Prepaid Card. You can start using au PAY by downloading the app — au ID not necessary. You can earn a single Ponta point (their specific point system) for every 200 yen spent, but it doubles if you shop with their credit card. 

There are three ways to use your integrated au PAY. You can use your smartphone via code payment and prepaid card or scan your iPhone or Apple Watch. 

Download on au Pay website. 

NFC Contactless Payments in Japan

contactless payment in japan id quicpay

Otherwise known as e-wallets, NFC payments allow anyone to read devices like Apple Pay and Google Pay and use the tap-to-pay method to complete payment. For added security, users need to unlock the app or their phone to do the action. 

It can get easy to accumulate cashless payment apps and credit cards, especially if all of them come with tempting perks and deals. A great advantage about NFC payments you wouldn’t find in other financial services is that you can store multiple credit and debit cards on your mobile devices. This full integration allows consumers to do day-to-day contactless transactions. 

In Japan, the FeliCa chip is widely used. QUICPay and iD dominate the NFC payment market. You can request QUICPay or ID to be added to your credit or debit card. You will usually need either both to integrate your cards to your Google Pay or Apple Pay. 


Digital Wallets in Japan (App-based)

The digital wallet might sound interchangeable with a cashless payment app, but it provides a more seamless customer experience. Instead of opening the app and showing a barcode, which takes a few seconds, unlock your phone and tap it to the reader. 

A lot of these digital wallets, like Apple Pay and Google Pay, are already pre-installed. You can set a default payment and register your card. Both digital wallets support Suica, iD, QUICKPay and Rakuten Edy. 

A major disadvantage is that digital wallets don’t have points or rewards. Find out more about setting up Apple Pay here and Google Pay here

When you want to make payment using digital wallets, don’t say “Apple Pay” or “Google Pay.” Instead, mention the specific platform — iD, QUICKPay or Rakuten Edy (“Edy” for short). 

Point Cards (e-Money)

point cards japan waon edy nanaco

Point card is a great option if you’re staying in Japan for the short term and looking for simple cashless options without the need to set up an account. In addition to the quick-pay feature, you can earn points when you use these cards at certain stores. 

Waon

English support: Available on website
Point reward system: 1 point per 200 yen

Helmed by the white dog mascot, WAON is great for shopping sprees at AEON malls and other convenience and grocery stores. 

Where to purchase: Head to any AEON mall, MaxValu store or Ministop. You will need to pay an additional 300 yen. You can top up funds at your usual popular konbini, including Family Mart and Lawson, or at a designated WAON recharge machine. 

Rakuten Edy

English support: Available on website
Point reward system: 1 point per 100 yen

You can also opt for a hassle-free cashless option by buying a Rakuten Edy prepaid card at major convenience stores. The card can be used alongside your Rakuten Pay account, which is great for someone who wants to have a physical card rather than a virtual one. Today, Rakuten Edy is one of the widely used prepaid cards in Japan.

Where to purchase: Similar to other point cards, you can simply ask the cashier at konbini to charge your card. 

Nanaco

English support: Partially available
Point reward system: Available

 If WAON has its dog, Nanaco has its giraffe mascot. Owned by the mega konbini chain store Seven Eleven, you can use Nanaco on thousands of stores across Japan. 

Where to purchase: To own a Nanaco card, you can apply online or pick up an application your nearest Seven-Eleven. 

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