In high-tech Japan, cash is king

Most small shops in Japan — a country with over 200,000 ATMs — only take cash to avoid high transaction costs. (AFP)
Updated 22 August 2019

In high-tech Japan, cash is king

  • Four out of five purchases are still made with cash as the ‘super-aged’ society shuns plastic

TOKYO: Once a pioneer in cashless transactions, Japan is now lagging behind as the world’s biggest economies increasingly embrace electronic payments — because its ageing population still prefers physical money.

Four out of five purchases are still made with cash in Japan, despite its reputation as a futuristic and innovative nation. In South Korea, some 90 percent of transactions are digital, while Sweden aims to be a cashless society as early as 2023.

But in Japan, where crime and counterfeiting is virtually non-existent so people feel more comfortable carrying cash, consumer response has been sluggish.

At Katsuyuki Hasegawa’s bike repair shop customers are invited to settle their bills using PayPay — a tie-up between Softbank and Yahoo — using a QR code via their smartphones. But only “two or three” people a week are using the service, Hasegawa said.

“In a place like this, everything is very slow. We get lots of old people who like to chat while getting out their money. They don’t need quick transactions,” says the 40-year-old shopkeeper.

“Personally, I prefer cash. With PayPay, you don’t keep track of your money,” he added.

With Japan becoming the first “super-aged” society, with more than 28 percent of people 65 or over, it is harder to persuade consumers to take up new technology, according to Yuki Fukumoto, an analyst at the NLI Research Institute. “The challenge from now on is how to motivate people” to change their habits, said Fukumoto.

This is a serious challenge in a country with more than 200,000 ATMs and where most small shops will only take cash to avoid high transaction costs.

Many were also put off when retail giant Seven & I Holdings suffered a hacking attack immediately after launching a new QR-code payment system and was forced to scrap the scheme.

Yet it was way back in the 1990s that Japanese firm Denso Wave developed the first QR codes now frequently used in cashless payments, while Sony has offered a chip used on public transport and for payments since the 2000s.

Payment cards for transport systems in Tokyo and other cities are also often used for small purchases from vending machines or convenience stores, but cash remains preferred for other transactions.

The Japanese government is hoping to seize on a wave of tourists expected to flood in for the 2020 Tokyo Olympics to double the amount of electronic payments to 40 percent by 2025.

It also plans to introduce a points system to partially reward customers paying by cashless means as a way to mitigate a controversial hike in consumption tax from eight percent to 10 percent from October. Tokyo perhaps has an eye on the costs of such a dependence on cash, estimated by a Boston Consulting Group survey at two trillion yen (SR70 billion) to maintain ATMs and transport money around securely.

Companies too are doing their best to promote a cashless society — earlier in the year, mobile company Rakuten started “100 percent cashless” stadia for its baseball and football teams.

Akiko Yamanaka, who runs a chic restaurant called Koguma, said a 10 percent discount introduced by PayPay for diners who settle the bill using their system had attracted several people.

“The more campaigns there are like this, the more people will convert to cashless,” said the 54-year-old.

And Rakuten boss Hiroshi Mikitani is convinced that the future is cashless, even in Japan.

“One day soon, money as we know it — notes and coins that we carry with us — will be as outdated and collectable as vinyl discs are now,” he said in a recent blog.

Nevertheless, he admitted that “security has to be improved” for this to happen, especially in the wake of the QR hack.


Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

Updated 01 June 2020

Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

LONDON: Arab News has published the recording of an interview with a Nissan lawyer after he denied saying that a bailout of Lebanon by the International Monetary Fund (IMF) was linked to the extradition of fugitive tycoon Carlos Ghosn.

The former Nissan chairman fled to Beirut in December from Japan, where he faced charges of financial wrongdoing.

In a story published in Arab News Japan on Saturday, Sakher El Hachem, Nissan’s legal representative in Lebanon, said the multibillion-dollar IMF bailout was contingent on Ghosn being handed back to Japan. 

The lawyer said IMF support for Lebanon required Japan’s agreement. Lebanese officials had told him: “Japan will assist Lebanon if Ghosn gets extradited,” the lawyer said

“For Japan to agree on that they want the Lebanese authorities to extradite Ghosn, otherwise they won’t provide Lebanon with financial assistance. Japan is one of the IMF’s major contributors … if Japan vetoes Lebanon then the IMF won’t give Lebanon money, except after deporting Ghosn.”

On Sunday, El Hachem denied making the comments. “The only thing I told the newspaper was that there should have been a court hearing on April 30 in Lebanon, but it was postponed because of the pandemic,” he said. In response, Arab News published the recording of the interview, in which he can be clearly heard making the statements attributed to him. 

Japan issued an arrest warrant after Ghosn, 66, escaped house arrest and fled the country.