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In high-tech Japan, cash is still king
TOKYO, Aug 21, 2019 (BSS/AFP) – 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
tells AFP.
“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 adds.
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.
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– ‘Outdated and collectable’ –
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 ($18
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” (“bear”), 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.
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