TOKYO - An estimated 20 per cent of all transactions in Japan are cashless today - a figure the government said on Wednesday (April 11) that it wants to raise to 40 per cent by 2025 and to 80 per cent in future.
However, a panel of experts told the annual New Economy Summit in Tokyo on the same day that Japan would need greater government intervention, like there had been in Singapore and India, to push a society so used to cash towards adopting cashless payments.
Dr Beh Swan Gin, chairman of Singapore's Economic Development Board, in discussing Singapore's approach, said the government intervened "where the market is failing" - including getting major banks to agree on a backend system to allow peer-to-peer transfers of money via mobile numbers. It is also working to reduce the number of point-of-sale (POS) terminals needed by each merchant to accommodate different forms of cashless payments.
Likewise in India, digital wallets and e-payments have soared since November 2016 when the government banned high-value banknotes - rendering worthless 85 per cent of all bills in circulation - and introduced a slew of measures to incentivise the "demonetisation drive".
Indian tech entrepreneur Arvind Gupta, chief executive of MyGovIndia, noted that 1.2 billion citizens now have a biometrically verifiable identity in India - the biggest platform in the world today that is not owned by a private company.
"Some 42 per cent of the population didn't have a bank account and they got access in less than one year," Mr Gupta said. "India has really leapfrogged in creating digital infrastructure where digital identity is available to everybody as a public good."
Further, in addressing concerns that going cashless would be expensive for businesses bearing the transaction cost, Chinese venture capitalist Hurst Lin said that the more widespread its adoption, the cheaper it would be.
"China has very quickly become a cashless society because it is convenient. And with wide adoption, transaction costs become infinitesimally small and promotes the whole digital economy," he said. "Beggars on the streets have QR codes which donors can scan to make a donation. At restaurants, you don't need so many wait staff because you can scan a QR code on your table to make payment. The cost of digitalisation has gone down to almost zero."
Dr Beh proposed that Japan provide more funding and invest in resources as well as training to properly build up a digital economy.
"A big focus is retraining and this requires ground work with the company employees to train them to be digitally confident," he said. "It is very easy to go out and recruit computer science graduates, but the best people to help a company transit from analog to digital are really the employees who already have the domain expertise."
The lack of funding was also the sticking point among experts at a separate panel on artificial intelligence, who said that Japan had fallen far behind other countries such as the United States, China and even Singapore due to insufficient government support.
Mr Koichiro Yoshida, director of the Japan Association of New Economy, noted that Japan's national budget for the promotion of AI was not only dwarfed by those of the US and China - but also by the amount spent by private companies like Amazon and Alibaba.
Rakuten executive officer Masaya Mori also lamented that Japan has not been able to keep up with Singapore in wooing talent with competitive benefits, a conducive business environment and a diverse workforce.
As a case in point for Singapore's innovative spirit, he cited the Republic's dramatic growth in the use of bike-sharing facilities in over a year. He said: "Unlike Japan, Singapore has the market to accept new ideas and new start-up companies."
Mr Yousuke Okada, chief executive officer of Tokyo-based start-up Abeja, said the "ecosystem" was not in place in Japan yet.
He said while there have been some movement, "deep learning start-up companies are usually started by three or four people who just graduated from university and frankly speaking have some engineering skills but no products".
"If there is solid financing of such operations so that the ecosystem can be cultivated, then I believe this will provide some promising aspects for Japan."