Where cash is still king

For all its tech savvy, Japan still prefers cash to cashless payments.
For all its tech savvy, Japan still prefers cash to cashless payments. PHOTO: BLOOMBERG

Cashless payments are growing in Asia with consumers lured by an increasing array of services, from smartphone payment apps such as e-wallets to stored value cards and cheap online interbank transfers.Many like the convenience and safety of not having to carry cash. But the growth is not universal, and, in some countries, cash remains king because of fears of identity theft as well as the lack of infrastructure and lack of knowledge of the digital world.

For all its tech savvy, Japan still prefers cash to cashless payments.

And, it is not for the lack of options. Mobile wallets debuted as early as 2004, while Apple Pay and Android Pay services are both available.

More prevalent is the mobile tap-to-pay technology developed by Sony, known as FeliCa, embedded in the Suica and Pasmo rail passes that are similar to ez-link in Singapore.

They are stored-value cards that can also be used in taxis and convenience stores.

But, latest available data from the Japan Consumer Credit Association shows that cashless payments only accounted for 17 per cent of the country's overall retail consumption in 2014.

This is lower than South Korea's 85 per cent, Singapore's 56 per cent and India's 35 per cent.

And, according to Bank of Japan data, the value of digital e-money transactions stood at 4.6 trillion yen (S$57 billion) in 2015, a fraction of the 49.8 trillion yen in credit-card payments.

Separately, a survey by insurer Meiji Yasuda last August indicated that cash was still the preferred payment method for as many as 70 per cent of Japanese across all age groups.

Experts have noted that Japan's jitters over going cashless stem from decades of economic stagnation, leading to a fear of overspending and incurring debts.

And then, there are concerns over virtual security in a country where people feel safer carrying around wads of cash, given the low crime rate.

Sales manager Keisuke Okui, 35, told The Sunday Times that he is an Apple Pay convert, after the technology was introduced in Japan with the launch of the iPhone 7 last year.

He lauds the benefits of going cashless: "I no longer need to carry my wallet, being able to do most of my payments by phone, so it is really convenient for me."

But, he observes his friends favouring banknotes, even for big-ticket items.

He said: "Even if they go to restaurants, the bill could be 100,000 yen and they will still pay by cash.

"Japan is still quite conservative, and there is a mindset that with credit cards people may spend more than what they actually have."

A version of this article appeared in the print edition of The Sunday Times on March 19, 2017, with the headline 'Where cash is still king'. Print Edition | Subscribe