Japan Declares War on Cash
Here’s something for the Japanese fintech crowd. In an effort to accommodate foreigners and boost spending, the Land of the Rising Sun now wants to double its digital payments over the next decade.
Cash-heavy Japan aims to double digital payments to 40% in the next decade by helping metropolitan-area businesses afford cashless services to better attract foreign visitors and open their wallets.
The goal, set by the Financial Services Agency and the industry ministry, will be part of a plan to promote fintech, the intersection of finance and information technology, in a growth strategy to be compiled in June. The move is also a step toward better accommodating foreign tourists, with an eye toward the 2020 Tokyo Olympics.
The Nikkei Asian Review continues that Japan’s current cashless payments rate stands at a relatively tiny 19%. That’s roughly half of the U.S.’ 40% rate, and much lower than the over 50% rate nations such as South Korea and China currently boast.
Why is that the case? Thanks to the high costs of setting up credit card terminals, the digital payments wave never really took off with small businesses in Japan – further cementing cash’s rule over the nation.
To rectify this, the Japanese government plans to provide billions of yen to help small businesses pay for the terminals. It also aims to streamline transactions by promoting things such as digital receipts – they hope to have major facilities in big-city regions and tourist destinations fully accept cashless payments by 2020.
What about fintech? Well, Japan’s war on cash opens a lot of doors for them, too:
Fintech businesses will also be able to develop payment services more easily. By 2020, around 80 Japanese banks — roughly 60% of the country’s total — will allow developers into their systems to access users’ account information through open APIs, or application programming interfaces. Developers can use this access to create specialized applications for mobile devices, through which users can easily make payments or send money to people.
Let’s see how it goes.
Photo: Ernest Duffoo