Japan Heading to a Cashless Economy Due to COVID-19

Cashless Economy

Surveys say that more customers are choosing cashless transactions amid the pandemic. Japanese who are known to be avid users of bills and coins are now heading towards a cashless economy to lower COVID-19 infection risks and earn more rewards. 

 

G-Plan Inc. and Biglobe Inc. conducted a survey April of last year showing 29.5% of 7,865 respondents are often opting for digital payments. Their number one reason is that they are after the reward points or rebates. About 31% explained that they just simply wanted to avoid touching cash.

 

In Mitaka Municipal Office, one of the municipal offices in Western Tokyo, they have already set up self-checkout machines to encourage clients to start doing cashless transactions to minimize infection risks in the government office. Mitaka is the very first government agency in Japan to set up self-checkout machines to mitigate the spread of the virus last January 18.

 

Since the government is encouraging everyone to stay at home, there is a remarkable increase in online shopping too which also uses cashless payments. 

 

The government-backed marketing drive for cashless transactions is at an estimated ¥775 billion campaign that ran from October 2019 to last June which gave consumers 5% rebates for cashless purchases made at small stores. This is to further encourage small stores to embrace cashless transactions despite the hesitation due to additional cost in the implementation and commission for the POS service providers. 

 

Furthermore, to enable these small merchants to start accepting cashless transactions, the government has given financial support and requested the cashless payment operators to lower down their commission fees. With this initiative and support, approximately 1.05 million small outlets participated in the cashless drive. This is far more than what the government has expected.

 

With the prevalence of the cashless system in Japan, what is more challenging is the security system which is considered very crucial for these digital payment platforms. In the past few years, there were quite a number of security breaches reported. One of these breaches is 7pay by 7-Eleven that made them scrap its smartphone payment service recently for failing to address the issue. 

 

To enhance public trust, these online payment platforms must prioritize above all their safe operations.

 

Reference: https://www.japantimes.co.jp/news/2021/02/22/business/cashless-payments-coronavirus/

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