Japan's Cashless Revolution: What Global Retailers Need to Know by 2025

あゆみ佐藤
Oct 27
4 min read

Introduction

Historically, Japan has been known for its high reliance on cash payments. However, in the 2020s, cashless payment methods have rapidly spread, reaching an estimated 40% of total payments by 2025. This shift is driven by government policies promoting cashless payments, the increased demand for contactless transactions due to the COVID-19 pandemic, and the rapid adoption of smartphone-based payment solutions.

1. Background of Cashless Payment Adoption

In 2018, the Japanese government formulated the “Cashless Vision”, setting a target of 40% cashless payment adoption by 2025. By 2024, the ratio had already reached approximately 39.3%, with cashless payments becoming commonplace in major commercial facilities, restaurants, supermarkets, and convenience stores.

The main factors behind this adoption include:

Rapid increase in demand for contactless payments during the COVID-19 pandemic
Preparation for inbound tourism, especially in anticipation of the Tokyo 2020 Olympics
Local government subsidies and reward point campaigns promoting cashless adoption
Large-scale promotional campaigns by major payment service providers

2. Major Types of Cashless Payments and Key Players

Cashless payments in Japan can be broadly classified into credit cards, QR/barcode payments (mobile payments), electronic money, and debit cards.

Credit Cards

Mitsui Sumitomo Card, JCB, VISA, and Mastercard dominate the market and accelerate digital transformation. Usage is expanding across subscription services, e-commerce, and in-store purchases.

QR Code & Mobile Payments

PayPay: Japan’s largest QR code payment platform, launched through a collaboration between SoftBank and Yahoo. By 2025, it has over 50 million users, with widespread adoption among small and medium-sized retailers. Extensive campaigns and merchant support have driven its popularity.
Rakuten Pay: Integrated with the Rakuten ecosystem, enabling strong synergy with Rakuten Points. It is increasingly used in Rakuten Market and physical stores, making it a competitive option.
au PAY (KDDI): Offers benefits to telecom subscribers, including auto-charge and merchant point rewards, creating a stable user base.
LINE Pay: The service ended in March 2025, with users migrating to alternative payment platforms.

Electronic Money

Suica, PASMO: Popular IC transportation cards widely used at convenience stores, restaurants, and retail outlets.
iD, QUICPay: Postpaid electronic money linked to credit cards, supporting the expansion of touchless payments.

3. Government Initiatives and Consumer Reward Programs

The Japanese government has implemented several initiatives to promote cashless payments:

Point Reward System (2019–2020): Offered 2–5% point rewards for cashless payments at small businesses, significantly encouraging adoption.
JPQR Standardization: Introduced in 2021 to unify multiple QR code systems, reducing merchant implementation costs and improving payment convenience.
Cashless Operations for Osaka-Kansai Expo 2025: Plans to implement blockchain-based digital wallet terminals, positioning Japan as a global model for cashless innovation.

4. Benefits for Retailers

Cashless payments not only replace traditional payment methods but also drive business transformation:

Faster checkouts reduce waiting times and increase customer turnover.
Detailed sales data from digital payments enables precise marketing and customer strategy optimization.
Lower costs and risks associated with cash management.
Enhanced safety and hygiene evaluation through contactless payments, particularly relevant during pandemics.

Small and medium-sized retailers benefit from fee subsidies and support programs, accelerating the shift to cashless.

5. Leading Examples in Practice

Convenience Stores

7-Eleven: Offers 2% point rewards for cashless payments and uses AI for staff optimization at registers.
Lawson: Promotes mobile payments via its proprietary app, with a top-tier QR code adoption rate among convenience stores.

Supermarkets

Aeon: Implements PayPay, Rakuten Pay, and au PAY in all major stores, ensuring a seamless cashless experience in collaboration with e-commerce platforms.
Life Corporation: Equipped self-checkouts with QR code payment capabilities, providing fast and secure transactions.

Restaurants

Even local and independently owned restaurants increasingly adopt PayPay, as customers are drawn by point rewards and campaign incentives.

6. Fintech and Mobile Wallet Evolution

Competition among PayPay, Rakuten Pay, and au PAY continues to intensify, attracting consumers with diverse campaigns and reward programs. Many users utilize multiple mobile wallets, with ease of use and benefit programs driving adoption.

The spread of digital banking has strengthened instant recharge and transfer services linked to bank accounts, further enhancing the cashless experience for consumers.

7. Challenges and Future Outlook

Challenges

Promoting cashless usage among seniors requires education and simplified operation.
Continued support to reduce transaction fees for small businesses is necessary.
Resolving user confusion due to multiple competing cashless payment options.

Future Outlook

Expansion of mobile wallets linked to credit cards is expected by 2028.
Central Bank Digital Currency (CBDC) trials will create new cashless payment infrastructures.
Senior-friendly user interfaces and support services will be developed.
Multi-currency cashless platforms will grow to support international tourists.

Conclusion

Japan’s cashless revolution goes beyond replacing payment methods, driving efficiency, pandemic response, and global strategy across society.

For global retailers, Japan serves as a leading model for implementing digital payment solutions in an aging society, offering crucial insights for future adoption strategies and international expansion.

With continued government support and innovation from market participants, Japan’s cashless society is poised for further progress.

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