For an economy as developed and advanced as Japan’s, cash is surprisingly still its most widely used payment instrument. Japanese consumers remain averse to mobile payments, and are even hesitant to use payment cards.

As per GlobalData’s Payment Instrument Analytics database, cash accounted for 79.4% of payment transaction volume in 2018, with payment cards accounting for the remaining 20.6%. However, the situation has started to change, and we are seeing great strides in the shift away from cash – especially with the adoption of mobile payments.

According to GlobalData’s 2019 Consumer Payments Survey, there has been a significant change in the ownership and usage of mobile wallets in Japan. The percentage of consumers who own and actively use a mobile wallet increased by almost 20 percentage points (pp) in 2019 to 26.9%.

Additionally, 19.5% of consumers stated that they do not have a mobile wallet but are interested in getting one, which is an increase of almost 10pp over the previous year.

Meanwhile, the percentage of Japanese consumers who are not interested in getting a mobile wallet dropped by 17.5pp to 26.5%, while awareness of mobile wallets has increased by over 10pp.

There has been plenty of activity from mobile wallet providers, giving a solid indication that mobile payment usage is about to take off among Japanese consumers. For example, PayPay, a mobile wallet jointly owned by Yahoo Japan and SoftBank that launched in 2018, spent the equivalent of $182m over two separate cashback campaigns to encourage mobile payment usage. Netstars, another Japanese mobile payment provider, joined the Singaporean Singtel-led VIA alliance, a cross-border mobile payment scheme, through which mobile wallets from member countries become interoperable.

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In a recent report from the Nikkei Asian Review, there are over 10 mobile payment providers in Japan. With most Japanese mobile wallets using the QR code-based payment system, it has come to a point where unification of QR codes for all the different providers is needed. This is something that the relevant parties are currently working on.

Observers of the payment industry are usually puzzled when they look at the Japanese market, often wondering why consumers in a market as advanced as Japan still have a preference for cash. However, GlobalData research and activity within the Japanese mobile payment space provide hard evidence that things are changing.