Japan's consumer culture, long wedded to cash payments, has finally reached an inflection point. For the first time, credit cards have overtaken cash in the share of payments in household consumption expenditure. Experts said the shift also accelerated as internet shopping firmly took root in daily life, while consumers, seeking to save even a little under prolonged inflationary pressure, actively took advantage of point-reward benefits.
On the 20th, Nikkei, citing the Ministry of Internal Affairs and Communications' household survey, reported that the share of payments made by credit card when two-or-more-person households purchased goods or services last year was 36.3%. In contrast, the share of cash payments stayed at 35.3%. When related statistics were first compiled in 2020, cash accounted for 43.1% while cards were only 26.7%, showing a considerable gap. In about six years, the positions of the two payment methods have completely reversed.
The biggest driver behind the reversal of payment methods is the spread of online shopping. The internet shopping usage rate among Japanese households nearly doubled over the past 10 years, reaching 56.9% last year. As more consumers sought to buy goods in online spaces where cash cannot be used, the frequency of credit card use naturally increased.
On top of that, the macroeconomic shift of inflation fueled the spread of credit cards. Card companies, seeking to attract more financial consumers, competitively expanded benefits that return part of the payment amount as points that can be used like cash. Nikkei analyzed that as prices steadily rose, Japanese consumers, feeling a heavy expenditure burden, were drawn to these "jjan-tech" ("saving + finance") point perks. The assessment is that a practical attitude of seeking even a small monetary gain in everyday expenditure overcame the long-standing custom of preferring cash.
Cash has not disappeared from every corner of Japanese society. A breakdown of the household survey by item shows consumers clearly distinguish between card and cash use. In areas such as transportation and telecommunications fees, payments by credit card were overwhelmingly common. By contrast, more than half of people still use cash when buying daily groceries at neighborhood supermarkets or paying medical bills at hospitals. In these areas, the cash payment share still fluctuates between 50% and 60%. Pointing to the high cash share in healthcare and food distribution, Nikkei projected there is significant room to improve operational efficiency by introducing electronic payment systems going forward.
Meanwhile, other forms of electronic payment that had been in the spotlight as new methods are growing more slowly than expected. The share of payments via QR codes shown on smartphone screens or electronic money using subway transit cards edged up only slightly from 5.2% five years ago to 5.9% last year. The traditional method of bank transfers also slipped from 24.5% to 22.3% over the same period, holding roughly steady. In the end, credit cards absorbed most of the space left by the decline in cash use.
Although the credit card share has surpassed cash, the overall share of cashless payments still has a long way to go. According to data from the Japan Cashless Promotion Council, as of 2023, Korea's cashless payment ratio reached a staggering 99.1%, effectively eliminating cash from most aspects of daily economic life. China also established itself early as a cashless powerhouse, logging 83.3% on the back of mobile easy-payment infrastructure. Japan, by contrast, remained at 39.3%. The Japanese government hastily said it would raise the cashless payment ratio to 65% by 2030, but even that target lags far behind other countries.