The Real Reason Japan is not Cashless…but eventually will be

Lots of silly western journalist reportage from the likes of the Financial Times (FT) and PYMENTS.com have attempted to explain the ‘cash addiction’ of Japanese society by spinning it as a failure of Japanese contactless payment technology: FeliCa, QR Codes, etc. They have failed miserably.

They would have done much better if they had gotten up from their desktops, loaded up Apple Pay Suica with a full charge of ¥20,000 and actually bothered to travel outside of Tokyo, with a few local train trips to the Japanese countryside to talk with Grandma Japan. Grandma Japan holds the family purse strings. Grandma Japan has credit cards and transit cards but those are just window dressing.

She is set in her ways, ways that have safely seen the family thought generations, the real household management is arranged around multiple hard cash osaifu ‘purses’. These purses are different accounts at different banks. Bank A is the medical purse, bank B is the insurance purse, bank C is the loan payback purse, and so on.

The Japanese Government knows this and is, slowly, weeding down the number of local banks, twisting arms, encouraging bank mergers while changing banking rules. X Day will finally arrive when Grandma Japan is forced to put all those purses in a single bank. The bank will kindly offer to manage all those purses for her, and oh, here’s this convenient Rakuten Super Suica + credit card that works everywhere in Japan for transit, shopping, getting cash when you need it, and getting points. You can also gift your grandkids with those cards too, and control how much they can use.

Get the picture? At that point Grandma Japan juggling too many hard cash accounts at one bank will be too much because it’s not traveling from bank A to bank B anymore. It’s all virtual in one place. She will throw up her hands and go cashless, and at that point Japan will truly become cashless in the more important way because it’s not about technology, it’s about households and family life. Unfortunately it’s a point that most western journalists in Japan don’t get, and can’t get, until they get their head out of technology and their body out of Tokyo.

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