Japan Cashless 2020 Retrospect

As we look back on 2020 there are 2 big divides: COVID and cashless. We suddenly found ourselves in a world where all human contact is conducted behind face masks and sheets of clear plastic. Not touching anything not ours is the rule of daily life.

The year started with the Japanese Cashless tax rebate in full swing but the real value of the program, helping smaller merchants to add cashless payments, became clear when the Diamond Princess brought the COVID crisis to Japan big time and real cash suddenly become suspect fomite material. More than anything, COVID fears attached to handling cash drove cashless use in 2020 but are we there yet? Back in July, I said we are. It will be months before official 2020 cashless trend numbers are in, but you don’t need anything more than to ask yourself one simple question:

How much has changed since the October 25, 2016 Apple Pay Japan launch?

Junya Suzuki correctly predicted Apple Pay would be the ‘Black Ships‘ inflection point catalyst for cashless payments in Japan that would change everything. And everything has changed. Cashless is now the first choice that most people want, that most stores want you to use. Cash is the fallback. If grandma want to use it at the supermarket checkout she can take all the time she wants feeding bills and coins into a checkout payment machine. Just one more choice in the every growing payment option menu.

There were other cashless developments in 2020, such as the Yucho Bank security scandal that hit the Docomo Account first, then other online payment services. The end result was that QR Code players (PayPay, Line Pay, etc.) took a hit and for the time being cannot recharge from a bank account. It knocked the wind out of QR Code payment mania that I don’t see returning.

On the transit front the biggest news was the Mobile PASMO Android and Apple Pay PASMO launch. Geographically these only cover the Kanto region but Suica and PASMO combined represent 80% of the Japanese transit IC card market. As Mobile PASMO turned out to be recycled Mobile Suica under the hood, I see it as part of the overall JR East next generation Super Suica that is formally launching in March 2021.

2021 should be an interesting year for contactless payments with Super Suica and VISA Japan finally signing on with Apple Pay. We will see more transit IC card service announcements similar to the Mobile ICOCA one, and if Apple Pay QR Code Payments launch we could see developments in that segment, but 2020 will always be known as the year that Japan finally went cashless.