Japan Payments Market Size
| Study Period | 2018 - 2028 |
| Base Year For Estimation | 2022 |
| Forecast Data Period | 2023 - 2028 |
| Historical Data Period | 2018 - 2021 |
| CAGR | 5.87 % |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
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Japan Payments Market Analysis
The Japan Payments Market was valued at USD 751.07 billion in the previous year and is expected to register a CAGR of 5.87%, reaching USD 1,043.59 billion by the next five years. Over time, payments have evolved from bartering to token systems (exchanging coins and paper money), currency pooling (deposits and bank accounts), and ultimately cashless transactions. Over the past decade, a significant acceleration in modern payment systems has been witnessed in Japan, among the primary factors influencing the growth of the studied market in Japan.
- Although one of the leading payment methods in the nation is cash, digital transactions are developing quickly, transforming the country into a digital one. Establishing the necessary infrastructure by the Japanese government also aids in ensuring the efficient operation of the payments market.
- According to the Statistics Bureau Japan, the average monthly household spending on online food purchases in 2022 was over JPY 2,650 (about USD 18.52), while on medicines was JPY 213 (about USD 1.5). Japanese households spent about JPY 17,000 (about USD 119) each month online that year. Such expenditure on online purchases will allow the studied market to grow.
- The third generation of online technology, Web 3.0, combines structured data and cognitive services to enable the web to understand and accomplish user objectives. Payments may use Web 3.0 to offer users more intelligent and individualized payment experiences. By using natural language processing (NLP) and voice commands, consumers can tell their devices what and how much they wish to pay using Web 3.0 technologies, for instance. Based on a user's past payment history and preferences, Web 3.0 technology can also offer customized payment recommendations and offers. Such technologies are also anticipated to evolve and influence the Japanese payments market during the forecast period.
- On the flip side, card fraud occurs when thieves use card holder's financial or credit card information to gain unauthorized entry to user accounts and take money. The substantial increase in the number of users who have fallen victim to fraud is caused by the fact that most people's everyday and professional lives are currently virtual or online, as well as the growing complexity of hackers and organized crime groups that target Japan online. Such factors are likely to restrain the growth of the studied market.
- COVID-19 notably impacted the Japanese payments market, with companies like Japan Post Bank intensifying their rivalry with PayPal. The market players are striving towards continued digitalization and innovation in the payments industry to mitigate the effects of the pandemic. Hence, the post-pandemic period is anticipated to witness a continued evolution of the payments industry in Japan.
Japan Payments Market Trends
Online Sales is Expected to Drive the Market
- Due to their simplicity in enabling online bill payments and other money transfer services, mobile wallets are becoming extremely popular all over Japan for E-commerce businesses. Additionally, the usage of these modern instruments enables quick and secure transactions. These advantages of utilizing a mobile wallet have led to increased use of these products. During the forecast period, the online payment facility is anticipated to create lucrative opportunities in the studied market.
- Alternative digital currencies are already quickly being embraced in the region, with cryptocurrencies being the most in demand. Future digital wallets offer on-demand and frictionless access to these alternative digital assets and store and enable payment transactions. Furthermore, they make it possible to carry out financial transactions using various payment sources.
- The firms are entering new regions to expand their presence in Japan and capture a broad customer base. For instance, in March 2022, Japan and South Korea were added to Citcon's list of international markets. Citcon is a mobile wallet payment provider based in California. Citcon's payment system aims to make managing and integrating different payment options easier while enabling cross-border trade. The nation's most widely used digital wallets, including PayPal, RakutenPay, LinePay, AliPay, and UnionPay, can also be used over the Citcon network.
- Similarly, the buy now, pay later (BNPL) firm in Japan, Paidy, offers Paidy Link that instantaneously links account holders to their digital wallets. Paidy employs its models and machine learning to speed up transactions and ensure payment. JS Capital Management, Soros Capital Management, Tybourne Capital Management, and Wellington Management contributed to the company's recent USD 120 million Series D fundraising round.
- According to the Bank of Japan Japan, over 5.88 billion electronic money transactions were reported in 2022. Year on year, the number of transactions climbed by 2.5%. The value of electronic money transactions reached a decade high in 2022. Such huge electronic money transactions would drive the studied market. Integrating a payment gateway has also become one of the most crucial aspects of any business in various industries. In addition, the increasing online transaction is expected to drive market growth over the forecast period. The focus on creating a robust communication infrastructure has complemented the critical development in strengthening the ecosystem necessary to support massive digital payments volume.
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The Retail Sector is Expected to Witness a High Market Growth
- The retail payments landscape in Japan has undergone a significant transformation in recent years due to changes in end-user payment habits, payment innovation, technical advancements, and the entrance of new providers. Japanese consumers are now using a variety of new, convenient payment options made possible in substantial part by mobile technology. One of the most significant retail payment trends is BNPL (buy now, pay later). Additionally, the new payments platform has enabled real-time payments utilizing PayIDs since eCommerce has grown to new levels throughout the epidemic. Many retailers in Japan are currently accepting BNPL as an essential form of payment, especially for internet sales in specific retail markets where BNPL adoption is high.
- Further, according to METI (Japan), in 2022, the business-to-business (B2B) market accounted for around 35.6% of total commercial transactions in Japan, up from approximately 26.1% in 2013. The B2B e-commerce business has proliferated in recent years and is worth over JPY 373 trillion (~USD 2.64 trillion). Such a rise in b2b e-commerce would create an opportunity for the studied market to grow and encourage market players to develop new solutions to capture the market share.
- For instance, in July 2022, Casio and Worldline collaborated to reduce credit card fees for Japanese shops. Casio and Worldline's new solution lowers the cost of processing Visa and Mastercard payments from 3.24% to 2.95%. Hospitals are charged a 2.5% fee. Casio controls a significant market share for cash registers that are not linked to point-of-sale systems. These machines are designed for small businesses. Casio's goal for the new payment platform is to attract 20,000 merchants by March 2025.
- Further, according to the Statistics Bureau of Japan, in 2022, the average monthly online expenditure of Japanese households ordered products and services via the Internet was more than JPY 17 thousand (~USD 120.2). Household spending on Internet shopping has consistently increased in recent years, with e-commerce penetration among Japanese families increasing. Such huge online spending on products would drive the digital payments market in the region.
- Paying by link is a relatively new payment method highly effective for streamlining the checkout process. It is gaining momentum in Japan. It can penetrate all retail segments, whether online or in-store. It would allow a business to automatically produce and distribute payment links to clients via text, email, chat, and QR codes. Customers would be directed to a PCI-compliant hosted checkout page using these links, which use one-time-use URLs. They then would provide their payment details.
Japan Payments Industry Overview
The level of rivalry in Japan's payments market is high due to the presence of many market players. Apart from PayPal, some banks, like Japan Post Bank, already enjoy a considerable presence in the payments market, further intensifying the overall rivalry between players. Some key players in the Japanese payments market are Mitsubishi UFJ Financial Group, Resona Holdings, and Sumitomo Mitsui Financial Group.
- January 2023 - Smartpay Bank Direct, the country's digital payments service that offers installments directly from users' bank accounts, was established by Japanese fintech Smartpay. Smartpay claimed that through the new service, it is Japan's first digital consumer finance company to use Japan's open banking system, with a network of 67 partner banks across Japan. The digital payments service accepts credit cards and direct debit at the time of sale via an automated, single-click user experience with no additional costs or interest for customers.
- August 2022 - ACI Worldwide agreed to collaborate with Japan Card Network, CARDNET, to optimize its digital payments system throughout Japan. CARDNET, Japan's core domestic payment chain, conducts approximately 30 billion local transactions annually. It also provides card payment switching solutions to 106 Japanese businesses and over 889,000 point-of-sale gateways to Japanese merchants.
Japan Payments Market Leaders
Mitsubishi UFJ Financial Group
Japan Post Bank
Resona Holdings
Sumitomo Mitsui Financial Group
Mizuho Group
*Disclaimer: Major Players sorted in no particular order
Japan Payments Market News
- June 2022: To enable card payments and cashless shopping in Japan, Worldline, a provider of payment services, teamed up with Casio, a business with its headquarters in Japan. This service in Japan would support efforts to change that country's more traditional retail environment. This would also involve Vesca, a regional payment solution supplier, focusing on a large Japanese market primarily of small business retailers.
- March 2022: Mizuho Financial Group and Google Cloud formed a strategic partnership to help the Japanese bank speed up its digital transformation and retail innovation efforts. Four areas would be the focus of the collaboration. First, Mizuho was to use Google's cloud-based, AI-powered analytics tool to assess client preferences. Second, the bank was to launch an advanced financial platform based on BaaS technology. Next, the bank would use Google Cloud's security engineering knowledge and development processes to upgrade its security systems. Finally, the collaboration hoped to transform Mizuho's corporate culture by adopting a Google Cloud product development and problem-solving approach.
- February 2022: Rakuten launched its NFT platform to sell and trade virtual assets to cash in on the crypto sector. The platform also featured an ability for IP holders to build websites supporting the issuance and sale of NFTs.
Japan Payments Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definitions
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Stakeholder Analysis
4.3 Industry Attractiveness-Porter's Five Forces Analysis
4.3.1 Bargaining Power of Suppliers
4.3.2 Bargaining Power of Buyers
4.3.3 Threat of New Entrants
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
4.4 Evolution of the payments landscape in the country
4.5 Key market trends pertaining to the growth of cashless transactions in the country
4.6 Impact of COVID-19 on the payments market in the country
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Adoption of online mode of Payments
5.1.2 Initiatives by the Government
5.2 Market Challenges
5.2.1 Data Privacy of the Consumers
5.3 Market Opportunities
5.3.1 Move towards Cashless Society
5.3.2 New Entrants to Drive Innovation Leading to Higher Adoption
5.4 Key Regulations and Standards in the Digital Payments Industry
5.5 Analysis of major case studies and use-cases
5.6 Analysis of key demographic trends and patterns related to payments industry in Japan (Coverage to include Population, Internet Penetration, Banking Penetration/Unbanking Population, Age & Income etc.)
5.7 Analysis of the increasing emphasis on customer satisfaction and convergence of global trends in Japan
5.8 Analysis of cash displacement and rise of contactless payment modes in Japan
6. MARKET SEGMENTATION
6.1 By Mode of Payment
6.1.1 Point of Sale
6.1.1.1 Card Payments (includes Debit Cards, Credit Cards, Bank Financing Prepaid Cards)
6.1.1.2 Digital Wallet (includes Mobile Wallets)
6.1.1.3 Cash
6.1.1.4 Other Modes of Payment
6.1.2 Online Sale
6.1.2.1 Card Payments (includes Debit Cards, Credit Cards, Bank Financing Prepaid Cards)
6.1.2.2 Digital Wallet (includes Mobile Wallets)
6.1.2.3 Others (includes Cash on Delivery, Bank Transfer, and Buy Now, Pay Later)
6.2 By End-user Industry
6.2.1 Retail
6.2.2 Entertainment
6.2.3 Healthcare
6.2.4 Hospitality
6.2.5 Other End-user Industries
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 Mer Pay Co. Ltd (MerPay)
7.1.2 Mitsubishi UFJ Financial Group
7.1.3 Resona Holdings
7.1.4 KDDI Corporation (AuPay)
7.1.5 Japan Post Bank Co. Ltd.
7.1.6 Rakuten Group Inc.
7.1.7 NTT Docomo (D-Barai)
7.1.8 PayPay Corporation
7.1.9 Resona Holdings
7.1.10 LINE Pay Corporation
7.1.11 Sumitomo Mitsui Financial Group
7.1.12 Mizuho Group
- *List Not Exhaustive
8. INVESTMENT ANALYSIS
9. FUTURE OUTLOOK OF THE MARKET
Japan Payments Industry Segmentation
Payment consists of settlement and payment systems and methods of payment provided in exchange for availing some services or purchasing some goods. The Japanese payments market is segmented by mode of payment (point of sale (card payments, digital wallet, cash), online sale (card payments, digital wallet)) and by end-user industries (retail, entertainment, healthcare, hospitality). The market sizes and forecasts are provided in terms of value (USD) for all the above segments.
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Japan Payments Market Research FAQs
What is the study period of this market?
The Japan Payments Market is studied from 2018 - 2028.
What is the growth rate of Japan Payments Market?
The Japan Payments Market is growing at a CAGR of 5.87% over the next 5 years.
Who are the key players in Japan Payments Market?
Mitsubishi UFJ Financial Group, Japan Post Bank, Resona Holdings, Sumitomo Mitsui Financial Group, Mizuho Group are the major companies operating in Japan Payments Market.
Japan Payments Industry Report
Statistics for the 2023 Japan Payments market share, size and revenue growth rate, created by Mordor Intelligenceā¢ Industry Reports. Japan Payments analysis includes a market forecast outlook to for 2023 to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.
Japan Payments Market Report Snapshots
