Market Trends of Japan Payments Industry
Online Sales Mode of Payment Segment is Expected to Significant Market Share
- 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.
- 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, Credit cards were the most used cashless means of payment in Japan, according to a survey conducted from August to September 2023. Around 68.4 percent of the respondents stated that they used credit cards in their daily lives, while 8.1 percent only used cash. Moreover, a quick and easy payment process was the leading reason for consumers in Japan to use cashless payment methods. Over 67 percent of respondents said they used digital payment methods to make payments quickly and easily. Further, according to the Japan Consumer Credit Association, In 2023, the number of credit cards issued in Japan reached 308.6 million. The number increased by 2.5 percent from over 301 million cards in the previous year.
- The rise in spending on online shopping would create an opportunity for the market players to develop new real-time payment solutions to capture the market share. In January 2023, Japanese fintech Smartpay launched Smartpay Bank Direct, the country's first digital payments service that offers installments directly from users' bank accounts. Through the new service, Smartpay claims it is Japan's first digital consumer finance company to utilize Japan's open banking system, with a network of 67 partner banks across Japan. The digital payments service supports credit cards and direct debit through an automated, single-click user experience at the point of purchase, with no additional fees or interest for consumers.
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The Retail End-user Industry Segment is Expected to Hold Significant Market Share
- 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 accept BNPL as an essential form of payment, especially for internet sales in specific retail markets where BNPL adoption is high.
- Further, according to Appliv Topics, the growing Japanese e-commerce industry is spearheaded by the three large-scale online retailers Rakuten, Yahoo Japan, and Amazon, which generate sales exceeding YEN one trillion (USD 0.068 billion). The three market leaders expanded their monthly active user bases by offering a range of products and services outside of business-to-consumer (B2C) commerce, reaching more than 40 percent of online users with their brands. This includes Rakuten's internet banking services, Amazon's video distribution services, and Yahoo's auction platform.
- Moreover, According to a survey conducted by Appliv Topics and JustSystems in Japan in 2023, the most used e-commerce site among consumers was Amazon, with approximately 50 percent naming the Japanese platform as their primary online shopping channel. The online marketplace Rakuten Ichiba followed in second place, with around one in three online shoppers ordering over Rakuten's platform.
- 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.
- According to Infcurion conducted the 2023 Consumer Payment Trend Survey covering 20,000 people aged 16-69 across the country. QR Code Payment App usage increased across all business sectors. 'Supermarkets and Grocers' (from 13% to 18%), Taxis (from 8% to 16%), and 'Japanese Pubs and Bars' (from 9% to 14%) experienced substantial increases.
