Cash and QR-codes: explaining the Japanese payment market

Alyona Shevtsova
4 min readMar 29, 2019


Like any blogger this week, I’m kind of supposed to write about the election time — but I won’t do that. Instead, we, as any civilized people, will continue to talk about a much more stable topic — financial services.

1–2 months ago, I promised to write about the payment habits and features of the transactional business in Japan. And now It’s time to do it.

Market situation

I’ll start with breaking the pattern — cash payments dominates in Japan. Yes, users prefer to pay not with a card or smartphone telephone, but with paper money in one of the most technologically advanced countries in the world with a leading economy and maglev trains. In 2016, the percentage of non-cash transactions in Japan was — drum roll — 20%. Less, than in Ukraine.

As I have said repeatedly, developing economies that are being reorganized into market-oriented development and lacking persistent payment traditions are a fertile field for the fintech revolution. Japan is not like that, but the fintech transformations reach it. First of all, we’re talking about mobile payments, which are becoming a dynamic market. The government program has the task to increase the share of non-cash payments up to 40% of transactions by 2025. Let me remind you: according to the results of 2018, it is 45.1% in Ukraine.

Now the transition to cashless is an important priority of the Japanese economy. This solves several problems, including labor shortages and improving the infrastructure for foreign tourism. All this will help save hundreds of billions of yen until 2025.

Banks and payment solutions: QR code is everywhere

Until 2018, banks in Japan were not active participants in the fintech processes — which isn’t true for the non-banking sector, which began actively introduce mobile payment cases. However, after the authorities made a change to the law to facilitate third-party access to accounts and depositors’ data, fintech companies began to actively launch their decisions, and banks had to react.

The decision was entirely in the spirit of zaibatsu (traditional Japanese monopolies). Three largest Japanese banks — Bank of Fukuoka, Yokohama Bank and Resona Bank — launched a payment system via QR codes and an application called Yoka Pay. Directly connected with bank accounts, with a wide distribution network.

In January 2018, another Japanese major bank, Mizuho, ​​launched Mizuho Wallet, a digital wallet based on a Sony contactless chip. Wallet is available only for Android-smartphones.

At the same time, Origami payment company integrated with Ogaki Kyoritsu Bank — this allowed the bank’s customers to use Origami’s QR-code application using the same mechanics as Yoka Pay.

Market leaders

But one of the leaders is Rakuten Pay — mobile-only payment system, which in 2016 was launched by the leader of the Japanese e-commerce segment, Rakuten. This is such an analogue of Ukrainian «Rozetka”, but much more powerful. Naturally, they immediately went to the top user preferences.

Rakuten Pay also works with the mechanics of QR codes — user scans the product and pays for it. The application has a huge advantage due to being in the Rakuten ecosystem: customers enter only their Rakuten ID for identification, then choose an already attached card or accumulated Rakuten Super Points as money.

The number of trade points where you can pay with your wallet, is almost 1.2 million. From supermarkets to small eateries, night shops, pharmacies, cafes, restaurants, beauty salons and even airports.

Significant Rakuten competitor is Line Pay — an application based on the Line messenger, which I described in one of my previous articles. I actively used Line for some time, our company even had orders for the development of monitoring bots for it. This is the “national messenger” of Japan, which is popular mainly in this country. But in general in 2018, Line recorded 165 million active users from Japan, Taiwan, Thailand and Indonesia, which makes it the largest communication platform in Asia.

Line Pay was launched in 2014. It offers money transfers between users and mobile payments. As I have already said, they have a united balance between bank card and a wallet balance in the manner of Visa Qiwi Wallet, which makes it easier to withdraw money from ATMs and make payments where NFC and QR payments are not available.

And, of course, Apple Pay and Google Pay work in Japan, although their share is small, and Japanese banks are in no hurry to share their profits.

Other market solutions

But the Japanese payment market is actively saturated, and therefore competition for users is growing rapidly.

Firstly, the Indian Paytm service came to them, in collaboration with SoftBank and Yahoo Japan Corporation. This is also a QR payment service, which is supported by the Chinese fintech giant Ant Financial from Alibaba. They want to promote their AliPay system in Japan and thus seek access to customers.

Secondly, MoneyTap, a blockchain-based payment application (Ripple), which was launched in Japan in October 2018. Instant calculations, security, fashionable (but not the same as before) blockchain, so on. The project was created by the Japanese banking consortium — these are 61 banks and 80% of all industry assets.

Also, there is a Chinese “second passport” in Japan — the WeChat messenger, which integrated QR payments in China to absolutely all areas of life. They won’t become a leaders, so another Chinese company, Tencent, just went to start a partnership with Line Pay. It’s easier.


The Japanese payment market is similar to Ukrainian in many ways — an active transition to non-cash payments is combined with no less active saturation with payment services. The only difference is: in our case, the leaders are technologically apt banks and global mobile wallets from Apple and Google, but in Japan local products runs the show.



Alyona Shevtsova

CEO of the international payment system LEO, the shareholder of IBOX Bank