State scheme introduced to encourage cashless payments in Japan
Under the initiative, consumers are collecting reward points when using cashless payments in Japan. Therefore customers earn 2% or 5% of their purchases that are not in cash, including credit card payments, at points of purchase. The government has begun to provide stores with support for installing cashless payment systems.
So the International Monetary Fund (IMF) suggested the end of last month that the country should consider extending the initiative until the end of June, 2020.
According to the IMF, extending the point reward program would help to take advantage of the impact of two percentage points in sales tax”, which sets the retail record from 8% to 10% in October.
Therefore after this success, the Japanese government launched a nine-month reward point program aimed at smaller retailers. As of its launch, the program was available in approximately half a million stores throughout the country. So the program became an instant hit at convenience stores. The top four chains offered instant 2% price discounts instead of reward points. The rewards program can provide a breakthrough in the transformation of Japan.
Doubling cashless payments by 2025
The government of Japan faces challenges that include reluctance among its aging population to use digital money. This is a reality that is out of place with its international reputation as a tech-savvy nation. Unlike other Asian countries such as South Korea, the adoption of mobile payment platforms and digital money services remains relatively low in Japan. Nevertheless, Japan pales in comparison with other countries. 96% of transactions in South Korea and 66% in China are cashless. Last month, a Reuters report described the Japanese as “the most dedicated cash hoarders in the world.” In other words, according to the Reuters- article, “Cash is king in Japan, and more so for the country’s fast-ageing population who are still deeply reluctant to give it up.”
In conclusion, Japanese government wants to double the ratio of cashless settlements to 40% by 2025 and to 80% eventually to spur labour productivity.