Why More People Are Not Using Cash - The Reality of a Cashless Society

Japan's Cashless Ratio Has Passed 40%

According to statistics from the Ministry of Economy, Trade and Industry, Japan's cashless payment ratio reached about 40% in 2023. Ten years earlier, in 2013, it was about 15%, which means it grew more than 2.5 times in 10 years. The upward trend has continued since then, and as of 2026 this ratio is still rising. In particular, after the COVID-19 pandemic in 2020, growing hygiene awareness of "not wanting to touch cash" accelerated adoption.

However, compared with the rest of the world, it is still at a low level. South Korea is at about 95%, China about 83%, and the UK about 65%. Among developed countries, Japan is said to be a cashless laggard. The reason lies in Japan's cash infrastructure being too good. Counterfeit bills hardly exist, there are more than 200,000 ATMs across the country, and there are few situations in which cash causes trouble.

Three Advantages of Cashless Payment

The first advantage is "speed." When paying in cash, you take out your wallet, count the bills, receive your change, and put the wallet away. This series of actions takes an average of 15-20 seconds. With smartphone payment, it is completed in 3-5 seconds. When there is a line behind you at a convenience store checkout, this difference is big.

The second is "records." When you pay in cash, the moment you throw away the receipt, you lose track of "what you spent how much on." With smartphone payment, every transaction is recorded automatically, so at the end of the month you can grasp accurately "how much you spent this month." The third is "point rewards." Many cashless payment services give 0.5-1.5% back in points, so if your annual spending is 1 million yen, you accumulate 5,000-15,000 yen worth of points. Cash does not have this perk.

Three Disadvantages of Cashless Payment

The first disadvantage is "overspending." With cash, the contents of your wallet physically decrease, so you intuitively know "how much more you can spend." With smartphone payment, only a number goes down, so the sense of spending money is weak, and some people end up overspending. As a countermeasure, we recommend deciding on a monthly budget and setting a spending limit in the app.

The second is "vulnerability during disasters." When a power outage or a communication failure occurs, smartphone payment can no longer be used. In the 2018 Hokkaido Eastern Iburi Earthquake, a large-scale blackout made cashless payment completely unusable, and a situation in which only cash was accepted continued for several days. The third is "personal data." Since everything about when, where, and what you bought is recorded, people who care about privacy feel some resistance to it.

Can Even Junior High School Students Use Cashless Payment?

To give the conclusion first, yes, they can. However, the methods are limited. A credit card cannot be issued unless you are 18 or older, but prepaid electronic money (Suica, nanaco, WAON, and so on) has no age limit. Because it works by charging it with cash at a convenience store and then using it, there is also little worry about overspending.

Smartphone payment apps such as PayPay and LINE Pay basically require linking to a bank account or credit card, so it is difficult for minors to use them on their own. However, there are also services that can be used with a guardian's consent. We recommend starting with prepaid electronic money and moving to smartphone payment once you are used to managing money.

Benefits and Burdens for Stores

Behind the spread of cashless payment are also circumstances on the store side. If a store does not handle cash, there is less work in preparing change at the register, reconciling the amount at the end of the day, and going to the bank to deposit money. When checkout is finished quickly, lines during busy hours also ease. On the other hand, the fee charged each time a payment is processed is a burden, particularly for small stores. Convenience and cost are two sides of the same coin. Which payment methods a store chooses is the result of weighing these benefits and burdens.

The Role Cash Has Played

Even as cashless payment advances, cash has its own merits. Even during a power outage or a communication problem, you can reliably pay with cash. Because the amount you have spent is visible, many people feel that cash makes money easier to manage. For people who are not used to operating machines, cash is more reassuring. What is important is not leaning toward one or the other but being able to use each according to the situation. If diverse payment methods coexist, everyone can enjoy shopping without being left behind. Even while pursuing convenience, there is meaning in keeping the freedom to choose.

"Taking the Good Parts" of Cash and Cashless Is the Right Answer

Just because cashless payment is convenient, there is no need to give up cash completely. As preparation for disasters, it is important to keep 10,000-20,000 yen in cash in your wallet. Also, there are still many places where only cash can be used, such as small individually run shops and festival stalls.

The ideal is a "hybrid" style in which you handle everyday shopping efficiently with cashless payment and carry a small amount of cash in case of emergencies and cash-only places. What matters is the flexibility to use each according to the situation rather than leaning toward one or the other. Technology is a convenient tool, not something to be pushed around by.