Japan wants to go cashless, but elderly aren't so keen
05/11/2019 03:12
* Sales tax hike comes with incentive to promote cashless
society
* Abe aims to boost cashless settlements to 40% by 2025
* Hopes to spur productivity, reduce costs of cash
transactions
* Elderly pensioners, mom-and-pop shops wary of going
cashless
By Tetsushi Kajimoto and Izumi Nakagawa
TOKYO, Nov 5 (Reuters) - Cash is king in Japan, and more so
for the country's fast-ageing population who are still deeply
reluctant to give it up.
Prime Minister Shinzo Abe's push to make more Japanese - the
world's most dedicated cash-hoarders – switch to using cashless
payments is producing some success, but not nearly as much as
desired. A growing rank of the nation's elderly pensioners are
resisting change, which could see Japan fall further behind its
peers in adopting mobile app payments and electronic money.
Tokyo wants to double the ratio of cashless settlements to
40% by 2025 and to 80% eventually to spur labour productivity.
Japan pales in comparison with other countries – 96% of
transactions in South Korea and 66% in China are cashless, data
by an industry lobby Payments Japan Association shows.
The transition to digital transactions will help Japan cope
with a shrinking population and a tight labour market. Cashless
payments will also allow stores to automate sales estimates and
banks to cut back on costly automated teller machine networks.
Shoppers were recently encouraged to ditch cash for e-money
after the government sweetened the deal by introducing a
rebate programme to ease the pain of a sales tax hike on Oct. 1.
Funded by $2.57 billion earmarked for subsidies, shoppers
get a refund in the form of points if they use cashless payments
at small shops and convenience stores.
JUMPING ON THE BANDWAGON
Big tech firms have responded with aggressive campaigns to
promote their e-money payment systems including SoftBank Group
Corp 9984.T , Yahoo Japan Corp 4689.T , e-commerce company
Mercari 4385.T and messaging app operator LINE Corp 3938.T .
Some have met with initial success. QR code payment app
PayPay -- owned jointly by SoftBank and Yahoo Japan -- saw
memberships jump 5 million since August to 15 million, thanks in
part to the government's campaign.
East Japan Railway Co 9020.T also saw membership for the
railway's electronic settlement system hit 11 million, up more
than one million since September.
"Customers benefit from the convenience of electronic
payment, while we receive fees and reduce costs by going
ticketless," said Tomoyuki Soyama, deputy general manager tasked
with IT business development at East Japan Railway. "It's a
win-win situation."
The direct cost involving cash transactions, including
labour at checkout counters, amounts to about $73.60 billion a
year, Mizuho Financial Group estimates, suggesting that going
cashless will dramatically reduce such costs.
Satoshi Kumagai, senior vice president in charge of
financial services and digital business at convenience store
chain operator Lawson Inc 2651.T , said the ratio of cashless
payments of sales have increased to 25% from October versus 20%
previously.
"It would be ideal to see all the transactions go cashless
given labour shortages and the need to boost convenience for our
customers," Kumagai told Reuters.
"On the other hand, we'll need to find a way to help those
elderly who may find it hard to go shopping without cash."
HOARDING CASH
Japanese households hold more than half of their assets in
cash and deposits. That proportion rises with the elderly, some
of whom stick to cash as a way to prevent wasteful spending.
"Everyone likes cash, don't they?," a 65-year-old woman in
Tokyo said, while looking at a cashless payment app banner.
"I'm not interested in going cashless. I feel uncomfortable
with it in case I lose my mobile phone. It's also unclear how
much I've spent compared with taking money out of my wallet."
Many small businesses are also struggling to shift to
cashless payments, or see little benefits in doing so.
Mom-and-pop shops rely on daily cash incomes to run their
operations, so they cannot depend on receivables too much, said
Yukio Kawano, chairman of Japan supermarkets industry lobby.
Less than half of some 2 million small firms deemed eligible
for subsidies on cashless payments have been registered with the
government campaign, due to the cost of introducing machines and
high transaction fees.
A low crime rate, ultra-low interest rates and a nationwide
web of ATMs have long made cash appealing in Japan, giving
people few incentives to shift to cashless payments.
The trend, however, could change gradually as commercial
banks consolidate their ATMs, reducing consumers' access to
cash.
Still, convincing the elderly, who make up nearly one-third
of the population, to change their practices won't be easy.
In a bustling shopping district of Tokyo's downtown Yanaka
Ginza, many small stores have yet to embrace cashless
transactions.
Mitsuo Kotake, 70-year-old owner of a small flower shop,
said he started offering PayPay three months ago.
But entering pin codes and setting up apps are simply too
confusing for his customers, most of whom are seniors coming to
buy flowers for the graves of their beloved ones, he added.
"It's easy to use for young people, but elderly people are
not familiar with it," he said. "I don't use cashless myself.
Cash is quickest."
($1 = 108.7000 yen)
(Additional reporting by Daniel Leussink, Leika Kihara and
Kaori Kaneko;
Editing by Jacqueline Wong)
((tetsushi.kajimoto@thomsonreuters.com; +81-3-4563-2731))