Japan Digital Payment Market Research Report, 2029

Japan's transition to digital payments has been a unique blend of history and innovation. Despite the introduction of credit cards in the 1960s, cash remained popular for decades due to cultural preferences for physical currency and a strong sense of security that comes with it. However, the landscape began to transform in the late 2000s, with the emergence of e-money solutions such as Edy and Suica, which marked the first steps toward a cashless future. This trend escalated in the 2010s with the introduction of mobile wallets, which provide greater convenience and flexibility in transactions. The amended Payment Services Act will go into effect in 2021, ushering in a new era of open banking and unique business models in the industry. This regulation move paved the way for increased competition and innovation, resulting in a more dynamic and consumer-focused economy. In future years, key milestones were achieved, such as QR code payments overtaking convenience store purchases in 2022, highlighting the growing desire for contactless transactions. Furthermore, the Bank of Japan launched a trial program for a central bank digital currency (CBDC) in 2023, marking a watershed point in the investigation of digital currency's possible impact on the payment landscape. These changes highlight the industry's ongoing evolution and adaptation to shifting consumer tastes and technical advances. According to the research report "Japan Digital Payment Market Research Report, 2029," published by Actual Market Research, the Japan Digital Payment market is projected to add more than USD 7 Billion from 2024 to 2029. Japan has a diversified range of digital payment methods, ranging from QR code payments to complex digital point systems, responding to a wide range of consumer wants and preferences. Several cultural and societal forces are driving Japan's shift to a cashless society. The widespread availability of smartphones has accelerated the development of mobile commerce, increasing the popularity of mobile wallets and QR code payments. Furthermore, the COVID-19 pandemic has highlighted the significance of cleanliness in transactions, incentivizing consumers to use digital payment solutions. Government activities, including advertising and tax breaks, play an important role in promoting cashless transactions, matching with the government's goal of reaching a 40% cashless transaction rate by 2025. Despite major advancements in digital payments, Japan continues to encounter hurdles in completely adopting cashless transactions. Deep-rooted cultural preferences for cash, particularly among older generations and specific groups, impede wider adoption. Furthermore, concerns about security, while generally strong, remain a possible impediment, particularly in light of periodic data breaches that can weaken customer confidence. The fragmented ecosystem, which includes various companies and standards, confuses the environment and causes confusion and trouble for users.

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The provision of solutions and services in the realm of digital payments encompasses a comprehensive array of technologies and processes designed to facilitate electronic transactions, money transfers, and financial activities across digital channels such as the internet or mobile networks. These solutions are instrumental in creating an ecosystem that ensures secure, convenient, and efficient digital payments. Transactions can be categorised based on their type, with domestic payments referring to transactions conducted within a country's borders, while cross-border payments extend beyond national boundaries. Payment modes offer diverse options for users, including cards (plastic or virtual), ACH transfers, digital wallets (e-wallets or mobile wallets), and other methods like contactless payments, biometric payments, and bank transfers. These modes cater to various preferences and needs of users, ensuring flexibility and accessibility in conducting financial transactions. Moreover, digital payment solutions serve a wide range of industries and end-user verticals, including Banking, Financial Services, and Insurance (BFSI), healthcare, IT & telecom, media & entertainment, retail & ecommerce, transportation, and others. Each industry sector benefits from tailored digital payment services that streamline transactions and enhance operational efficiency. In essence, the digital payment landscape thrives on the diversity and adaptability of its solutions and services, catering to the evolving needs of users and industries alike in an increasingly digital world. The market offers considerable prospects, which are driven by numerous major reasons. For starters, the growing e-commerce scene increases the demand for secure and convenient online payment options. As consumers increasingly rely on digital platforms for their shopping needs, there is a growing demand for dependable payment mechanisms that can allow transactions securely. Furthermore, categories such as micropayments and peer-to-peer (P2P) payments have significant growth potential and represent untapped markets in the digital payment ecosystem. These divisions provide potential for creative solutions targeted to unique demands and preferences, which will further drive market growth. Furthermore, prospective events such as the 2025 Osaka Expo and potential future Olympic Games have the potential to accelerate the use of digital payment systems. Such large-scale events not only draw international attention, but also provide forums for displaying cutting-edge innovations, such as developments in digital payments. The attention and momentum generated by these events can help to increase global acceptance and adoption of digital payment systems. Pricing and segmentation in the digital payment sector are complex, with structures shifting according to the payment method, transaction value, and service provider. Merchant fees, in which merchants pay a proportion of the transaction value to the payment service provider, and subscription fees, which charge merchants on a regular basis for access to payment services, are two common pricing structures. These various pricing techniques address the differing demands and preferences of both businesses and consumers, allowing for greater flexibility and customization in payment systems. In terms of big players and new entries, the digital payment ecosystem is populated by both established entities and budding innovators. Established firms have long dominated the business, providing dependable and trustworthy payment options. However, new entrants are fast gaining traction by utilising their existing user base and offering unique features to enhance their market reach. These newcomers bring excitement and competition to the market, resulting in further innovation and evolution of digital payment options. When comparing Japan's adoption of digital payments to other established Asian economies such as South Korea and China, it is clear that Japan has been sluggish to embrace this trend. However, current data show a significant increase in digital payment usage in Japan, implying strong expansion in this industry. This spike suggests that Japan's digital payment adoption gap may be closing. As Japanese customers become more aware of the advantages of digital transactions, such as ease and security, it is expected that Japan will catch up with, and possibly even surpass, its counterparts in the coming years.

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Kripa Shah

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Considered in this report • Historic year: 2018 • Base year: 2023 • Estimated year: 2024 • Forecast year: 2029 Aspects covered in this report • Digital Payment market Outlook with its value and forecast along with its segments • Various drivers and challenges • On-going trends and developments • Top profiled companies • Strategic recommendation By Offering • Solutions • Services

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By Transaction type • Domestic • Cross Border By Payment Type • Cards • ACH Transfer • Digital Wallet • Other Payment Modes By Vertical • BFSI • Healthcare • IT & Telecom • Media & Entertainment • Retail & E-commerce • Transportation • Others The approach of the report: This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources. Intended audience This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Digital Payment industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.