several factors, including concerns over data leakage, lower financial literacy, and cultural attitudes towards money. Cash transactions are deeply ingrained in the Japanese way of life, from everyday purchases to significant financial dealings. Within Asia Pacific, Japan had the second-highest share of cash for in-person transactions at 51 per cent in 2022 after Thailand, according to the US-based banking and payment processing company FIS. The company expects Japan to have the highest cash rate in Asia Pacific by 2026 at 37 per cent.  Meanwhile, according to Economy Ministry data, almost 40 per cent of all transactions in Japan were cashless last year, much lower than China and South Korea, which had 83 per cent and 93.6 per cent respectively.  This statistic highlights Japan’s unique position as a technologically advanced society that still clings to cash. Gradual shift However, the country is now ramping up its efforts to expand cashless payments.  GlobalData forecasted the Japan card payments market to grow by 10.8 per cent this year, reaching 121.4 trillion yen (US$866.8 billion), supported by the growing consumer preference for non-cash payments. This growth is being driven by a combination of government initiatives, technological advancements, and a gradual change in consumer attitudes. “Japan’s payment landscape is dominated by cash,” said Ravi Sharma, lead banking and payments analyst at GlobalData. “However, this is undergoing a transformation, with electronic payments gaining traction and cash usage declining, supported by the country’s large banked population and high financial awareness.”  In April 2018, the Ministry of Economy, Trade, and Industry announced a plan to achieve 40 per cent cashless payments by 2025, with a long-term goal of reaching 80 per cent. “With government initiatives to promote electronic transactions and improved payment infrastructure, payment cards have grown in prominence over the years,” said Sharma. “Card issuers and payment service providers are focusing on developing payment infrastructure via the expansion of the payment acceptance network.”  This infrastructure development is crucial for supporting the growing volume of cashless transactions. The market’s card payment value posted a 15.8 per cent and 12.8 per cent growth in 2022 and 2023 respectively, according to GlobalData’s Payment Cards Analytics. It reached 109.6 trillion yen (US$782 billion) last year.  GlobalData said the rise in e-commerce payments has been a significant driver of the growth as payment cards are widely preferred for online purchases. However, the company’s analyst said challenges such as economic instability and geopolitical uncertainty may pose obstacles to this growth.  “Nevertheless, Japan’s payment landscape is evolving, and card payments are set to play a more significant role in the country’s financial ecosystem,” Sharman said. “Overall, the card payments value is expected to register a strong compound annual growth rate (CAGR) of 6.9 per cent between this year and 2028.”  Japan, perhaps, is on a steady path towards a more cashless society. PayPay, one of the most common QR code payment services in Japan, reported surpassing 50 million users in 2022, indicating the increasing adoption of digital payment solutions among Japanese consumers. Meanwhile, as the country has seen a significant surge in foreign tourists due to the weakened yen, the government is now speeding up its adoption of cross-border QR code payments. A record-high 17.78 million foreign tourists came to Japan in the first half of the year, with arrivals in June led by travellers from South Korea, China, Taiwan, and the US. This influx of tourists has added urgency to the need for more accessible and versatile payment options. Earlier this year, the Japanese government negotiated with eight Asian countries to enable the joint use of QR code payment services, allowing international travellers to make purchases abroad using their payment methods. The initiative is expected to start next April. This international collaboration is a significant step towards integrating Japan’s payment systems with global digital payment frameworks, enhancing convenience for both locals and international visitors. While Japan has been slow to adopt cashless payments compared to its Asian neighbours, significant progress is being made. Through a combination of government initiatives, advancements in payment infrastructure, and changing consumer preferences, Japan is gradually embracing a cashless future. The journey is far from over, but the direction is clear, and the prospects are promising.