Cashless Payment in Japan: What’s Available & How to Use It

One of the more pressing concerns when visiting or living in Japan is: how do you pay for things? Not too long ago, the most ready answer was cold, hard cash. But a sharp move towards contactless payments has fostered a dizzying array of options. Here’s a rundown of what’s available for cashless payment in Japan – and how ubiquitous they are – for both tourists and residents.

The rapid advancement of cashless payment in Japan

Back when we first started UJ, I wrote about cashless payment in Japan. The status back then in 2018 was…well, less than good. Japan was clearly behind most of the rest of the world – particularly South Korea and China – in contactless payments. Credit card usage was low and cash was king.

That changed rapidly in 2018 with the introduction of the mobile payment app PayPay. Combined with a certain public health crisis that necessitated reducing human contact, cashless in Japan accelerated rapidly.

Maybe too rapidly. As cashless payment in Japan increased, so did the number of ways to pay cashless. The country saw an explosion of solutions, to the point that some stores find themselves supporting over two dozen ways to pay.

Despite this proliferation, though, only around 36% of all payments in Japan are cashless as of 2022. And while many stores accept payment methods popular in other Asian countries, many of the native payment methods aren’t accessible to visitors. Contrast this to China, where cashless use is high and many cashless payment methods now support attaching a non-Chinese bank account.

The three types of cashless payment in Japan

I’m going to discuss the various types of cashless payment in Japan a little out of order. I’ll introduce the ones that tourists can use first and then cover which ones are available to residents. In both cases, I’ll list each option by how many stores accept that form of payment, from greatest to least.

In general, there are three forms of cashless payment to consider. The first is credit cards. I’ll have more to say about these – and how many stores support them – below.

The other two forms of cashless are electronic money (電子マネー) and mobile payment or smartphone payment (モバイル決済；スマホ決済). Both of these use your smartphone but differ slightly. Electronic money requires maintaining a prepaid balance on your phone. Mobile payment allows prepaid charging but also provides the option of paying later.

The two methods also differ in how the transaction is processed. Mobile payment generally requires a cellular network connection to process the transaction. If the network’s down, you can’t make a payment. By contrast, electronic money payment will work even in areas with poor reception or during a network outage.

Cashless payment in Japan: Options for everyone (even tourists)

With that introduction done, let’s look at the best cashless payment options for everyone, including short-term visitors. After that, I’ll dive into the ones accessible to you if you’re a resident.

Credit card

Statistically the most used form of cashless payment in Japan. According to Japan’s Ministry for Economy, Trade, and Industry (METI), credit accounted for 93% of all cashless payments in 2022. That’s a big jump from 2016 when only 53.9% of all cashless transactions were by credit card.

If a store accepts any form of electronic payment, credit cards are likely to be on that list. That said, you’ll still run across small stores that won’t accept cards due to the high transaction fees. For these cases, it’s good to have cash on hand or a balance on a transportation card (discussed below).

Another drawback of credit cards: You generally won’t be able to tap to pay with your foreign credit card using Apple Wallet or Google Wallet. That’s because most contactless payment in Japan works through Sony’s FeliCa IC chip, a local invention with limited support outside of Japan and a few other Asian countries.

An increasing number of stores support contactless credit card payment via the physical card’s IC chip. However, this is hit-and-miss.

Note that you can pay with Apple Pay or Google Pay using a supported local payment method. I’ll get into that below.

Transportation IC card

They’re more than just a method of boarding the subway or bus. Japan’s transportation IC cards – PASMO, Suica, ICOCA, TOICA, etc. – are also accepted as a method of payment at over 2.26 million locations throughout Japan. This includes every major grocery and convenience store chain and many restaurants.

What’s more, this is one of the easiest options to use for people who want to tap and go. You can add a virtual IC card directly to our Apple Pay or Google Wallet and charge it via a credit card in your wallet. To pay, you just tap your card, like any other Apple Pay or Google Wallet payment.

However, there are some clear downsides to using your IC card as your primary payment method, particularly if you’re a resident and not just a tourist.

First, IC cards like Suica limit the total balance you can carry to 20,000 yen ($138). If you pay for anything meaningful, that means you’re constantly reloading your card. It’s not the end of the world but it is annoying.

Why 20K yen? Because transportation IC cards are generally issued without user registration. That means, if you lose your card (or your phone), you’ll lose whatever balance you have on it. To limit the negative impact on customers, issuing companies limit the balance you can carry.

Second, you’re missing out on points rebates. All mobile payment apps in Japan come with a built-in points or rebate program that gives you cash back with each purchase. It’s not a lot but it’s something – and it adds up over time. If you’re a resident, there’s little reason not to use another form of contactless payment and rack up these rebates.

Third, not all credit cards play well with Japan’s IC cards. In particular, most Visas don’t work. (Mastercard and American Express seem to work fine.)

A supported Asian mobile payment service

Additionally, if you’re visiting Japan from somewhere in Asia, you’re in luck. Since most of Japan’s tourists come from Asia, more stores are supporting payment methods such as China’s Alipay, Korea’s KakaoPay, and TrueMoney from Thailand. If your method isn’t directly supported, it may be supported via PayPay (see more below).

Electronic money payment options for residents

If you’re a resident of Japan with a local mobile phone number, you get access to the limitless options available to any citizen or resident. Let’s look at these in order of how many stores accept them.

First, let’s look at the electronic money landscape. These services aren’t really services that you would use directly. Instead, they’re networks that enable numerous other forms of electronic payment.

QUICPay

In terms of e-money, JCB Bank’s QUICPay is the country’s largest service. You can use QUICPay at 2.28 million locations throughout Japan.

The thing is, though, QUICPay isn’t a method of payment, exactly. Instead, it’s a network that allows contactless payments through Sony’s FeliCa IC chip. That’s the chip built into transportation cards and most local credit cards. Using QUICPay, for example, you can set up a JCB credit card as a form of contactless payment in your digital wallet.

Because it’s so powerful, JCB partners with many of the mobile payment providers listed below to give them access to its network. That means that, via QUICPay, you can use other mobile payment options like PayPay, LINE Pay, and AU Pay as a contactless payment anywhere that QUICPay is accepted. Since that’s over 2 million stores, it means you can effectively use any local payment method via Apple Pay or Google Pay at any store that accepts it.

iD

iD is phone company NTT Docomo’s version of FeliCa chip integration. Like QUICPay, it’s more of a network for enabling FeliCa integration. Over 2.2 million stores in Japan support iD. Suica works via the iD network.

Cashless payment in Japan: Options for residents

Now let’s take a look at the cashless payments in Japan options available. These are app-based services that you can generally use in two ways:

• As electronic money with a prepaid balance
• As a credit card that you pay off later

Many of these services integrate with QUICPay or iD to enable Apple Pay or Google Pay support. If a store directly supports the service, you can also pay using a barcode or QR code displayed by the app.

PayPay

A joint venture between cell phone company Softbank and Yahoo! Japan, PayPay is the country’s king of mobile payments. Over 10 million stores in Japan accept it. That’s five times the number of merchants that accept transportation IC cards.

What made PayPay so popular? Since it works via QR code or barcode scanning, it doesn’t require any special equipment. That means most stores can support PayPay with the equipment they already have on hand. PayPay also benefited from a clever rebate campaign at launch that drove a large number of sign-ups.

Today, PayPay has over 51 million users and processes over 2 billion payments a year. It’s risen to the level of indispensable infrastructure in Japan’s economy. Additionally, PayPay supports integration with numerous Asian cashless systems popular in Asia, including AliPay+ (China), AliPayHK (Hong Kong), KakaoTalk (Korea), TrueMoney (Thailand), Touch ‘N Go (Malaysia), and GCash and HelloMoney (Philippines). That means over one billion people across Asia can use PayPay for contactless payments.

If you have a Japanese phone number, signing up for PayPay is painless. If you don’t want to apply for a line of credit, you can charge your card from a credit card, your bank account, or with cash from most convenience store ATMs.

Paying with PayPal also racks up PayPay points. One point equals 1 yen and you can use them to pay for purchases such as you’d use your cash balance or line of credit. The number of points you get ranges from 0.5% to 2% of the total transaction.

PayPay also makes it easy to split a bill. Using the Group Bill function, you can easily ask your friends to pay you back for dinner or karaoke.

Sadly, you can’t use PayPay if you don’t have a local number, which requires proof of residency. So PayPay and the other payment apps are off-limits for tourists. The exception is if PayPay integrates with your hometown service as I mentioned above.

Additionally, some of PayPay’s services – receiving money and sending it to your bank, paying taxes, and paying bills such as your rent – require verifying your identity. For that, you need either a Japanese driver’s license or a My Number card. Given that it can take months for new residents to get a My Number card, getting your license might be the easier option. (Residents of several countries and a handful of US states can get a license here without taking a driver’s test.)

au Pay

I may be a little biased towards au Pay, as I use it as my primary cashless payment method these days. However, au Pay also happens to be the second-most supported service after PayPay with 6.26 million participant stores. Additionally, au Pay works at stores that accept Rakuten Pay (below).

au Pay uses Recruit’s point system, Ponta, for cash back. You get 1 Ponta point for every 200 yen you spend using au Pay. Certain participating stores, like Tomod’s drug stores or Marui, will give you an additional 1 or 2 points for every 200 yen you spend.

You can also integrate your Suica card with au Pay. If you use your au Pay card to refill your Suica balance, you get an extra 1 Ponta point per 200 yen.

Like PayPay, au Pay also integrates with the QUICPay system for Apple and Google Pay payments. That means you can use it everywhere that accepts QUICPay.

Rakuten Pay

The number three most supported option is Rakuten Pay from online retailing giant/cell phone provider Rakuten. At 6 million stores, Rakuten Pay also has excellent coverage.

Like au Pay, Rakuten integrates with Suica for charging and accumulating points. Like PayPay, you can use your Rakuten Pay account to pay things like taxes and utility bills.

Rakuten also lets you rack up points for purchases. It offers up to 1.5% back on select purchases and also gives extra points for refilling your card from a Rakuten credit card.

The other pays (including the local brands)

The other top payment services in the mobile cashless category include d-Barai from Docomo (5.08 million stores), LINE Pay (3.09 million), Meru Pay from Mercari (2.69 million), and FamiPay (over 1 million).

Additionally, there are a number of smaller services with various levels of support. Perhaps one of the cutest is Hachi Pay. Named for Shibuya’s most famous dog, Hachiko, its use is limited to a little over 3,000 stores in Shibuya City. However, if you register your My Number card to show you’re a Shibuya resident, you get bonuses and cashback deals larger than any other mobile payment provider offers.

Conclusion: Cashless payment in Japan

I mainly use au Pay, with PayPay as a backup because of its universal reach. However, which service or services you use as a resident is largely a matter of personal choice and convenience. Having PayPay alone means the occasions on which you’ll have to whip out cash are few and far between.

Sources

2022年のキャッシュレス決済比率を算出しました. Ministry of Economy, Trade & Industry (English translation)

What Are the Most Cashless Countries? Expert Market

電子マネー・スマホ決済の加盟店舗数ランキング！使える店が多いのは？Jiei Hyakka

Suicaの｢チャージ上限額｣はなぜ2万円なのか. Toyo Keizai

PayPay Collaborates with Four Cashless Payment Services in Three Countries, Making the Service Available to More than 1 Billion People via Alipay+. PayPay