Is Japan a Cash Society?

 One of the myths you will often hear is that Japan is a “Cash Society” – but is it true?  And if so, what does that even mean?  It’s one of those things you hear all the time, but rarely see any hard numbers presented.  

I take it to mean that Japan is a country where most people use paper money and/or coins to pay for most things most of the time.  A more extreme interpretation might be that you can only use cash to pay for many of your day to day expenses.  If so, I don’t think it’s true at all.  

There are numerous types of payment you will see in every day life:

• Cash (paper money and coins)
• Direct Debits (From bank accounts) – Mainly used for utility bill payments
• Direct Deposit – Mainly for payroll and refunds
• Transfers between bank accounts – Often used to send money to friends, pay rent, etc.
• Contactless IC payment – Including Transportation cards such as Suica, ICOCA and Pasmo.  These can be prepaid (such as the transportation cards mentioned above), as well as cards like WAON, EDY and Nanaco.  Post-paid/realtime standards all exist, including iD and QuickPay.  These can typically be in the form of physical cards or emulated cards on smart phones.  For example, you can get a physical Suica card, or use Mobile Suica on your phone.  These are typically used for small purchases and transportation, and use Sony’s Felica standard almost exclusively.  
• Credit Cards / Debit Cards – These are Visa, Mastercard, Amex, and JCB.  These use magnetic stripe, IC Chips (with contacts), and occasionally contactless (NFC) ICs, as in the example of Visa Touch.  Contactless payments via NFC is not so popular in Japan, as the above mentioned standards like iD and QuickPay are faster and already entrenched.  The advantage of these cards is that they can typically be used at overseas merchants.  
• J-Debit – Allows you to use a cash card from a bank to pay at the POS.  
• QR Code / Bar code / Mobile App payments – These hhave only become popular recently, and include things like Paypay, Yucho Pay, Rakuten Pay, au Pay, etc.  

You may have noticed that Checks and Money Orders are not on this list.  Technically the both exist, but they are not common for consumer use.  

Salary Payment

While the law technically stipulates that companies must pay in cash for employees who request this, most companies in practice require a bank account to set up direct deposit.  This means that for most employees, at least at large companies, they don’t have paper money coming in, and need to go to a bank branch or ATM in order to withdraw cash if needed.  

Now let’s consider common places where you might spend money, and what payment forms are accepted at each:

• Convenience Stores – Basically all types, excluding J-Debit.  Using a credit card is probably a slower method at many stores.  Many clients use cash, but Suica and iD are also very popular.  QR Code payment has become more popular in the past few years.  
• Resteraunts – Most proper resteraunts will accept credit cards, or cash.  Some will accept Suica and other IC cards, or QR-Codes.  
• Online shopping – Most all online shopping sites will accept credit cards, but often will accept bank transfers/direct debit, and some (such as Amazon) accept mobile Suica.  
• Supermarkets – (e.g. Ozeki, Summit, Queens Isetan, Kaldi, MyBasket, etc) : Almost all will accept cash, credit cards, Suica, iD, etc.  Many will accept QR code payments.  
• General Stores – (i.e. Donkihote, Tokyu Hands) : Most will accept most of the payment types listed above.
• Drug Stores (e.g. Matumoto Kyoshi, Koko kara Fine, Tomod’s) – Most will accept most of the payment methods listed above, including cash, credit, Suica, etc., and QR code payment methods.   
• Family Resteraunts (i.e. Jonathan’s, Saizeria, etc.) – Most allow most of the payment methods listed above.    
• Home Centers (i.e. Shimachu Homes) – Cash, Credit, and depending on the chain, other methods such as Suica, iD, QR code payments, etc.  
• Delivery (i.e. Dominos, Demaikan, Uber Eats, etc.) – Credit Cards, Cash, dPay.  
• Rent – Typically bank transfers, some larger companies may be able to set up direct debit.  Some smaller landlords might also accept cash.  
• Tax Bills, Utiltity bills – These can typically be set up to be deducted from your bank account or charged to a credit card automatically each month.  If you have not set these up, you will receive an invoice in the mail with a bar code.  These can be paid at convenience stores in cash, with Nanaco at 7-11, and with various other methods, including apps from the banks.  
• Electronics Stores (i.e. Bic Camera, Yodobashi Camera, Yamada Denki, etc). – Typically accept any method, including J-Debit.  BIC even accepted BitCoin for a while. 
• Furniture stores (i.e.  Nittori, Ikea) – Most methods.  Cash and Card for sure.  
• Dive Bars, very small cafes and resteraunts – Cash, sometimes more options.
• Small corner vegetable Sellers – Cash, maybe QR Code payments.
• Vending machines – Cash (coins or bills), Suica.  
• Taxis – Most in the city will accept Credit Cards, Cash, Suica, iD, and sometimes other methods.  Many of the larger companies also may accept barcode payments and/or have their own app.  Some are operated by individuals, and often these will only accept cash.  

I think by now you get the point – most things can be paid without paper cash.

For eating a quick meal at a family restaurant, or a quick trip to the supermarket or convenience store, cash is accepted, but most people pay by e-money (Suica, iD, or similar), or by QR Code (PayPay, au Pay, or similar).  These are faster and more convenient than cash or credit cards, and the small amounts are handled efficiently.  

For charging at a fancier resteraunt, electronics store, furniture store, or general goods strore, e-Money and Bar Code payments can still be used, but for big ticket items, credit cards / Debit cards tends to dominate.  For example, Suica (and other transportation cards) can only store up to 20,000 JPY at once, so you couldn’t use it to pay for a 500,000 JPY TV or bed.  Nanaco is likewise limited to 70,000 JPY.  Most bar code payment methods also have a limitation, whereas credit cards and cash have no practical limits.  

Small Shops

Some very small sellers like the mom & pop vegetable store on the corner don’t accept anything except cash, or may accept only a bar code method like PayPay.  This is because they don’t want to pay any transaction fees, and don’t want to deal with a bank or get expensive cash registers or payment terminals.  Even Suica requires a payment terminal, whereas systems like PayPay only require a phone or a bar code sticker.  The sign up process is easier, and the introductory fees are lower. 

QR Code / Bar Code Payments & Consumers

What said, why has there been a boom in QR code style payments other than for small merchants?  On the consumer side, QR code payments are generally less convenient than using something like Suica – but in order to try to gain market share, the QR code/bar code companies have been running campaigns for the last year or so, offering 2% cash back and the like.  I suspect that once the promotional money for these campaigns runs out, the popularity will dwindle somewhat.  

The Suica Advantage

There are a few reasons why Suica (and other transportation cards) has enjoyed such longstanding popularity:

• Speed – Suica cards don’t need to check in with the bank, the balance is stored on the card itself.  A suica card is designed to be used at a busy turnstile, and is specced to allow 10 people to enter per second.  That means a transaction, from start to finishes takes less than 0.10 seconds.  Some readers may think “so what if it takes a couple seconds…” – but when there is a line of people behind you, you want to pay and get out.  When there is a line of people in front of you, you want them to pay and get out, not be fumbling in their wallet, counting coins, unlocking their phone and launching apps, etc.  
• Flexibility – Suica comes in both mobile and card form, and you don’t need to unlock your phone or open any app to pay.  Neither you nor the store  need an internet connection, either.  Suica can be charged from cash, or by other methods, such as credit card.  
• Privacy – You don’t have to register a Suica card to your name if you want to be anonymous.  You aren’t forced to give your name, address, ID, phone number, bank account, or any other information.  There is no contract to read and agree to either.  Anyone can buy a Suica card for $20, or create an anonymous Suica card in Google Pay as well.  As a result there are no restrictions on residency, age, citizenship, or anything else.  Truely anyone can get and charge a card any time they like.  You can of course register accounts for safety and convenience if you like.  
• Ubiquity – Pretty much every person in Japan has a Suica card, or compatible transportation card.  If you have it anyway, then it’s convenient that you can use it to pay for small items.  
• Eki (Station) – Train stations are some of the most sought after retail locations for merchants, and some of the most convenient locations for consumers to do their shopping.  There are many shopping malls in these stations, like Atre, Ekichika, and many more.  A condition of renting space is that the store much accept Suica (or Pasmo, etc).  This means even stores that ordinarily don’t accept Suica (like Starbucks) are strong-armed into accepting it at many of their locations.  As a result, when shopping in and around train stations, you can be rest assured that whatever else the shops accept, they will accept Suica for sure.
• Usefulness – If you have some remaining balance on some payment methods and you aren’t going to use them for a while, the money is effectively useless.  For example, if you have 500 JPY left on your PayPay account, you may or may not be able ot use it.  Paypay is accepted many places, so you will probably use it, but if you have PayPay, dPay, au Pay, Yucho Pay, Rakuten Pay, etc., and have $5 on each… some may sit unused for a while.  You may decide to transfer the money back to your bank account in those cases – but with Suica, it’s guaranteed that you can use it to ride the train, subway, or bus, which most everyone does from time to time.  
• No Mobile Requirement – Suica is supported on mobile devices, but as mentioned above physical cards are supported.  The phones simply emulate a physical card, which means they don’t even need to have battery or internet to use an existing balance or charge from cash.  

At any rate, I have tried most of the payment methods out there, but I spend almost all of my money via the following:

• My Bills are charged to my JCB credit card or direct debit from my bank account.  
• I pay paper invoices by Nanaco (but I charge this with cash once per month)
• I have an iD/Visa debit card, so I often use iD to pay at places that accept it
• I use Suica around the station and places that don’t accept iD (f.e. Kakuyasu)
• I use the visa debit card’s card number, or my JCB credit card’s card number for shopping on Rakuten, Merucari, Yahoo Shopping, Amazon, and other online purchases (Using Suica to pay online is a minor hassle)
• I use cash sometimes at small bars… (Though some accept PayPay these days) and cash only supermarkets

Actually, as a general rule, if a physical store doesn’t accept Suica or iD, then I figure they must not want my money, and I don’t generally shop there.  The major exceptions would be dirt cheap cash only marketplaces.

I really don’t use EDY or QuickPay, because I have found that most places will accept Suica or ID.  EDY is on the way out anyway. I never use Visa Touch because every place that accepts it accepts iD or Suica.  I don’t use the visa (chip) feature of my card if the shop accepts iD, which most do.  JCB isn’t supported by all overseas web sites, so I use Visa in those cases.  

At any rate, I only very rarely use actual cash, and I don’t use often PayPay or similar.  (I have set up some of these apps, such as au Pay and Yucho Pay, but don’t really have an incentive to use them).  

So the idea that you need to use cash for most day to day expenses is simply false.  You can most likely pay for your coffee, groceries, cleaning supplies, online shopping and most everything else you want using some combination of Suica/iD, Credit/Debit, and bar code/QR Code apps.  

If you don’t spend a lot of time in dive bars and buy all your groceries from mom & pop corner shops, you aren’t likely to need to carry much cash.  That said, given that there are some places that only accept cash, I would always keep at least 2,000 JPY on me  – just in case.  

This is perhaps different than what I have seen in some other countries, where everyone accepts cashless payments.  For example, it is well known that these days in China, WeChat pay or Ali Pay is seemingly accepted even at the smallest food stalls and similar.  While everyone acts like this is some modern revelation, debit and credit cards are seemingly accepted even for the smallest payments in the US and some other western countries, while many southeast Asian countries allow you to pay money through the mobile operator via SMS.  Meanwhile, Japan has had Suica and Mobile Suica since well before WeChat was a gleam in the creator’s eye.  

Conclusion

According to Statistica, 42% of consumer retail payments were cashless in 2024 – but this focuses on retail payments, and does not include things like salary, rent, and loan payments. Since rent and loan payments usually happen “cashless” in the sense that cash is transferred by bank transfer, but no paper money is handled. Still, this is low compared to the 72% of cashless payments at retail in the USA – but the USA is known for having debt-ridden consumers, while Japan is known for having a large number of “silver” riders.

If we are talking about actual paper cash, there are very few things you need that to pay for – which means that regardless of what other people do, you can live your life mostly cash free.

I should remind you that while cashless payments do have many advantages, numerous scientific studies have shown that when people spend money with cashless payment methods they tend to spend more money overall. This is especially pronounces with credit cards, and less so with debit cards. My recommendation would be to suppress this effect by using prepaid cards with small balances for only a week’s worth of shopping instead of a credit card or debit card linked directly to an account with a large balance. You want that feeling of “I wonder if I have enough left on my card to pay for this”, since it simulates the same feeling you have when you ask yourself whether there is enough cash in your wallet or not.