Golden Goose

Blog

  • All about Kakuyasu SIM Cards

    All about Kakuyasu SIM Cards

    Most people these days can’t live without their mobile phones. More specifically, their smart phones. For the most part, smart phones need internet service to be useful. When you are at home or work, you probably have WiFi, but when you’re out and about, you need mobile data service to be able to do much of anything. Also, even if your data needs are 100% met by WiFi, you need mobile service in order for phone calls and SMS messages to work.

    Kakuyasu basically means “Inexpensive” in Japanese. Therefore, Kakuyasu SIM cards refer to SIM cards that are less expensive than the standard SIM cards. Overseas, these are often referred to as MVNO services, which refers to the fact that they are not offered by the major incumbent mobile carriers, but minor “Virtual” carriers which lease the network from the major carriers.

    For background, there are Four major mobile service providers in Japan:

    1. NTT Docomo (Ahamo)
    2. KDDI au / Okinawa cellular (Povo, UQ Mobile)
    3. Softbank Mobile (Y! Mobile, Line Mobile)
    4. Rakuten Mobile

    The first three have been around for a long time, although Rakuten is a more recent entry.

    The names in parenthesis above are the lower cost brands from each carrier. For example, NTT Docomo is the “Premium” brand, but since the carriers realized they were losing market share to MVNOs, they launched their own less expensive brands as well.

    In most cases, these sub-brands are still more expensive than the MNVO carriers, so I will not cover them much here.

    Rakuten mobile started out as an MNVO, and then started building their own towers to become a full fledged operator.

    Some Popular Kakuyasu Brands

    1. Mineo
    2. NURO Mobile (Sony)
    3. IIJMio
    4. UQ Mobile
    5. OCN Mobile (Not accepting new contracts)

    I won’t try to create a whole list, because there are entire sites devoted to this.

    Instead, I want to make a few main points:

    1. These cheaper alternatives exist. If you didn’t know, now you do.
    2. These cheaper alternatives lease the networks from the major carriers (MNOs), or are run by them in some cases.
    3. You’ll get less data, but if you have WiFi at home then you don’t need much data. If you don’t and you watch a lot of videos, then any amount of data won’t be enough. (More on this later)
    4. You can buy your phone directly from Sony, Apple, etc., or buy a used phone. There is no need to buy an overpriced phone from your carrier.
    5. You can cut your phone bill in half or more compared with a major carrier in most cases.

    Common Objections

    1. I often have people tell me “Oh, but I don’t trust this small unknown company, I’ve been with my carrier for years”. These small (and not so small) companies are leasing infrastructure from the major carriers in most cases, so the signal strength will be what it always was. The internet may be faster or slower for other reasons. A company doesn’t need to be large to set up the virtual infrastructure. In the worst case, you can switch carriers again if you don’t like the one you have selected. Having stayed with your current carrier for years is not a good reason to continue to pay too much.
    2. The second thing people tell me is “Oh, but I need all this data I have… I watch movies all day on my phone…” First of all – why? Get a computer or something with a bigger screen. Second of all, if you are watching streaming movies or YouTube, etc. all day at home then you should get home internet and use WiFi. You will have much faster internet, and you will save money by getting Hikari fiber and switching to a cheap kakuyasu SIM. If you are constantly downloading huge amounts of data outside your house, then even 50GB may not be enough. I know people who pay Docomo over 7500 per month for “Docomo MAX”, and still and up with slow speeds and stuttering video at the end of the month. Even if you want to watch a lot of video outside of the house at places where you don’t have WiFi, you can download videos from Hulu, YouTube, and most other streaming services when you are in WiFi range, and watch them later.
    3. The third thing I sometimes hear is “But I have a contract on my phone, I’m still paying for it”, or “I can’t afford to pay for a phone all at once”. Honestly, phone financing is a scam. If you can’t afford to pay for a new phone all at once, don’t buy one. You should re-evaluate your financial situation instead. I’m not saying this to be mean, it’s just the truth. These days, even a 3 year old phone works just fine for most anything, and you can pick them up dirt cheap. You can cancel your contract, pay the remaining loan balance, and still come out ahead by switching to Kakuyasu SIM. Also, if you insist on going into debt just to buy a phone, you can buy one online from Apple, Sony, and others with financing that will let you make (for example) 12 or 24 monthly payments with 0% interest through JACCS or the like. Rentio.jp will even rent you one so you can try before you buy.
    4. The final objection is “But I have time left on my contract”. You will always have time left on your contract, that’s by design. The sooner you get out, the more money you will save. Just bite the bullet and do it. Yes, typically there is a time period every 2 years where you can cancel for free, but that may be a long time to wait, and you may forget by then. If you have to pay a 10,000 JPY cancellation fee, but then you save 3,000 – 6,000 per month, isn’t that worth it?

    Calculation

    Just as an example, let’s take a look at Sony’s NURO Mobile VM Plan.

    This plan has 5GB per month with voice and SMS service for 990 JPY. (You can up that to 10GB for 1485 JPY). You can carry over unused data to the next month, and there is no cancellation fee.

    You can bring your existing number (SMP) and phone, and select Docomo, au, or Softbank infrastructure. This means you can get exactly the coverage you had, and even bring a phone locked to one of those carriers.

    If you were paying 5,000 per month to a major carrier, and you could lower that to 1,000 or 1,500 per month, that would be a savings of which is 42,000 to 48,000 JPY per year.

    Personal Experiences

    I personally have had accounts with Softbank Mobile and then NTT Docomo. My phone bill was usually over 6,000 per month.

    • Softbank’s data dependent iPhone plan was a scam, because the price was lower than the fixed plans only if you stayed under 11 MB per month, which is nearly impossible. As soon as you exceeded the 11MB limit, the dynamic plan costed more than the fixed plan. This is old information now, but I see similar plans in place now from other carriers. They lure you in with a lower starting price, and set the limit at which the price increases low enough so that most people will exceed it without realizing. They locked their phones not just to the carrier, but the device-specific plan, and included bloatware on the Android phones they sold as well.
    • Docomo’s plans were expensive, and their Android phones also included bloatware.

    In both cases, they used “Free” phones to attract customers, while I had to pay over 6,000 JPY per month, every month, whether I had replaced my phone recently or not. “Free” phones are simply subsidized by high service costs.

    Since switching to OCN, I pay something like 1,500 JPY per month, and have done so for more than 10 years. I “only” get 170 MB per day, but that is enough for Line, Google Maps, web browsing, and most other normal activities that don’t involve streaming video or downloading app updates. That means I have saved over 400,000 JPY over the past 10 years with only very minor inconvenience. Sure, there is no “Free” phone, but in exchange, I can spend what I want, when I want.

    When I first switched to OCN, I continued using the mobile phone I already had from Docomo, but then later bought new phones directly from Sony’s web site. These phones are unlocked and don’t contain bloatware. Currently, Sony phones bought directly from their site can have double the storage of those sold by the major carriers.

    I have my phone set to never download app updates over mobile networks, and I download offline videos from places like YouTube ahead of time when I am on WiFi, so I can watch them when I am outside if I want to without using mobile data.

    I have lightening fast hikari fiber at home, which means I can use my computer stress free without tethering, and do things that require hundreds of GB of data transfer like: like backing up my computer over the internet, downloading virtual machines, OS updates, high-bitrate 4k video, and more. I can of course use this internet with my phone via WiFi, so there is simply no need for a large data plan.

    I have also used Nuro mobile, but switched to OCN for two reasons:

    1. OCN has a “Data share” option, where you could have multiple SIM cards attached to the same data plan. This allows you to have an additional SIM card for, say, a tablet or extra phone without paying much more.
    2. OCN has a daily limit option, as opposed to a monthly limit. This means that if you accidentally do something that uses a lot of data, it won’t affect you from the next day. Say, for example, you accidentally downloaded an operating system update that was 2GB to your phone. If you have a monthly limit of 3GB, then you just used more than half of that, and now you might run out of data before the end of the month. If you have a daily limit, your connection will only be throttled for the rest of day.

    OCN isn’t accepting new contracts anymore, but it’s worth checking out other options, since there are a variety of different plans available.

    Conclusion

    * The short summary is, you almost certainly don’t need more than 3 GB of mobile data monthly. *

    • You only need that much if you do a lot of video watching on your phone. Even then, you could do that via WiFi both faster and cheaper.
    • If you are truly a nomad who needs lots of data everywhere you go, then you are better off getting some sort of Pocket WiFi, such as UQ WiMax, which has much closer to unlimited data that you can share with not only your phone, but also your tablet, PC, portable game system, etc.
    • Remember that you can download video and do things like app updates when you are in WiFi range.
    • Kakuyasu SIM providers use the same networks as normal providers, so you will get the same reception and signal strength as with the major carriers.
    • There may be minor speed differences around peak times, such as lunch time. Some plans have lower speeds all the time, but still fast enough to watch streaming video, and those plans include more data.

    Links & References

    https://mineo.jp/
    https://mobile.nuro.jp/
    https://www.iijmio.jp/gigaplan/esim/phone/
    https://www.linemo.jp/lp/001/
    https://www.linemo.jp/campaign/international_202503/?lang=en
    https://kakaku.com/mobile_data/sim/
    https://www.uqwimax.jp/mobile/
  • The Best Bank Accounts in Japan

    The Best Bank Accounts in Japan

    Factors to Consider

    There are a number of factors to consider when thinking about which bank is “best”, here is a short list:

    1. Security (Ability to disable cash cards/debit cards, set daily and monthly limits, time of day limitations, block foreign transactions, etc).
    2. Ease of Use (Web site and mobile app usability, etc).
    3. Features (online banking, debit cards, sub-accounts, one time use virtual numbers, cardless ATM use, automatic transfers, etc).
    4. Fees (Charges for domestic and international transfers, withdrawals, deposits, etc).
    5. Language (Ability to use the bank in languages such as Chinese and English, in addition to Japanese).
    6. Physical branch and ATM locations.
    7. Support – How many credit card companies, utilities, etc. will let you use each bank as an automatic withdrawal (Direct debit) source, and whether your paycheck or pension can be deposited to this bank.
    8. Rates – Rates for savings and loans.

    Security

    When you open an account at any of the brick and morter banks (including JP Bank), they will ask if you want to allow your cash card to be used at other banks, or at convenience store ATMs, etc. I suspect most people say “Yes”, but typically if you use your own bank’s ATMs, transactions are free, or at least cheaper. The locations and operating hours are limited, of course. If you have an account you plan only to use for savings and access infrequently, you may opt to not allow access from other ATMs at all. Sometimes your bank’s ATMs will have additional security features, such as fingerprint scanning, etc. – so you will need to use their ATMs to get the best security.

    Likewise, you can opt out of online banking with the megabanks, and your account will be even more secure. Likewise, debit cards are dangerous in that a single charge could wipe out your balance, and the money may be gone for a long time while you dispute the charge, so maybe don’t ask for a debit card for accounts that will hold huge amounts of money.

    Cash card only cards also have another advantage over debit cards – a normal cash card (even one with J-Debit) has no expiration date. Cards with Visa, JCB, etc. debit features always have an expiration date and have to be replaced – typically every 4 years. This could be very inconvenient if you are living overseas for a few years or you move around replacement time.

    With the net banks, using convenience store ATMs will usually be your main option, but they still have the ability to block foreign ATMs, block ATMs in certain regions, etc. Some banks (f.e. au Bank) let you quickly disable the card in the app, or even have it so that it automatically locks after a certain amount of time.

    Password Cards and OTP/MFA Tokens

    Often for online banking, you will have 3 options:

    1. A password card – This card has a matrix of numbers and letters on the back, and looks like a bingo card. When you try to make a transfer, etc., the site will prompt you, f.e. “A7”, and you need to read the character at A7, which say might be “9”, and type that in. These are usually free, and used by the likes of Mitsubishi and 7 bank.
    2. A hardware token – This is a little device or card that you can press a button on in order to get a one time password to enter when logging in or doing transactions. Sometimes they will charge extra for this. It is more secure and safer than using option 3. Mitsubishi, PayPay Bank, JP Bank (Yucho), Sony bank, and many more offer this. The JP Bank one can be complex to use, and the Rakuten does not offer such an option, preferring OTP emails instead.
    3. An OTP app – This will be an application on your phone that you can use to generate OTP codes just like the hardware token listed above. This has an advantage for the bank since it’s basically free to them, and the advantage for you that you don’t need to carry a separate token. This is also a disadvantage since it means you could be cohered into giving the code, you will need to set it up again whenever you upgrade your phone (or it is lost or stolen), and furthermore phones can be hacked. Mitsubishi, for example, has been nagging people to convert to this method.

    Spending, Withdrawal, and transfer limits.

    Most banks have some sort of system to allow you to set up daily or monthly limits of some sort.

    Mitsubishi, for example, has a lot of options to set limits per transaction or per day for various categories, but like many banks, most of these limits can only be set per increment of 10,000 yen. This is useful for preventing someone from with access to you account from transferring out your life savings, but maybe not so useful to prevent you from taking out too much at the ATM once you’ve had one too many drinks.

    Examples of banks with very fine controls include Rakuten Bank & JRE Bank (which is run by Rakuten). These both let you set limits at the 1000 increment for both cash card and debit card usage, as well as setting limits on which regions of Japan your card can be used in, and what times of day it can be used.

    PayPay bank lets you generate virtual debit card numbers to use for online shopping, and each one can have a specific limit set.

    Ease of Use

    Ease of use is something I often hear foreigners complaining about, but honestly, I don’t feel the same way. Japanese web sites in general tend to be a lot “busier” than foreign sites.

    Just compare the following sites from the most popular search engines in the US and Japan.

    Quite a difference, right? But neither is better than the other. Most Japanese people prefer the “busy” look. It has more information, and more detail. You don’t need to click as many times to get to where you want to go – but there is much more presented at once which can overwhelm some people. This difference can be seen not only in web sites, but also mobile apps, PowerPoint presentations, etc. It’s not a failure of IT, but a cultural difference. If you live in Japan, you’ll need to get used to it at some point.

    That said, some of the apps are “simpler” than others, often simply because they have fewer features. For Example, au Bank has a simpler app than PayPay – though I find both perfectly easy to use.

    JP Bank is probably the most difficult bank to make transfers from, since you need to convert account numbers between the JP bank system and the system that every other bank uses if you want to transfer to an account that isn’t with JP bank. This is actually very easy once you get used to it (There is a set formula to use), and you can save “favorites” – but I am sure it can be confusing the first time.

    The reason for this, incidentally is because JP bank was set up by the Post Office when it was still owned by the government, for people who couldn’t afford regular commercial banks.

    Features

    Online banking

    Almost all banks offer online banking these days, but the web sites of “Traditional” banks are often clunky and somewhat difficult to use, even by Japanese standards.

    Debit Cards

    It’s important to know that there are two types of debit cards:

    1. International Branded debit cards (i.e. JCB, Visa, Mastercard, etc)
    2. J-Debit Cards

    You can tell an international brand card because it will have the logo of the payment processor somewhere, and often a card number and expiration date (though this is becoming less common now with so-called “numberless” cards)

    A J-Debit card is just a normal cash card with the J-Debit feature enabled. You can use these cards at major retailers such as BIC camera to make purchases just by using your PIN. I think most foreigners are not even aware of this feature.

    Net banks often have virtual and sometimes disposable debit cards as well. For example, PayPay will let you generate Visa Debit card numbers in the mobile app. au Bank has a fixed number you can use.

    Electronic Money

    eMoney here has a very specific meaning. It refers to contactless payment using the Felica standard.

    Common examples include Suica & Pasmo (which can be used on the train and bus as well), Nanaco, Waon, EDY (Which is becoming less common), QuickPay, and iD.

    QuickPay and iD are similar to Visa touch, etc., in that the account information is stored on the card, but the money isn’t. This means you don’t ever need to “charge” these.

    Suica, Nanako, etc. store your actual balance on the card itself, which means they process extremely fast (think 0.1 seconds), and don’t rely on the internet to work – but they need to be charged.

    The above can [basically] only be used in Japan, but are better supported and more useful than features like “Visa Touch”, etc.

    Cards with Visa/Mastercard/JCB Touch are also a thing, and can be useful for shopping overseas. Some cards even have both iD and Visa touch.

    Some banks won’t have this technology built into the card, but let you install it on your phone instead, though often it will need to be a Japanese market phone.

    Sub-accounts

    Usually banks will only let you have one of a specific type of account, and since most people want “futsu” (normal) accounts, you can effectively only open one account. This means if you wanted to have one account for groceries, one for paying your utility bills, and one for saving up for that vacation, you would need 3 separate accounts.

    This isn’t a big deal since most accounts charge no monthly fee, and many people have multiple accounts for transfer fee reasons (i.e. using the SMBC account when transferring money to your landlord who uses SMBC) – but it’s also mildly annoying.

    Sumishin SBI has a “sub account” feature that lets you set up separate balances for things like “Winter Vacation”, “Pet Insurance Fund”, etc. You can create these, choose the name you like, and transfer money between them easily. Only the main account will be connected to the ATM/Debit card, so you can’t accidentally spend money in the other accounts.

    Multicurrency Accounts

    Many banks offer this in some form or another, but it is simpler with some banks than other. For example, Prestia and Sony Bank support a lot of currencies and make this very easy.

    Cardless ATM

    Some banks, f.e. au Bank and PayPay Bank have so-called “Cardless ATM” features, where you can use the app to scan a QR code on the ATM and take out money without using a card. This may be more of a curse than a blessing, though, since it means that leaving your card at home to prevent over-spending won’t work very well for the willpower deprived unless they install the app on a separate phone that they also leave at home.

    Automatic transfers

    There are two main types of automatic transfers.

    1. Where you set up an account to take money from another account on a set schedule once per month. These are typically free, but can only take money from your own accounts, only with a set timing, and there is usually a lag of a week or more from the time the money is debited from the source account and when it is available in the destination account. This can be useful, for example, to transfer 50000 JPY from your payroll account to your savings account at another bank without paying fees. Many banks have this feature, though with Megabanks you will probably have to submit a request using a paper form.
    2. Furikomi Transfers – These are the same transfers you would do from an ATM or Online banking, but you set them up to go automatically on a certain bank. They will charge fees the same as a manual Furikomi – but they can be very useful for paying bills, rent, etc. PayPay Bank, for example, supports this feature.

    Fees

    With the exception of Prestia, most Japanese banks don’t have monthly fees, but they do have fees for just about everything else. The main two fees most people need to be concerned about are ATM fees and furikomi (domestic transfer) fees.

    With the megabanks, using their own ATMs is often free, but the operating hours of the ATMs are limited. There also may not be one within a convenient distance from you. One reason you see people lining up at ATMs at lunch time on pay day is the desire to withdraw cash curing operating hours from their own bank to avoid paying ATM fees.

    With the net banks, they don’t have their own ATMs, so you can usually withdraw money from convenience store ATMs, and sometimes the ATMs of major banks as well. There will often be a few free withdrawals per month, with more being allotted to those meeting certain conditions, such as having their paycheck deposited to that account, having a related credit card, having a certain balance or certain amount of spending, etc.

    Rakuten is a great example here. Even though they let you limit withdrawals at the 1000 JPY level, if you limited yourself to 5000 JPY per day to prevent impulse spending and watch your budget, you would need to withdraw money a lot more often, and end up paying a lot of ATM fees!

    Rakuten has a “level” system, though, where as you meet more conditions, your level increases, and you can get more free ATM use and transfers. Most net banks have a similar system. (f.e. Sony, Sumishin SBI, and JRE have this style). The thing is, you may not want to keep a large balance in, or have your payroll deposited into an account you use mainly for daily spending, and you may not want to carry around the ATM card for the bank your payroll gets deposited into and bills are paid out of.

    Transfer fees follow a similar pattern to ATM fees in general.

    There are two stand-outs in the area of fees:

    1. JRE bank – Because the infrastructure of JRE bank is in fact run by Rakuten bank, the use of ATMs owned by convenience stores and other banks follows a similar pattern to Rakuten and other net banks – but – You can use “View Altte” ATMs present in JR Train Stations for free! Unlimited for all! No minimum balance requirement or anything like that. This is mainly useful for people in Tokyo, but an amazing benefit. Train stations are open long hours and conveniently located for many people. In a pinch you can still use convenience store ATMs.
    2. Sumishin SBI – Say you’re not in Kanto or you don’t have a JR station anywhere nearby your home or work, well then Sumishin SBI (Neobank) is still a great option. Just for setting up the mobile app with biometric security, you get 5 ATM withdrawals and 5 transfers to other banks for free. That’s more than any other bank I am aware of. The criteria to get 10 withdrawals and transfers is relatively easy to meet, and it’s possible to get up to 20. One way to get to 20 is to sign up for their platinum debit card. This is not free, but may be cheaper than paying ATM fees if you use the ATM a lot – and also comes with 1~2% cash back (depending on campaigns, etc)

    Foreign Language Support

    I’ll start by saying that I don’t think #6 is very important. Usually megabanks like Mitsubishi and SMBC will have good support and lots of branches, but fare poorly in most of the other categories.

    I don’t think #5 is very important either. If you don’t know enough Japanese to use a bank account, learn it. Less than 2% of the population in Japan is foreign, and most of those are Korean and Chinese and learned the language before coming or were born here. There really is no excuse. If you insist on using a bank that supports English well, then you will be limiting yourself severely. (And in this case, look no further – 7 Bank or Prestia are probably the way to go).

    Prestia (Also known as SMBC Trust) is what is formerly known as Citibank before they fled Japan. Citibank targeted wealthy westerners, and so supported English, and Prestia still does. Note that Prestia is one of the only banks to charge a monthly fee just for having an account.

    7 Bank (owned by the same 7&i holdings company that owns 7-11 convenience stores and Ito Yokado supermarkets) mainly targets immigrant workers who want an easy way to send money home, just as people from Philippines and Indonesia. 7-11 ATMs also accept foreign cards and can give guidance in English, making them useful for tourists as well.

    Physical Branch and ATM Locations

    Many of the so-called “net banks” have no physical location at all – that’s why they offer lower fees, better interest rates, etc. Sony bank had one branch in Marunouchi, but that closed during COVID.

    JP Bank and Mega banks have locations everywhere, JP bank basically anywhere there is a post office. It isn’t normal that you would physically need to visit a bank, and most of the banks are out to scam you with overprices investment products and insurance – so honestly I would avoid going to a bank branch when possible.

    If you want to have a branch nearby, then JP Bank or a local bank is best for most people. (Local banks also offer better rates and easier approvals than Megabanks, and are necessary for certain government loans, etc.)

    Prestia has fewer locations than the likes of SMBC and Mitsubishi, but of course the net banks have the most locations in the sense that you can usually use any ATM at 7-11 a few times per month for free. Again, JRE bank is the most impressive if you are near Tokyo, given that nearly every single JR station has a View Altte ATM. In fact, honestly, there are a lot quite far from Tokyo as well, as you can see below:

    Support

    “Support” here means support by other financial institutions, the government, employers, credit card companies, etc.

    For example, with a megabank, it’s guaranteed that your employer will pay you there, the government will deposit your pension there, credit card companies will let you use the account for direct debit, etc. With some of the net banks, this is not always the case.

    Employers will typically pay to any “normal” bank (traditional, regional, local, or net banks), but sometimes not pay JP bank accounts. In this case, you can just convert the account number.

    Pension funds, etc. will often only pay to certain major banks.

    Credit card companies can be picky. For example, you can select Mitsubishi bank as a direct debit source for View card, but you can’t select PayPay bank.

    Likewise, loans payments can often only be debited from accounts at the same bank. (i.e. SMBC might only allow be to debit an SMBC account to pay a home loan). The above is another reason many people have accounts with multiple banks.

    Interest Rates & Approval Rates

    Rates are an area where net banks and small local regional banks almost always win.

    Interest rates come down to simple math. Large brick and mortar institutions that have been around for hundreds of years and have to pay for lots of branch offices obviously have more employees and higher operating costs.

    Even though operating at vast scale has allowed them to out-compete the likes of Citibank and HSBC, it’s hard to compete with net banks that have only a small fraction of the fixed costs.

    Simply put, this means that net banks can typically offer higher savings account rates, lower loan interest rates, and lower fees than megabanks. They have the same insurance and regulation, so there is usually literally no reason to use a Megabank (other than the fact that other people use them).

    On the other hand, approval rates at Megabanks can be lower than net banks. They will often demand more documentation, and be less willing to approve loans. There are certain large banks that will approve loans more easily, but charge much higher interest rates (Resona and SMBC Trust come to mind).

    Loans are also easier to obtain from regional banks and trusts (Think: Bank of Yokohama)as compared to megabanks like Mizuho, MUFJ, etc.

    Most banks will also want foreigners to have Permanent Residency status before handing out large loans, though this can be worked around in many cases by setting up a Japanese company to take out the loan instead. Credit cards can be easier to obtain.

    Conclusion

    This entry was meant to be an introduction, however we will cover specific banks in more detail in the future.

    For now, know that if you need English, then Sony, 7 Bank and Prestia are your main options.

    If you want tight ATM controls, then Rakuten and JRE Bank are your options.

    If you want a lot of free ATM use at all hours, then JRE Bank and Sumishin SBI are great options.

    If you want to set up a lot of automatic transfers and/or set up a lot of virtual debit card numbers for online shopping, consider PayPay bank.

    If you are looking for the best rates and easier approval, avoid Megabanks.

    If you are looking for an account that has wide support, use Megabanks.

    If you need to open an account ASAP and it should have a physical branch nearby, then JP Bank is a good option.

    In reality, If you’re like most people, you’ll probably end up with at least one Megabank and one Net bank account.

  • The Fallacy of Credit Card Points

    The Fallacy of Credit Card Points

    If you look on places like YouTube, you will find dozens of bloggers telling you how they have amazing credit cards that give lots of points, crazy schemes to convert money ten different times between different formats to earn even more points, and how they can live their life entirely by points.

    If you hear of all of this, you might get the impression that you are missing out. In reality, many people are sinking their valuable time and energy into trying to earn points while loopholes are being closed and temporary deals are ending. This means they not only have to spend time and effort to actually earn points, but they need to spend even more effort to research and discover new ways to earn points as the best old ways are blocked.

    Point Card Types

    In order to return to reality, let’s cover the main two types of point cards:

    1. Loyalty cards – These are cards issued by stores to encourage you to shop there. These include things like Mont-Bell club member’s card, Ozeki Cash back card, Summit point card, etc. This also includes the non credit-card versions of cards from places like Marui and Bic Camera. Sometimes they also function as a prepaid card (such as Donkihote’s Majica card), or don’t involve a card at all (such as Amazon’s point system). These cards are usually free, or have a very low nominal fee. As you purchase goods or services, you earn points that you can use towards future purchases. Then, there are more generic points such as v-Point and T-Point/V-Point. As a rule, these cards aren’t bad. Just beware that you are trading your data and privacy for points. The main point here is that you are if going to buy (for example) groceries at Ozeki anyway, you may as well earn some points on your purchase.
    2. Credit/Debit cards – These are points that are issues by a credit card company such as ePos, View, American Express, etc. These will be the main focus of our discussion today.

    It’s best to always think about the position of others to fully understand situations.

    The Retailer’s Point of View

    When a retailer such as 7-11 offers goods for sale, they have two main costs:

    1. Fixed costs – such as the cost of renting the building they operate in, monthly labor costs, etc.
    2. Variable Costs – This mainly includes the cost of the items they are selling.

    So, for example, they buy a bottle of green tea for 50 JPY and sell it for 120 JPY. This earns them a gross margin of 70 JPY. Since 7-11 operates in expensive locations and pays people to be there 24 hours per day, maybe they have to pay 50 JPY in fixes costs, leaving a net margin of only 20 JPY per bottle of green tea sold.

    The above assumes you pay cash, and that handling cash is free. In reality, handling tons of coins is a bit bothersome and does cost come money to deal with at high volumes, but the cost is still relatively low.

    Stores want to accept various forms of payment for several reasons – but one major reason is because there are solid statistics showing that people who pay with credit or debit will spend much more than people who spend with cash.

    This is easy to understand. If you go to the local convenience store with, say, 150 JPY, intending to buy green tea, you are probably just going to buy green tea. If you have your credit card, though, and you see some bread for 100 JPY, you might be tempted to buy that as well. Your credit card is after all, effectively limitless.

    The studies mentioned above also talk about the concept of mental pain when spending money. Spending cash causes people some amount of discomfort. Spending with things like debit cards causes less discomfort, and so they spend more. Spending with credit cards causes the least discomfort, and so people spend the most. Stores want you to spend, so of course they may be tempted to accept credit cards.

    This all sounds great from the store’s perspective, but here’s the rub: Credit card companies charge transaction processing fees to merchants like 7-11. For reference, most processing companies (i.e. Visa, Amex, JCB, etc.) charge about 2% plus 5-10 JPY per transaction. That means your 120 JPY bottle of green tea cost perhaps 3+5 = 8 yen to process. It’s easy to understand how they might even lose money on very small purchases.

    Convenience stores are a good example, because they often accept more forms of payments than many other types of shops. They can afford to do this since their margins are so high to start with.

    Now, perhaps 7-11 has a special deal with the payment processors since they have a lot of bargaining power and have a large percentage of small purchases – but that isn’t really the point here. The point is that they do have to pay transaction fees whenever you use a credit card, debit card, or things like Suica or PayPay. Credit cards have among the highest fees.

    This means that 7-11 is paying more and earning less when you use a credit card. If you buy more because you are using a credit card, then their profit margin suffers, but at least they earn more in total.

    What do you suppose retailers like convenience stores and supermarkets do when faced with lower profit margins? Accept them? Of course not, they simply charge you more.

    If they could, most retailers would add a 2% surcharge to all credit card purchases – but they don’t because that is typically prohibited by the contracts they sign with payment processors.

    One work-around is they issue point cards, and raise their prices. For example, XYZ Camera charges more than some other retailers, but they issue 10% points on all purchases! Sure, but when you use a credit card, the points are lowered – so the item effectively costs you more. Now they aren’t breaking the rules, but they also aren’t eating the costs either.

    The real point here is that there is a reason why the very cheapest places often only accept cash, and the places that only accept cash are the cheapest places to shop.

    The Payment Processor’s Point of View

    The processor companies such as Amex, JCB, Visa, and Mastercard have a different point of view, of course.

    Their business model is simple. The processing company (Visa, JCB, etc), charges the retailer some percentage, f.e. 2%, and typically pays the credit card company or bank that issued the credit card some lower percentage (say 1%). They make a profit on this margin. 1% may not sound like much, but it’s 1% over a huge amount of money every year.

    The Credit Card Company’s Point of View

    The credit card companies issue cards to consumers like you and me, and whenever we spend money they pay the required amount to the processors. They then bill us for that amount later. As mentioned above, they typically receive payments from the payment networks, which they then share some portion of with us.

    In Japan, the main points of profit for most customers are the yearly account fee and the money they receive from the payment processing networks. They give some portion of this profit back to us as “Cash Back”, “Points”, or “Miles” – but it’s important that this money originally came form the merchants – which means it came out of our wallet in the form of increased prices!

    Often, credit card companies will give you more points if you pay a higher yearly fee, or a very low point ratio in exchange for a free yearly card fee. Think about it this way. If you pay a large annual fee, they will pass along all of the money they get to you since they already made their profit. If you pay no fee, they will keep most all of the money they make off your purchases. Either way, they win. Sure, if you pay a huge annual fee and then spend an enormous amount on your card in the year, maybe you can break even but it’s a difficult sell for most people.

    Better yet for them, in the case of “Points” or “Miles”, they often make it look like yen or dollars, but it’s really a separate currency. A currency with limited use that they can manipulate at will. For example, “Points” can only be used in certain places, and the prices are often very high. Something you could normally cost 1,000 JPY might be 5,000 points on the American Express point marketplace. Miles are often even worse because of blackout dates, etc.

    For customers that hold a balance, the credit card companies can of course make money from interest, and for those who don’t pay on time, late fees.

    The Consumer’s Point of View

    Finally, there is the point of view of us, the consumers. While most of the information above is freely available online, many people have never though about it and simply think “Free Points!”

    If you stop and think about it, it should be obvious that large banks like SMBC and Mitsubishi aren’t going to give you money for free. They are giving you some of the money they get from the likes of JCB and Visa. Likewise, payment processors JCB and Visa aren’t giving out money for free either – they are giving a portion of what they collected from the shops.

    Shops are owned by investors, and in general investors aren’t going to lower their expectations for profit – they are just going to charge consumers more or devise complex point systems.

    Summary

    7-11 has to charge more for Green Tea in general because they accept credit cards – so they are accounting for the fact that they will have to pay credit card processing fees on many purchases. They charge more, so of course we pay more. So, for example, we pay 2% more, visa takes that 2%, gives 1% to say, Mitsubishi Bank, and they give 0.5% to you in the form of points. So in reality, you paid 2% more (in cash, eventually) to get 0.5% in points which have limited use.

    You can and should use loyalty cards where it makes sense. For example, you can save 10% or more with Matsumoto kiyoshi by using their mobile point card app. That’s a significant amount.

    What you should absolutely avoid doing is making purchases you might not otherwise make on a credit card because you think “I’ll earn points!”

    However, you can and should make larger or more frequent purchases at places that don’t even accept credit cards, PayPay, etc. – because they are very often the least expensive places.

    Examples:

    • Seafood, Fruit and Coffee beans at AmeYoko in Ueno
    • Fish & Vegetables in the basement at Nakano Broadway
    • Electronics from various places you can find on kakaku.com. Very often, the cheapest prices come from those who only accept furikomi (bank transfer) payments. This makes sense, because the credit card fees on a $1000 computer are substantial.

    I personally think it’s also important to develop the mindset of thinking about the positions of other players in the game. If they are giving you money or points, you think think “Why? Where is this money coming from?” There is always a reason.

    Since you are probably going to use a credit card or debit card to pay for things sometimes anyway, there is nothing wrong with getting a card that gives you points – but you should be well aware that people tend to spend more when they use cards than cash (and you probably aren’t as immune to this effect as you think you are).

    Back to the YouTubers and other point fanatics – There are sometimes limited time offers where you can actually gain a “large” amount of points. For example, 1.5% or 2% instead of the usual 0.5%. These are usually a company willing to take a loss for a short period of time as an advertising measure. This was the case with PayPay, for example.

    There are also sometimes cases where you can do something like buy an Amazon gift card with a prepaid card that you bought with another credit card, so you can “stack” the points. This is a case where one or more of the companies involved will lose money, so as soon as they become aware of this they will block it. Spending a lot of time and money to chase such trends is not nearly worth it in my opinion. If you are doing transactions in small amounts, then you will never make back the time and effort you spent. If you are doing such transfers in large amounts then you are taking a lot of risk and may be banned for fraud, money laundering, terms of service violation, or similar.

    At the end of the day, if you get points automatically on purchases you would make anyway without paying more than you normally wound, then that’s fantastic.

    Just be aware of the following two facts:

    1. You’ll probably spend more if you are using a credit card than if you are using cash
    2. You’ll probably pay more if you buy at a place that accept credit cards to begin with
  • The Goose that laid the Golden Egg

    The Goose that laid the Golden Egg

    This blog discusses various aspects of personal finance including debt repayment, money management, investment, wise purchasing decisions, living within your means, when to splurge, and more.

    More to the point, we focus on what’s important – financial freedom.

    Many of the examples and specific products and services mentioned here will be most relevant to the Japanese market, however the general principles will be valuable to people all over the world.

  • Has Japan become poor?

    Has Japan become poor?

    Ever since the bubble in the 80s, people in Japan have been saying how they are poor now.  Sure, compared with the bubble period, the average income has decreased – but by definition, that’s always going to be the case with any bubble.  

    In checking figures, I am purposely choosing a measure that makes Japan look poorer than it is.   That is Annual Household Income Per Capita in USD.  Why is this measure pessimistic? 

        Well, Japan has a lot of single earner households, so looking at the household figure will make this look lower for countries like Japan, and better for countries that have multiple income earners.  What’s more, many Japanese households have extended family members like grandparents living together with the family which lowers the number further.  This is still to some extent fair, since after all, all of the family members need to eat.  

        Secondly, the yen has been weak against the USD lately, which means that these figured will look lower than the actual drop in purchasing power due to inflation.  Again, this figure is not completely unfair since many goods for sale in Japan are purchased from overseas, and some of those are paid for in USD.  On the other hand, many goods are produced domestically, so the exchange rate doesn’t matter as much for those.  

        The average Japan household income per capita in 2024 was $15,500 USD.  (Compared with $22.7k in 2012 and $14.8k in 2002).  

        For reference, here is the same number for the following countries:

    • China: $4,805
    • France: $28,072
    • Germany: $33,631
    • Malaysia: $5,731
    • Mexico: $3,690
    • Singapore: $38,976
    • South Korea: $19,230
    • Switzerland: $60,075
    • Taiwan: $16,605
    • Thailand: $3,740
    • UK: 34,805
    • USA: $40,722

    Looking at this, Japan is well above most other countries in Asia, but loses to Korea and Singapore, and just barely to Taiwan.  European and North American countries are quite a bit higher.

    Looking at a more forgiving number, the average salary in Japan, the number is 6,200,000 for 2024, which works out to $39,818 using the exchange rate from 2024-May.  The number is 6,400,000 for 2025, which works out to $44,471 at current (June 2025) rates.  

    Using the 2024 number, you can think of this as being basically $62k USD when purchasing local goods, and $39k when purchasing foreign goods.   Since most people purchase a mix of local and foreign goods the reality is somewhere in the middle.  

    When you divide by the number of family members per household, the number drops to the $15k USD number listed above.  For most families, the most important components of that will be housing and food.  

    Housing in Japan is not directly affected by exchange rates, and is relatively stable.  Even in Tokyo, housing is also very much cheaper than housing in large Western cities.  Medical care is also inexpensive compared to countries such as the US.  

    This means that even with a relatively lower salary, there may actually be more disposable income.

    Having said that, there has been mild inflation in the last year, and certain goods have risen more than average.  To consumers not used to yearly inflation, this has come as a shock.  People tend to notice the things that have gone up more than the average, and not notice the things that have actually dropped in price.  

    Since it isn’t fair to compare these numbers directly when the cost of living is significantly different, there is a concept called Purchasing Power Parity, which allows you to adjust the numbers for the cost of living in each country.  When you do that, you’ll see things quite a bit differently.  

    In this chart, you can see that the adjusted household income is more like $20k after adjusting for purchasing power.  This still doesn’t mean that people are living half the lifestyle they would have in the US, because the conversion rate doesn’t fully account for transportation and housing being cheaper – or interest rates being so much lower in Japan.  

    Many companies have started instituting salary raises based on cost of living, but it will be a while before these policies are widely in place and keeping up with inflation.  

    In the meantime, the situation continues to be that the average Japan is “poorer” than they were during the bubble years, but not poor by any means.  The last two years have seen inflation after over a decade without it, which will make a lot of people feel a bit poorer for a few years while they get used to the change.  This is mainly relevant to the average person with respect to food prices.  

    Many people in Japan seem convinced that Chinese people are rich.  This comes from several observations:

    1. China surpassed Japan to become the world’s 2nd largest economy by GDP in 2008 (This is based on perhaps suspicious figured provided by the Chinese government, but even if the real date was 2009 or so, it’s certainly #2 by now).

    2. Japanese people see rich tourists visiting Japan all the time and spending a lot of money.  

    What people don’t necessarily realize is that comparing GDP is not meaningful when countries have a population difference of around 10 times.  In fact, having a population that is 10x larger with around the same GDP simply means the average GDP per capita  of China is roughly 10% of Japan’s.  

    Using the latest numbers (October, 2024) of GDP per capita, China has $13,870 while Japan has $35,610.  These numbers don’t add up, but one thing is clear, the average income per person is much lower in China than in Japan.  The numbers for South Korea and Taiwan are very similar to Japan, while Singapore clocks in at $93,960!  

    So yes, the numbers in China have been on the rise, and the numbers in Japan have been falling, but a large part of that is due to the unfavorable exchange rates.  These numbers will likely improve when the US lowers interest rates.  Also, note that the average income in Japan is roughly 3x that of China using most any measure.  

    The issue with China is that:

    1. There is a very large population, so even is you only look at the top 1% earners, there will be a lot of people.  Some of those people will want to come to Japan.

    2. Income inequality in China is much worse than in Japan or the US.    

    And only the wealthy Chinese people will be tourists coming to Japan to spend their money.  This is of course true in general with tourists to any country.  Add to this the fact that the weak yen has made Japan an attractive market for tourist recently, and it shouldn’t be surprising to see many visitors from other nearby Asian countries.  This is neither good nor bad, just a reality.  It does mean, though, that people in Japan shouldn’t assume that suddenly all Chinese are wealthy – because that is certainly not the case.  

    There has also been a fear in some countries, including the US and Japan, that foreigners will buy up all the land.  It seems to me that this fear is semi-valid, but the solution is simple.  Some countries, such as India and Thailand don’t allow foreigners to buy land at all.  While that seems a bit overkill, it would be easy enough to implement a  system where we only sell land to citizens of countries who also allow Japanese people to buy land there.  This would immediately rule out China, since even locals can only “buy” land from the government there for 70 years, which is technically renting.  

    Back to the point of the article.  It’s true that with the weak yen and inflation, things are feeling more expensive in the few years so – in fact prices have increased about 10% in the last 5 years.  That’s in line with the inflation rates of most developed economies, by across the board increases with salary have not yet caught up for everyone.  

    On the other hand, it’s also true that you can get a livable apartment in one of the safest and most vibrant cities in the world (and one that also happens to be the biggest), in a democratic country with a rich culture, and fantastic public transport –  for under $500 per month.  You can likewise eat for around the same amount – meaning you can live a reasonable life in the biggest city on earth even at minimum wage.  

    Data Sources:

    https://www.ceicdata.com/en/indicator/japan/annual-household-income-per-capita

    https://www.salaryexplorer.com/average-salary-wage-comparison-japan-c107

    https://www.imf.org/external/datamapper/NGDPDPC@WEO/CHN/HKG/JPN/KOR/SGP/TWN

  • Guide to Prepaid Cards in Japan

    Guide to Prepaid Cards in Japan

     There are multiple types of cards commonly available in Japan:

    • Cash Cards (ATM Cards) – These can be used at ATMs to deposit, withdraw, and transfer cash, and sometimes with the J-Debit network to pay for things at a limited number of stores.  These cards serve the same purpose as passbooks that are used for some accounts, and you can typically have both on the same account.  
    • “Normal” (Post Paid) Credit Cards – These are cards with the JCB, Visa, Mastercard, or Amex brand that can be used to pay for goods and services.  Most of these cards support the contact IC (Chip & Pin) standard, and may also have a magnetic stripe.  In addition, most have a number printed on them that can be used for online purchases.  “Numberless” (NL) cards without a number or mag stripe are becoming more common in recent times for purposes of fraud prevention.  Some allow creation of “virtual numbers” online.   Also, some cards support international contactless payment standards like “Visa Touch”, and some support Japanese contactless payment standards like iD or QuickPay.  The major brands can also be used to charge prepaid contactless eMoney, such as Suica and Edy.  Typically, purchases made on a credit card are due in full the following billing cycle by default, though it is a common feature to be able to spread a payment out into N payments, where N may be anywhere from 2 to 24 payments.  Revolving payment plans are also supported by some cards.  Typically payments made with 1 or 2 payments are free of charge, whereas payments made over more than 2 months, including revolving payments charge interest or a service fee.  Some credit cards will allow you to generate virtual numbers for online shopping as well.  We will cover credit cards in more detail in a future installment.  
    • Debit Cards (often called Check Cards overseas, called “Shopping Cards” by many banks in Japan) – Besides the J-Debit feature sometimes supported by cash cards, Visa and JCB debit cards exist, which link directly to a bank account.  When you spend money on a debit card, it disappears from your bank account in real time. This is convenient, but dangerous. Sometimes these are issued as a separate card (as is the case for SMBC Standard, Mitsubishi, and many of the larger banks), and sometimes you will be issued a combination cash card/debit card (as is the case with Sony Bank, Rakuten Bank, Prestia, Japan Post Bank, SMBC Olive, and others).  Some banks will not issue a physical debit card, but will issue virtual debit cards.  au Jibun bank follows this pattern, issuing a cash card, but allowing you to generate a credit card number in the app for online payments.  Like credit cards, debit cards may or may not support international and/or domestic contactless payments, and some banks allow the generation of virtual numbers.    
    • Contactless IC cards (electronic money) – These are stored value cards that hold the value internally, not in an account.  They can purchased and used anonymously, and charged by cash or sometimes credit card.   Mobile app versions exist which will work on Japan market smart phones, and work the same way as the physical card in that they need to be charged before use.  These include Suica, Pasmo, Icoca, Edy, Waon, etc.  Suica and Pasmo can be used for the bus and train, in addition to convenience stores, supermarkets, cafes, etc.  Almost all of these cards used in Japan are constructed using Sony’s Felica technology, and are not compatible with NFC standards used in other countries.  These cards will be covered in another post.
    • Prepaid Cards (Prepaid Credit Cards) – These are essentially like debit cards, except they are deducting from a balance specific to the card, not directly from a linked bank account.  Some cards, however, can be set to automatically charge from a linked bank account if the balance is not enough.  Cash can not generally be removed from these cards once charged.  Like credit cards, they will usually have a magnetic stripe, and may have contact (EMV) or contactless IC (Felica or NFC) chips.  All of the cards I am aware of have a card number for online shopping as well.   

    Advantages

    Prepaid cards have the advantage of being generally easy to apply for and receive, as there is usually no credit check necessary.  They can be used for online payments, or at shops – but they usually can’t directly be used to ride public transportation.  (They can generally be used to charge mobile Suica, etc., so they can be used indirectly for transportation).  

    Prepaid cards also make budgeting easy, as you can put money into a prepaid card that you plan to spend for groceries, etc., to ensure you don’t go over your limit, without worrying about accidentally using up the balance in your bank account that might be needed for direct debits, or receiving a large credit card bill in the future.  

    Prepaid cards are safe. The most money that could ever be stolen or lost the amount on the card. Identity theft and fraud are therefore much less of a concern.

    Disadvantages

    Some web sites or merchants will not accept prepaid cards. This depends on whether the bank and payment processor flag the card as a prepaid card, so which cards work where will vary. For example, I had a payment be denied at a bar in Hokkaido using my au WALLET card, but it worked with SMBC Prepaid.

    Typically, you can only use the balance on the card – which means you should check the balance before making purchases. Some cards have automatic recharge features – but this largely defeats the purpose of using a prepaid card in the first place.

    Popular Prepaid Cards

    Since prepaid cards vary in features, we will cover a few of the more common ones here:

    SMBC Visa Puripe (Prepaid)

    This is Sumitomo Mitsubishi Bank’s standard prepaid card.  (There are also ANA and Family versions) The ANA version was discontinued in 2023. The plain version and family versions are covered here.

    Application: You don’t need a bank account with them to apply, in fact basically anyone can apply online.  Technically, you need to have a mobile phone number / email address, and be at least 6 years old.  

    Name: The card is issued with your actual name printed in Romaji on the front.

    Brand: This card is Visa branded.

    Contact IC: This was one of the first with a contact (Chip & Pin) IC.  That makes this card better if you plan to use it in person for large purchases, especially overseas.

    International Contactless IC: Visa touch is supported on the card itself.  This will work in Japan but is only supported in a limited number of places and is usually inconvenient to use.  Better is the fact that this should work overseas as well.  Visa Touch is also supported on Apple Pay.  

    Domestic Contactless ID: The physical card itself has no domestic contactless payment support, but if you register the card with Apple Pay or Google Pay, it supports iD.  Since a large number of shops support iD, this is quite convenient.  

    Transportation IC: This card can be used to charge Mobile Suica.

    Charge methods:

    • Charge at 7-11 ATMs using cash.  No transaction fee.
    • Charge online from the SMBC Prepaid site using an SMBC Credit Card.  No fee.
    • Charge online from the SMBC Prepaid site using a non-SMBC Credit Card.  210 JPY Transaction fee.
    • Charge online from SMBC Prepaid site using a bank account.  Works with most banks if you have net banking.  210 JPY Transaction Fee
    • Charge from “V Point”, if you have them. 
    • Note: Credit card charges can be scheduled to charge automatically on a particular day of the month, or when the balance falls below a certain point.  

    Balance check: The card has a QR code on the reverse, which can be used to check your balance without logging in.  This is super convenient, since it only takes a few seconds to check your balance.  You can scan the code once and save a bookmark on your phone, so that you can easily check the balance in the future without even scanning the code.  If you want to do anything else, such as charging the card or changing any settings, you will of course need to log in.  

    Notifications: A mail will be sent when the card is used.  Optionally, you can set a monthly spending limit, over which another notification mail will be sent.

    Design: This card is silver and rather plain looking, and in fact looks exactly like the normal SMBC credit cards, with the exception of “prepaid” printed in small grey lettering on the front.  The number is printed on the back of the card.  

    Points & Cashback: 0.25% cash back, added to the balance on the 10th of each month based on the usage of the previous month.  

    Maximum Balance: 300,000 JPY (~$3,000 USD)

    Fees:

    • Application / Initial Use: None
    • Yearly Fee: None
    • Charge Fee: Varies (Detailed above)
    • Foreign Transactions: 4.07%

    This is one of our favorite cards because it can be charged for free from cash (at 7-11), supports Visa Touch and iD, and does not show up as a prepaid card to merchants – which means it typically works even on web sites merchants that block prepaid cards.

    URL: https://www.smbc-card.com/prepaid/visaprepaid/index.jsp

    d Card Prepaid

    The mobile phone carrier NTT Docomo has their own credit card, d Card (previously: DCMX), and this is the prepaid version of that.  This card business is actually run by SMBC, so it is mostly the same as the SMBC Puripe card listed above.  

    Application: You don’t need any particular bank account or credit card to apply, in fact basically anyone can apply online.  There seems to be an impression that you need to be a Docomo user or have a d Card to apply, but this is not true.  You do need to create a “d Account” in order to apply, but anyone with an email address can do that.   Another requirement is that you must be at least 12 years old.   

    Name: The card is issued with the name “PREPAID MEMBER” printed on the front, so that name should be used when making online purchases.  This is good for privacy, but means that merchants who try to match names may not accept the card.

    Brand: This card is Mastercard branded.

    Contact IC: This card has no contact IC.  This means if you use the card in the traditional way (i.e. not contactless or online), you will need to swipe the card, and then sign in many cases.  Since magnetic stripe is on the way out, we expect that this will be updated in the near future.

    International Contactless IC: None on the physical card itself.  You will have to swipe the card if you are overseas.   The card supports Mastercard Contactless when using Apple Pay (Google Pay is not yet supported).  

    Domestic Contactless ID: The iD standard is supported on the physical card itself, which means you can use the card contactlessly at most commercial retail stores in Japan.  (This is not surprising since Docomo is a big backer of iD).  

    Transportation IC: This card can be used to charge Mobile Suica.

    Charge methods:

    • Charge at 7-11 ATMs using cash.  No transaction fee.
    • Charge at the register at Lawson.
    • Charge online from the SMBC Prepaid site using a d Card Credit Card.  No fee.
    • Charge online from the SMBC Prepaid site using a non-SMBC Credit Card.  204 JPY Transaction fee.
    • Charge online from SMBC Prepaid site using a bank account.  Works with most banks if you have net banking.  204 JPY Transaction Fee
    • Charge from d Point balance
    • Charge from your Docomo cell phone account (i.e. add it to your monthly phone bill)

    Balance check: The balance can be checked from the d Card Prepaid web site.  This site works on mobile, but you will have to log in even just to check your balance.  Once you log in, the browser will remember the login via cookies, but every time you access the site, you will need to enter your date of birth before you can do anything.  

    Notifications: A mail will be sent when the card is used.  You can set up two email addresses.  

    Design: The current design of the card is yellow on the front.  The card number is printed on the front of the card.  The card doubles as a d Point card, so there is a bar code on the reverse side for that.  

    Points & Cashback: 1 d Point per 200 yen spent, which equates to 0.5%.  These points can be used to charge the card, among other things.  The card can be used as a point card, even when paying cash.  

    Maximum Balance: 300,000 JPY (~$3,000 USD)

    Fees:

    • Application / Initial Use: None (The site lists a fee, but mentions it is currently being waived).  
    • Yearly Fee: None
    • Charge Fee: Varies (Detailed above)
    • Foreign Transactions: 4.07%

    URL: https://dcard.docomo.ne.jp/prepaid/index.html

    Kazoku no Osaifu Prepaid Card

    This card is also issued by SMBC, and in fact is really the same as the SMBC Visa Pripe card, except it lets you create multiple cards linked to the same account.

    There are two main ways to link the cards:

    a. Shared balance – In this case, any of the cards can use the shared balance. This might be a good choice for sharing a monthly grocery allowance with your significant other, etc.

    b. Separate balances – In this case, each card has a separate balance. The “main” card can transfer money to any of the other cards. This might be a good choice for letting your children have their own card and sending them their allowance payments.

    Transferring balances between cards can be done via the web site or mobile app. (The mobile app can in fact be used for the normal Visa Pripe cards listed above – just the transfer features won’t work).

    Physical design: You can choose one of the playful designs, or choose the plain silver design used for the normal SMBC cards.

    Everything else about this card other than the physical design is the same as the SMBC Visa Puripe card, so we won’t repeat ourselves here.

    URL: https://www.smbc-card.com/prepaid/kazokunoosaifu/index.jsp

    JCB ANA Milage Club Prepaid Card

    Note: ANA and JCB have announced that this service will end in November 2025, so they are no longer taking new applications for this card.

    Interestingly, the almost identical looking Visa version of this card is offered by SMBC, but the JCB version is offered directly by JCB itself.  The only prepaid card (other than gift cards) that JCB offers is the ANA branded one. Despite the ANA branding, you can choose between receiving miles or cash back when you apply – but either way it will be ANA branded.  Even a cash back card still has an ANA point number on it, though, and so can you can use this number when buying plane tickets from ANA or affiliated airlines.  Note that ANA is part of Star Alliance.  

    Application:  There are no real requirements listed for application on the main page, but the application process is somewhat more involved than most others, much like applying for a normal credit card.   

    Name: The card is issued withthe name your actual name (in Romaji) printed on the front, so that name should be used when making online purchases.  

    Brand: This card is JCB branded.

    Contact IC: This card has no contact IC.  This means if you use the card in the traditional way (i.e. not contactless or online), you will need to swipe the card, and then sign in many cases.  We expect that this feature will be added in the near future.

    International Contactless IC: None on the physical card itself.  Unknown if  this works on Mobile, so you should assume contactless payment won’t be available overseas.  

    Domestic Contactless ID: None supported on the physical card itself.  The QuickPay standard is supported on Google Pay.  Apple Pay is not mentioned anywhere.  

    Transportation IC: Untested.  (Presumably works).  

    Charge methods:

    • No current ability to charge at ATMs.  
    • Charge at the register at Lawson.  There is a limit of 49,000 JPY per charge.  No fee.  
    • Charge online from the MyPage site using a  JCB Credit Card or debit card.  Same 49,000 JPY limit per charge as above.  No fee.
    • Charging online from the MyPayge site using a non-JCB Credit Card is not supported.
    • Charge online from MyPage side using a bank account.  Works with most banks if you have net banking.  110JPY if the charge amount is under 10,000 JPY (~$100 US), no transaction fee if the amount is 10,000 JPY or above.  The process is somewhat convoluted compared with most of the other cards on this list.  There is a limit of 29,000 JPY per charge when using this method.  
    • Web Conbini – This is a method where you apply online, and then get a number which you need to use to pay at the convenience store.  The disadvantage is that you need to register online first, but the advantage is that it can be used at convenience stores besides Lawson, including 7-11, MiniStop, Family Mart, etc.  The transaction fees and limit are the same as when charging from a bank account.  

    Balance check: The balance can be checked from the MyCard web site.  This site works on mobile, but you will have to log in even just to check your balance.  There is a QR Code on the back of the card to make this easier if you are on mobile.  

    Notifications: A mail will be sent when the card is used.  You can set up two email addresses.  

    Design: You can chose between grey, blue, or pink.  The card number is printed on the front of the card.  The card doubles as an ANA Milage Point card, so there is also a number printed on the front side for that.   

    Points & Cashback: As mentioned above, you can choose between Miles or Cashback when applying for the card.  I will list both here:

    Miles:

    • You earn 5 miles per 1000 JPY spent (0.5%)
    • This amount is added to your account at the end of the each month based on your spending from the 16th of the previous month until the 15th of the current month.  

    Cashback: 

    • You earn 1 JPY per 200 JPY spent (0.5%)
    • This amount is added to your account on the 25th of the each month based on your spending from the 16th of the previous month until the 15th of the current month.  

    Regardless of which method you choose, there is also a bonus paid twice a year based on the amount you charge (not spend):

    • From March 16th to Sept. 15th – Bonus will be paid at the end of Sept.
    • From Sept 16th to March 15th – Bonus will be paid at the end of March.
    • If you charged at least 120,000 JPY, you will receive an additional 180 JPY/Miles.
    • If you charged at least 240,000 JPY, you will receive  an additional 360 JPY/Miles (total).  

    Since you can charge this card in person using cash or via bank account for free relatively easily, it is one of the better cards if you are wanting to earn points and save on fees.  

    Maximum Balance: 300,000 JPY (~$3,000 USD)

    Fees:

    • Application / Initial Use: Application is free, but 550 JPY is charged on the first use.  
    • Yearly Fee: None
    • Charge Fee: Varies (Detailed above)
    • Foreign Transactions: Not Mentioned.  

    URL: https://www.jcb.co.jp/prepaid/ana_prepaid.html

    au Pay (Prepaid) / Previously au WALLET

    This card is offered by KDDI’s au Mobile phone carrier.  

    Application: You must have an au Pay Account (and app), and also be either:

    • An au subscriber (mobile or hikari (fiber) internet)
    • An au Jibun Bank account holder with an account linked to au Pay

    People have the impression that you must be an au Subsriber to get this card, but since anyone with an au Jibun Bank account can get one (and you can apply for an account online easily enough), it is actually open to anyone who can open a bank account.  

    It should be noted that there is also an “au Pay” card which is not prepaid, but a normal credit card.  

    The au Pay service is a basically an app based QR Code payment app, much like PayPay, etc.  You need to install this app and create an account.  Once you link it to an account, you will be able to charge and use the app to pay via bar code or QR code and charge mobile Suica from the app as well.  If you link it to an au Jibun Bank account then they will automatially send you an au Pay prepaid card.  Presumably the same is true if you have an au subscription on the same au Account used by the app.  

    This card is really an extension of the au Pay app.  

    Name: The card is issued with your actual name printed in Romaji on the front.

    Brand: This card is MasterCard branded.

    Contact IC: This has no contact IC.  This means you will usually need to sign if you are charging a large amount on the physical card.   2024 Update: New cards are issued with CHIP&PIN compatible contact ICs.

    International Contactless IC: None on the card itself.  2024 Update: Mastercard Touch.

    Domestic Contactless ID: 

    • None on the card itself.  
    • Supports QuickPay and Mastercard contactless payments on Apple Pay

    Transportation IC:

    • Supports charging Mobile Suica from your prepaid balance right in the au Pay app. 
    • Mobile Suica App, etc. Untested (presumably works)

    Charge methods:

    • Charge at Lawson/7-11 ATMs using cash.  No transaction fee.
      • When charging at the ATM, you can use the physical card, or a QR code generated by the au Pay app.  This means you don’t need to bring the actual card with you to charge it at an ATM.  
    • Charge at Lawson by paying cash at the register.  
    • Charge using cash at au some Shops using cash at a “SaKuTTO” kiosk.  (Transaction fee unknown).  
    • Supposedly you can charge from the au Pay web site, however it seems to just direct you to the app.  
    • Charge from the au Pay app – including from au Jibun Bank Account
      • You can charge from an au Pay (credit) card in the app
      • You can charge from (and view the balance of) your au Jibun Bank in the App
      • You can charge from other credit cards in the app.  Apparently all Mastercard and Amex cards work, while only some Visa and JCB cards do.  
      • There is an auto-charge setting which has two modes: Real-time, and “staged” (for lack of a better term).
        • Realtime just pulls the amount needed to complete a purchase from your linked au Jibun bank account if there isn’t enough money.  (This is also how the now discountinued JP Bank Mijica card worked).  In essence, your prepaid card acts like a debit card when using this setting.  
        • “Staged” will charge your account by X yen when it falls below Y yen.  For example, you could set it to charge your card by 10,000 JPY whenever it falls below 5,000 JPY.  That way you know the card always has at between 5,000 and 15,000 JPY.  This mode keeps your bank account ledger much cleaner by taking money in blocks.  (This is also similar to how e-money auto-charge credit cards like View Suica and Pasmo credit cards work).
        • Auto-charge can only be enabled by people who have au contracts.  (mobile phone, fiber, etc).  

    Balance check: You can check the balance on the web site or application.  

    Notifications: No Information.

    Design: The card apparently comes in two varieties, orange and silver.  The front of the card has the card number and accountholder name.  The back has a signature panel and WebMoney bar code.  WebMoney is basically a generic gift-card type format that can be used on some online shops, and is supported bu the au Pay card.   

    Points & Cashback: 

    • au  uses Ponta points
    • 1 Ponta point is awarded per 200 JPY spent (0.5%)
    • For shops that specifically support the Ponts Point scheme, you can ean additional points (i.e. 1%)
    • If you link a Ponta account to your au account in the au Pay app, you can pay via Ponta points from the au Pay app
    • You can use Ponta points to charge the balance of your au Pay account. (and thus prepaid card)

    Maximum Balance: 500,000 JPY (~$5,000 USD)

    Other Features:

    Starting in April, 2024:

    • You can create a virtual card number which can be used for internet shopping without giving away your “Real” card number.
    • Card expiration date change from 5 years from issue date to 7 years.
    • 3D Secure verification feature is supported.
    • If you don’t use one of the payment methods (QuickPay, MasterCard, Apple Pay) for a while, au may disable this payment method to prevent fraud. To re-enable it, the user must go into the accounts menu in au Pay app and perform the action. (au Pay bar code payment can still be used even when the above are disabled).

    Fees:

    • Application / Initial Use:
      • Before 2024: None
      • From 2024: 600 JPY (but returned if you use the card enough)
    • Yearly Fee: None
    • Charge Fee: None

    URL: https://www.au.com/payment/prepaid/

    Other Examples

    • Merucari is an online fleemarket app that also has a QR Code based payment system.  For example, you can sell goods, and hold a balance in Merucari for the funds you received.  You can transfer that balance back to your bank account, but you can also pay for goods with QR code, or, with Google Pay, you can pay using iD.  Merucari will also send you a physical prepaid card if you request.  This makes it similar to au Pay in many respects since it is app centric and the Physical card is just an add-on.  
    • There is a prepaid card called Kyash.
      • This card has features to let you share with family members and friends, similar to kasoku no osaifu.
      • This card can be virtual only, or you can request a physical card.
      • More information can be found on the Kyash page here.
    • Mitsubishi UFJ Bank is now offering a prepaid card called バンドルカード (Bundle Card).
      • This card starts as a virtual card only, but you can pay a small fee for a physical card as well.
      • More information can be found on their page here.
    • There are prepaid cards issued by banks and linked to bank accounts.
      • Japan Post used to have the Mijica card, but they discontinued this and replaced it with a debit card.
      • Rakuten bank offers a prepaid card that can be charged from a Rakuten bank balance.
        • You must have a Rakuten Bank account first in order to apply for this card.
        • More information can be found on their site here.
    • There are prepaid cards issued by credit card companies as daughter cards of a main card
      • Examples in this list of prepaid cards linked to normal credit cards mentioned above include “d Card prepaid” and “SMBC Prepaid Card”, but these cards can be issued without having a credit card from the company, and charged using other methods.    
      • A good example of a prepaid card dependent on a credit card is the Marui ePos prepaid card, which can be applied for as a daughter card to the Marui ePos Credit Card.  

    Overall Thoughts

    Debit/Credit Card style Prepaid cards still have minimal market share penetration in Japan.  For example, Mitsubishi Tokyo Bank offers Visa debit cards and credit cards, but not prepaid cards.  Likewise there are no American Express branded prepaid cards at this point in time.  Depending on your use case, charging Mobile Suica from a debit card may be useful instead.  

    Bank accounts can typically be opened and maintained for free, meaning that the difference between debit cards and prepaid cards is mainly that debit cards are connected to a bank account, so you can always withdraw the cash.  

    If you need to keep money in your bank account for pending direct debits and don’t want to worry about overspending, you can open a separate “allowance” account at another bank, or use a prepaid card.  

    Gift card style cards are another option, including virtual gift cards such as Amazon, etc. – but prepaid cards are more flexible in where they can be used.  

    Things like Merucari and bundle card can function as virtual prepaid cards even without a physical card.  

    Although the number of prepaid cards on the market is limited at this time, there is still a variety of cards with different features for different needs.  For example: 

    • If you want to use the card primarily for online purchases, any of the cards listed above will work fine, though JCB is not accepted by all foreign sites.  Some sites don’t accept prepaid or debit cards at all.  
    • If you want a card with a contact ID chip for Chip & Pin payment or international contactless payment in person, then the SMBC Puripe card is currently your only choice.
    • If you want a card with built in Japanese e-Money, then the d Card is your best choice.
    • If you want a card with e-Money that works on your phone, then which card you should choose depends on which brand you prefer (iD or QuickPay), and whether you have an Apple or Android device.  d Card and au Pay cards work on Apple devices, whereas SMBC Puripe and ANA JCB Prepaid work on Android devices with Google Pay.  
    • The usable charge methods and fees vary by card, so which card you choose may depend on whether you cant to charge by credit card, bank account, or cash.  

    Additional Considerations:

    • Some web sites accept prepaid cards, but require that cards you use have 3D-Secure support.  3D-Secure is a system where you have to enter a password when registering the card, for fraud prevention purposes.  Not all cards support this, for example au Pay Prepaid just implemented this feature recently.
    • Prepaid cards are still behind normal credit cards and debit cards in terms of features.  For example, some banks and credit card issuers allow you to set the times of day when a card will work, and precise spending limits per day.  For example, with a Rakuten Visa Debit card, you could set the card to only allow charges of up to 8,000 JPY per day.  If you intended to use the card only at the supermarket, this could prevent fraud.  Likewise, if you know you will only want to use a card during the daytime, you sould set it to be inactive between 10pm and 10am.  Many debit/credit cards, such as Marui ePos Credit card and PayPay Bank’s debit card, allow you to set up virtual card numbers with set spending limits and expiration dates for online purchases.  Many of these features are not yet available on prepaid cards.  
    • If you are not looking to use the card online, or hold a large balance, and will mainly be using it for small payments at places like supermarkets and convenience stores, than a stored value eMoney card like Suica may be a better fit.   
    • Even though prepaid cards don’t involve the issue extending credit, you still need to register your personal information and provide ID and proof of address.  If you prefer something you can use instantly and anonymously, then again stored value e-Money like Suica may be a better fit.
    • Invoices that come by mail for things like utility bills can generally only be paid in cash, and not with debit cards.  Generally Nanaco can also be used at 7-11, and other exceptions may apply.  

    Comparison

    CardPointsApple PayGoogle PayContactContactless (Card)
    SMBC Visa PripeCash BackY (iD, Visa)Y (iD)YVisa Touch
    d Card Prepaidd PointY (iD, Mastercard)NNiD
    Kazoku no OsaifuCash BackY (iD, Visa)Y (iD)YVisa Touch
    ANA Milage Club PrepaidANA Miles or Cash BackY (Quickpay)NNN?
    au Pay Prepaid CardPonta PointsY (QuickPay, MasterCard)N?Y (2024~)MasterCard (2024~)
  • Basic Bank Accounts in Japan – Opening An Account

    Basic Bank Accounts in Japan – Opening An Account

    If you want to open an account at a major bank, it is as easy as walking into the nearest branch – if you speak Japanese.   If not, you might want to bring a friend.  

    Typically anyone can open an account, so long as you are a legal resident.  This means no tourists, but most anyone else.  There is apparently a rule that you must be here for 6 months or more, but apparently this is enforced by some banks more than others.

    Since a basic bank account does not allow you to run a negative balance or borrow money, there is generally no credit check or credit history needed.  

    You will be asked to provide identification, which for a foreigner might include your MyNumber card, Zairyu card, health insurance card and/or your passport.  You may be asked to provide a copy of your Jyuminhyo (residence record), which you can get from city hall.  They may ask for information on your employer as well.  Basically, the only two real requirements are that you are a legal resident, and you will be in Japan at least 6 months.  

    You may or may not be required to provide an Inkan (Stamp), so you may want to have that made up ahead of time.  Some banks will allow signature instead.  You will need an Inkan eventually if you live in Japan, so you may as well get one made.

    There are two basic types of accounts

    • Futsuu
    • Tozan

    All you need to know is that Futsuu means “normal”.  This is the type of account msot everyone has.  You can accept direct deposits from your employer, and set up direct debits for things like electricity and gas payments.  

    Most banks do not charge any monthly fee for maintaining an account, and don’t charge any fee to open an account either – this means you can feel free to set up multiple accounts at different banks if that’s useful to you.  

    Typically a bank will not let you set up accounts at more than one branch, and will not let you set up more than one account of the same type.  This is one reason why people will often hold accounts at multiple banks.  

    Technically, banks will pay you interest on your balance – but in practice, the interest rates are so low in Japan that you may as well consider the account to be interest free.  

    You can of course earn slightly higher interest by opening a time deposit account (CD), but even then the interest is so low as to not be worthwhile for most people.  

    Typically banks have no minimum balance, but you may get some perks by having a higher balance or setting up direct deposit for your paycheck.  Examples would be reduced ATM or transfer fees.  

    Banks will usually offer you a “Cash Card” (ATM card), which you will probably want to accept.  There are various options, including the ability to use the ATM card at convenience stores such as 7-11.  You might have to pay more when you use a convenience store ATM, but they are usually located more conveniently than your bank’s ATM corner, and almost always open 24/7.  

    Manually Transferring Money

    You can easily transfer money to anyone else’s account using your ATM card, or online – so there is really no need for services like Vinmo or PayPal for domestic payments.  

    The information you’ll need to know to transfer money is the following:

    • The financial institution name or 4 digit code
    • The branch name or 3 digit code
    • The account type (Probably Futsuu)
    • The account number
    • The account holder’s full name in Katakana

    If you know those pieces of information, you can transfer money from your account using your ATM card, or with internet banking.  You may need to at least be able to read enough Japanese to select the bank name and branch name from a list, or enter the first few characters into the ATM or internet banking.  

    Once you have entered the bank, account type, and account number, one of two things will happen:

    1. The ATM/web site will display the account holder’s name in Katakana
    2. The ATM/web site will ask you to enter the account holder’s name in Katakana

    Either way, the purpose here is to confirm that you didn’t mess up the information and that the person (or company) you are sending money to is correct.  Once you have confirmed this, then the payment will go through.  Once you have sent the payment, the money is gone, and there is typically no easy way to get it back.  

    The checks are typically done in real-time, but if somehow the payment was sent to an invalid account, the money would be returned within a few days.  Otherwise, the money now sits in the account of the person you sent it to.  

    You can of course use this method to send money between your own accounts.  

    Note: JP Bank uses a different system, but the account information can be transformed to conform to the system listed above.  

    Transfers used to only take effect during business hours on business days, and could take several hours if you were sending to a different bank.  This meant that even if you sent money on a weekend or holiday, the money would not arrive until the next business day (even though it would disappear from your account immediately).  

    Recently, there is a new “instant transfer” system being instituted at most banks.  This system will always transfer the money in less than 10-15 minutes between participating banks, any time of any day (unless they are undergoing maintenance).    You don’t need to opt into this in most cases, it’s automatic.  

    Not all banks subscribe to this new system, though, so if you have an account that doesn’t (like Prestia), then you might need to wait a bit longer for transfers to  clear.  

    Where do you find the information for your bank, branch, and account number?  The branch and account number are printed on your cash card.  

    Note that because you can just transfer money to anyone, any time: Personal checks aren’t really a thing.  

    Passbook  vs. Eco

    Japanese accounts traditionally issue Tsucho (Passbooks), which can also be used at the ATM, and will print a record of your transactions.  More recently, banks are pushing “Eco” accounts, which do away with the passbook.  It’s most cases, it’s your choice.  You can usually get both a passbook and an cash card (ATM card) on the same account.  It is expected that passbooks will eventually be phased out – as some banks already charge extra for the use of passbooks.

    Note that banks don’t typically send paper statements since the idea is that you have a passbook instead, or reference your statement online if you have subscribed to Eco Tsucho.  Bear in mind that if you need an official paper record of your balance for a loan application, visa application, etc. and you have switched to a passbook-less account, then you may need to ask for a balance statement printout.  This can be a hassle and take several days.  The bank will also not retain your records forever – so you might want to save or print your bank data once per year if you might need to check it later.

    Debit Card Features

    Banks will also sometimes ask you if you want to have a debit card feature on your ATM card.  This has nothing to do with the “Check Card” type feature often offered by foreign banks where you get a Visa logo or something like that.  If a mega bank asks you about a debit card feature, they are likely talking about J-Debit, which is a system that lets you pay with your ATM card at some merchants, such as Bic Camera.  

    The Check Card,  or Visa Debit card type feature  has also become available at many banks over the past few years.  This is typically called a “Shopping Card” by the big banks. 

    Sometimes this will be a debit card that has both a credit card number and cash card features, sometimes there will be two separate cards issued.  I believe the reason for this is that the IC part of the card could be Visa, or Cash, but not both, so there was a decision to be made by the banks about whether to use only Mag Stripe for  one feature, or wanting to have the extra security of using IC for both.

    Another thing to consider is that like real credit cards, check card style cards have expiration dates, whereas normal Cash cards issued by Japanese banks do not.  The larger banks tend to issue the cash cards and shopping cards as two separate cards. Recently, cards combining both features are becoming more common. For example, SMBC Olive combines Cash Card (ATM), Debit card, and credit card features into a single physical card.

    For example:

    • SMBC offers a Visa debit card that supports both Visa contactless payment and iD debit.  It has an IC chip so you can use it at stores, and a number printed on it which you can use online.  It also has a PLUS logo on the back, which I believe means that it can be used for cash withdrawels overseas.
    • MUFJ offers a Visa debit card that supports Visa contactless, but not iD or QuickPay, making it less convenient in Japan.  
    • Rakuten bank offers Visa or JCB built into their cash card if you apply for it.  
    • Prestia (SMBC  Trust) offers a multicurrency combined Cash & Shopping (debit) card that works with Visa Touch and iD Debit.  
    • JP Bank recently started offering Visa debit cards as well, and their cards are integrated debit/cash cards.
    • Sony bank offers a multicurrency combined visa debit/cash card.  
    • au Jibun Bank only offers a basic ATM card, but their app will generate a virtual card with a number than can be used for online shopping, and QuickPay contactless payment from your phone.  

    Most banks will issue a shopping card with Visa or JCB, and a few with Mastercard.  Some banks, like Rakuten bank will allow you to choose.  Being Japan, I would choose JCB if given the option, but if you plan to use the card overseas, then Visa or Mastercard may be a better option.  This includes if you want to use the card to pay for subscriptions to overseas web sites, etc.  (though bear in mind this won’t work with some sites anyway, if they want to verify your address and don’t support Japanese addresses).  

    Some shopping cards will  support Visa Touch, iD, or QuickPay.  iD and QuickPay are the native Japanese options for postpaid (or in this case, real time debit) contactless payment, Visa Touch may work overseas.  Some cards even have both, or have one built into the card, but will let you set up the other on your phone.  You really want to get both, because iD and QuickPay are supported many more places in Japan than Visa Touch.  These options will deduct money from your account the instant that you use them, and so require a balance in your account, but they don’t need to be charged.  

    Some banks will issue cards that include other forms of contactless payment, including Waon (Aeon Bank), Nanaco (Seven Bank), EDY (Rakuten bank), Suica (JP Bank and others).  These are all convenient, especially the Suica (since you can use it to ride the bus, subway, and train), but they are prepaid, and have to be charged before you can use them.  You can charge the Suica and Nanaco cards at any 7-11 ATM, and of course Suica can be charged in train stations as well.  

    It’s interesting to note that a new trend is that many new credit cards are “numberless” (often called “NL”), meaning that they don’t have any number on them at all, and there is no mag stripe.  They only work with an IC reader.  This means they can’t be used for online  purchases, but they may allow you to generate temporary numbers on their net banking site or app.  This trend may filter over to debit cards in the near future.  A separate card with a credit card number printed on it is often shipped with these cards – this card can be kept safely at home and used for online purchases.

    Apps

    Most banks now have smartphone apps, though what you can do in these apps differs wildly between banks.  Some only allow you to check your balance, while others will act as an OTP, allow transfers, set up contactless payments, and sometimes even withdrawals & deposits.  In particular, PayPay bank and au Jibun bank both have apps that allow you to scan a QR code at the ATM and withdraw or deposit money without an ATM card.  Seven Bank even allows the use of facial recognition at 7-11 ATMs.

    OTP Tokens

    Many banks allow you to request onetime password tokens.  These will either be in the form of a physical token or a special app that allows you to generate a code which you must input to the web page in order to proceed with transfers, etc.  For example, Mitsubishi UFJ bank will give you a physical token or you can set up their app to generate codes.  Often times, the app will be free, but there will be a small charge for a physical token.  The physical token is better in some ways, as you won’t need to worry about anything when upgrading your phone, and it isn’t likely to be prone to hacking.  

    Rakuten bank doesn’t have an OTP token as an option last time I checked, but they send one time passwords to your email instead.

    What the OTP token is required for, and how it is used also vary between banks.  For example, most banks just require you  to press one button and generate the code which you enter – but JP Bank requires you to enter the transferree’s bank account number into the OTP in order to generate the token code.  When registering a payee for PayPay bank, you can decide whether OTP will be required to make transfers to this payee in the future, but some banks will just always require the OTP code for any transfer.  

    Direct Debits

    As mentioned above, direct debit can be set up to let money be withdrawn automatically by credit cards, utilities, etc.  This is something that in general needs to be requested to the company in question, and they will forward you request your bank.  Your Inkan (stanp) is typically required for the paper application form you must fill out.

    Sometimes these forms can be filled out online, and after filling out the portion on the company’s site, they will often forward you to the bank’s site, where you will be required to log in, and probably enter your OTP.  

    Some banks, such as PayPay will let you see a list of currently authorized transfers, and cancel them from the site.  Most banks, however don’t have this feature.  

    You can think of this as a “Pull” feature, as Tokyo Gas, Nuro Internet, Docomo Phone Service, etc., will initiate the transaction and “pull” the money from your account each month once you authorize them to do so.  

    You can also use your shopping debit card to set up payment for the comanies that support that – the main difference from a practical point of view is that shopping card transactions will show up on your online statement or passbook as something like “DEBIT 0234” instead of something more specific like “Tokyo Electric”. This will often incur a small fee, in contrast to using direct debit, which will usually be free.

    If there is no money left in your account, there is typically no “insufficient balance fee” from the bank – the transfer simply doesn’t go through.  Some companies will try the debit again at the end of the day, or the next day.  Other companies won’t, and so you will need to then send them the money another way.  Usually this will mean either manually transferring the money to an account they give you the information for, or using a card to deposit the money.  (For example, if you have a Marui credit card, you can deposit money to pay off your balance using cash by using a Marui ATM at one of their department stores).  

    Not all companies will allow direct debit from all banks.  For example, View Card will not allow you to set PayPay Bank as a direct debit source, but they will let you use MUFJ.  This is unlikely to be an issue if you use one of the Megabanks.  

    Post Card Payments (Paper Invoices)

    Many bills will show up in your mailbox as postcard type pieces of paper with a bar code until you set them up to be paid some other way (such as the direct debit mentioned above).  These can include utility bills, credit card bills, tax bills, and more.  

    The typical way to pay these is to take them to the convenience store and pay in cash (or Nanaco electronic money) at the cash register. 

    There are apps and banks that will let you pay these paper invoices by scanning them with a smartphone app and deducting the money from your bank account – but often with a service fee.  

    Automated Transfers

    Surprisingly, most banks don’t have “Push” features to automatically send money to other accounts.  Some, such as PayPay do, but these may incur transfer fees.  If this is important to you, you may want to have your pay deposited into the account with the automated transfer feature, and then this bank can send the funds elsewhere is required.  Obviously, when pushing money, the amount needs to be determined beforehand, so this can’t really be used for things like utility bills which change every month.  It can be used for things like rent, however.  

    Some companies will allow you to split your pay and have it split up and deposited into more than one account, but many don’t want to deal with the hassle.  If your company supports it, this may be one option to fund multiple accounts.  Also, some companies allow you to specify one account for standard payroll, and another for bonuses.  

    On the other hand, something that most banks do offer is automated import of money from other accounts on a regular basis.  These typically don’t cost anything, but may be limited to once per month, and the timing is usually predetermined.  For example, au Jibun Bank and PayPay bank offer the ability to transfer money from other banks on a regular basis, but this works something like this:  The money appears from the source account just like any other debit, on the 27th of the month.  The money appears in the destination account on the 4th of the following month.  This type of transfer usually needs to be set up well ahead of time, and is intended for long term use, for example to move money to a account every month for savings purposes, etc.  

    Real Time Debits

    Some accounts and services have the ability to be linked in such a way that they will immediately withdraw funds from your account for a specific purposes.  A good example of this is that most banks have a related company that operates brokerage accounts, and it is typically possible to set things up so that you can transfer money from your bank account to the brokerage account in real time in order to invest.  This feature is often called “Money Bridge” or similar.  For example, Rakuten Bank and Rakuten Securities can be used in this fashion.  

  • Why Foreign Banks Can’t Compete in Japan

    Why Foreign Banks Can’t Compete in Japan

     As I am sure most people know, banks accept deposits from customers, and then pay interest.  This costs the bank money.

    Banks also typically lend money out for business loans, home loans ,and other types of loans on which they of course charge interest.  

    Basically, the way banks have historically made profit is that they borrow money from depositors, lend that money out, charge interest, pay some percentage of that back to the depositors, and keep the rest for themselves.  

    Here are some average numbers from the United States as of the end of 2022.

    • Car Loan – 3.3% – 5.99
    • Savings Account – 3.3% – 4.35 %
    • Standard Home Loan – 5.5% – 6%
    • Business Loans (bank) – 4.2% – 4.5%

    As an example, an average consumer might put money into the bank, which pays them 3.3% interest.  The bank lends that money out as a home loan at 6%.  That gives them a 2.7% margin.    Since the banks have many millions of depositors, many thousands of home loans, and are operating billions of dollars, this more than covers their cost for renting expensive bank buildings and paying their employees, and leaves plenty of profit for returning to investors, expansion, etc.  

    Sadly banks in the US have gotten into less honorable, but more profitable operations such as pay day loans, title loans, excessive fees, and credit cards – but we’ll leave that discussion for another day.  

    The point is: banks in the US, and in most countries, have a large customer base and a wide percentage point spread to work with.  

    So how about Japan?

    I’ll use Mitsubishi UFJ Bank as an example: 

    • Normal Deposit Account (Futsuu Yokin Kouza): 0.0010%
    • Variable Rate Home Loans: 0.345% – 0.475%

    Yes, you read that correctly: The interest rate they charge on home loans is less than half a percentage point in the most expensive case!  10 year fixed rate loans are closer to 1%, but that’s still extremely cheap compared to most countries.  

    These rates aren’t special to Mitsubishi either.  As of this writing, Sony bank charges 0.397% (if you put a 10% deposit), and SBI Shinsei Bank charges 0.320%

    What that means is that the bank has to lend out the money, collect the payments, pay their rent, employee payroll, IT fees, utility bills, taxes, pay for losses on bad loans, and then pay interest back to the depositors.  It’s no wonder the rate on deposit accounts is essentially zero.  

    If you are willing to lock your money away for a year or more, then you can get an increased rate of return, say.. 0.0020%!  

    Having to live on a margin of less than 0.5% of interest requires massive scale and low costs.  A foreign bank operating in Japan is by its very nature likely going to have a small scale and higher costs.  

    Difficult Market Conditions in Japan:

    • Low Interest Rates: Japan’s prolonged period of ultra-low, and at times negative, interest rates made it difficult for retail banks to generate significant profits from traditional lending and deposit-taking activities.
    • Intense Competition: The Japanese retail banking market is highly competitive, dominated by large domestic megabanks (like SMBC, MUFG, Mizuho) with extensive branch networks and deep customer bases.
    • Small Market Share: Despite its long history in Japan (entering in 1902), Citibank’s retail banking market share remained relatively small.
    • High Operating Costs: Despite efforts, foreign banks often faced higher operating costs in Japan compared to local counterparts, including staffing, real estate, and compliance. Operating in Japan’s highly regulated financial sector still incurs significant compliance costs and requires navigating complex local rules, especially for foreign institutions that may not have the same deep-seated relationships with regulators as domestic banks.

    Because of this, the two main foreign banks operating in Japan both closed their retail branches in the past 10 years.  

    HSBC

    HSBC closed all of their retail/consumer operations and fled a number of years back.  Their branches were simply closed as they said goodbye to their customers.  

    Cultural and Operational Mismatches: Some analyses suggest that HSBC struggled with an “ethnocentric” approach in its Japanese retail operations. This includes:

    • Language Barrier: HSBC’s internal official language is English, which created challenges for recruiting bilingual local staff and daily communication.
    • Centralized Decision-Making: HSBC’s more centralized decision-making process clashed with the more consensual, decentralized, and often slower decision-making culture prevalent in Japanese organizations.
    • Employment Practices: Difficulties aligning with Japan’s “lifetime employment” culture and the challenges of dismissing staff. (It isn’t easy to terminate employees in Japan).
    • Technical Incompatibility: Issues with standardizing global ATM and internet banking systems to meet specific Japanese market requirements.
    • HSBC had also faced global scrutiny and fines related to anti-money laundering (AML) practices, which further underscored the need to consolidate operations and focus resources on core, compliant businesses.

    Exit from Japan:

    • As part of its exit, HSBC sold its Japanese private banking business (targeting ultra-high-net-worth individuals) to Credit Suisse Group AG in late 2011/early 2012.
    • For its broader Premier and retail banking services, HSBC phased out operations, gradually closing its branches and assisting existing clients in moving their assets to other banks and financial institutions.

    In essence, HSBC’s exit from Japanese retail banking was a strategic decision to withdraw from a market where it faced intense competition, low profitability, high operating costs, and cultural/operational hurdles, allowing it to reallocate resources to areas like corporate banking and asset management where it believed it could achieve better returns globally.

    Citibank

    Citibank also operated in Japan, essentially catering to rich foreigners, and also closed.  In many retail markets, including Japan, Citibank was a relatively small player compared to dominant local banks. Competing effectively in a saturated, low-interest-rate environment like Japan’s retail banking market was challenging and didn’t align with Citibank’s desired returns. This was not just to profit crunch, Citibank Japan was punished by the Japanese government multiple times for dealing with the Yakuza, as well as deficiencies in its governance, internal control, and business management systems.

    In the case of Citibank, though, SMBC Trust Bank took over the operations, absorbing Citibank Japan into  SMBC Trust Bank in 2015, and branding it “Prestia”.

    Because of this history Prestia is one of the only banks  where most everything is available in English, and one of the only banks to charge a monthly fee just for having an account (Depending on your balance).  

    Strategic Advantage for SMBC Trust Bank:

    • Acquisition of Desirable Assets: For SMBC Trust Bank, acquiring Citibank Japan’s retail operations was a strategic move. Citibank had a base of affluent, globally-minded customers, many of whom were expatriates, with significant foreign currency deposits and a preference for global financial products. This niche was attractive to SMBC Trust Bank, which aimed to expand its private banking services and enhance its foreign currency funding base.
    • Expertise and Brand: SMBC Trust Bank also gained Citibank’s know-how in foreign currency investment management, product development, and the established “PRESTIA” brand, which was well-known among a specific segment of the Japanese and expat population for its global services.
    • In essence, Citibank’s exit from Japanese retail banking was a calculated decision to shed a less profitable, high-compliance-cost segment in a challenging market, allowing it to reallocate resources to more lucrative global wealth management and institutional businesses where it held a stronger competitive advantage. The repeated regulatory issues in Japan likely accelerated this decision.
  • Basic Bank Accounts in Japan – Types of Banks

    Basic Bank Accounts in Japan – Types of Banks

    Overview

    Even though cashless payments are becoming increasingly prevalent, there are still many instances where traditional banking services are essential – whether it’s for sending money, withdrawing cash, or arranging a loan. In fact, you typically need an account just to receive your salary or pay your rent. What might surprise some is the variety of banking institutions we have.

    There are several national mega banks, numerous regional and local banks, as well as many online banks.  The lines between these are a bit blurred in some cases, but these are the three main categories for practical purposes.  

    Mega banks

    When most people outside Japan, or even new residents, think of a “bank,” their minds likely jump to the large “Mega-banks.” These are the titans of the financial world here, with their imposing, modern branches dotted across major cities and beyond. They offer a comprehensive suite of services, ranging from standard savings and checking accounts to complex financial products like mortgages and investment vehicles, catering to both individual and corporate clients. Their extensive ATM networks and robust online banking platforms make them incredibly convenient for everyday use.  

    Many older and/or conservative people feel that megabanks are somehow “safer” than the other types of banks. This has no basis in reality since all banks are required to follow the same rules and to have the same deposit insurance.

    Examples of Mega Banks:

    • Mitsubishi UFJ Bank (MUFJ) (三菱UFJ銀行)
    • Sumitomo Mitsui Banking Corporation (SMBC) (三井住友銀行)
    • Mizuho Bank (みずほ銀行)
    • Japan Post Bank (JP Bank) (ゆうちょ銀行) – Run by the post office – See more about this below.
    • Resona Bank　（れぞな銀行）

    Regional Banks

    Moving down in scale, we have the “Regional Banks” (地方銀行 – chihou ginkou). As their name suggests, these institutions operate primarily within specific prefectures or regions. They often possess a deeper understanding of the local economy and community needs, which can translate into more tailored services for residents and local businesses. Many people appreciate their more “hometown” or familiar feel compared to the larger institutions.

    Regional banks are often willing to give loans to people that megabanks aren’t, and sometimes have better interest rates and lower fees.

    Examples of Regional Banks:

    • Chiba Bank (千葉銀行)
    • Yokohama Bank (横浜銀行)
    • Tokyo Star Bank (東京スター銀行)
    • Fukuoka Bank (福岡)

    A distinct category includes “Shinkin Banks” (信用金庫 – shinyou kinko) and “Credit Cooperatives” (信用組合 – shinyou kumiai). These are unique in that they are member-owned financial cooperatives, similar to Credit Unions in the US. Their core mission is to support and foster the prosperity of their local communities and small to medium-sized enterprises (SMEs). They are generally smaller than regional banks and are often lauded for their community-centric approach and supportive services for local entrepreneurs.

    Often government loans and grants (f.e. small business support programs) require the use of a these institutions.

    • Tokyo Shinkin Bank (東京信用金庫)
    • Setagaya Shinkin Bank (世田谷信用金庫)
    • Hyogo Shinkin Bank (兵庫信用金庫)
    • Kobe Shinkin Bank (神戸信用金庫)

    Net Banks

    In recent years, “Internet-only Banks” (ネット銀行 – netto ginkou) have seen a significant surge in popularity, particularly among a younger demographic and those who prioritize digital convenience. Operating without physical branches, they leverage technology to offer services entirely online. This often results in competitive advantages like lower transaction fees, more attractive interest rates on deposits, and highly intuitive mobile applications, making them a preferred choice for many digital-savvy users.

    A recent phenomenon is the emergence of Banking as a Service (BaaS) and “Virtual banks”. This allows companies without a banking license or infrastructure to launch a bank with their own branding and financing. These include (for example) JRE Bank and Takashimaya Neobank.

    Examples of Online Banks:

    • Sony Bank (Moneykit) (ソニー銀行)
    • SBI Sumishin Net Bank / NEOBANK (SBI住信SBIネット銀行)
    • Seven Bank (セブン銀行) – (Run by 7&i, the holding company of the popular 7-11 convenience store chain).
    • Rakuten Bank (楽天銀行)
    • JRE Bank (Run by Japan Rail East with the infrastructure provided by Rakuten Bank)
    • PayPay bank (Previously Japan Net Bank) (PayPay銀行)
    • au Jibun Bank　（auじぶん銀行）
    • Aeon Bank (イオン銀行)

     More about Japan Post Bank

    Japan Post bank started as the “Postal Savings” system in 1875, based on a similar system that was in place in the UK. The primary goal at the time was to provide a simple, secure, and universally accessible means for the public to save money.

    We listed this in the megabank section above, and it is a mega bank, but it is a bit different from the others. Japan Post Bank is distinctive because it was historically an arm of the national postal service, its immense network is unparalleled. Thanks to its origins, Japan Post Bank has service points (or at least ATMs) in virtually every post office across the archipelago, making it incredibly accessible, even in the most remote rural areas where other banking options might be scarce.

    Investment Banks

    Investment banks (証券) are also common, but not really considered “banks” in Japan. These allow you to trade stocks and bonds, etc., but require a separate type of license, and are often linked to a “normal” consumer bank.  

    Examples:

    For example, Rakuten Securities is a separate company set up by Rakuten that lets you set up investment accounts. You can set up a normal Rakuten account at Rakuten bank, an investment account at Rakuten securities, and link them for easier transfers. The same situation applied to SBI and other companies.

    Personal Experience

    I’ve had accounts at 2 of the commercial megabanks, numerous net banks, one regional bank, and JP Post.

    Summary

    This has been a brief overview of the diverse banking landscape here in Japan. Each type of institution serves a particular niche and contributes to the overall financial ecosystem. It’s quite fascinating when you consider the unique roles they each play in our society.

    • Megabanks will have the most branches around the country, and you can walk into one any time you need to do some paperwork, etc.  
    • Regional and local banks will often offer your better deals on interest rates, etc., but may not have ATMs all around the country.  
    • Online banks will generally offer the best deals, and the best online banking, but have few or no physical branches.  The other banks also have online banking, though the available features often lag behind the online banks.
    • Japan Post Bank has the most locations of any bank in Japan.
  • Is Japan a Cash Society?

    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.

    References: