Jobs and the Future of Work

How Japan is moving towards a cashless society with digital salary payments 

Japan cashless society digital salary payments

Compared to other Asian countries, Japan has been slow to move towards a cashless society. It hopes to reverse this with digital salary payments. Image: Unsplash/Jonas Leupe

Naoko Kutty
Writer, Forum Agenda
Naoko Tochibayashi
Communications Lead, Japan, World Economic Forum
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  • The Japanese government is preparing to introduce a system for companies to pay salaries digitally – without going through bank accounts – by spring 2023.
  • According to a recent survey, only 30% of companies are considering implementing this system.
  • Compared to other Asian countries, Japan has been slow to move towards a cashless society, but it hopes to change that.

The Japanese government is preparing to introduce a system for companies to pay salaries digitally – without going through bank accounts – by spring 2023. By promoting this system, which allows companies to transfer salaries to workers using smartphone payment apps, the government hopes to solve the complex issues facing foreign workers in Japan, expand the financial services market and deregulation, and promote growth.

However, according to a survey of 247 companies conducted by Works Human Intelligence, a leading developer of integrated HR systems for corporate clients, less than 30% of companies are considering or will consider implementing digital salary payment. The survey found that system and operational costs and increased operational person-hours were the main barriers.

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Japan: a fast emerging cashless society

The potential benefits of paying salaries digitally are significant. It reduces administrative fees associated with payroll payments and helps foreign workers, who often find it difficult to open a bank account. Companies can also indirectly offer benefits such as cashback and point rewards for using QR code payments and e-money payments as part of their employee benefits program. On the other hand, the survey highlighted that most companies are not yet ready to adopt such a system.

In 2018, the Ministry of Economy, Trade and Industry (METI) formulated the "Cashless Vision," which proposed measures for Japan to move towards becoming a cashless society. It aims to increase cashless transactions to 40% by 2025, when the Osaka Expo is held, and possibly 80% in the future. The goal is also to help solve issues such as labour shortages, regional revitalization, and productivity improvement.

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The Cashless Promotion Council, which brings together government, educational institutions, research institutes, and private companies, was also established in 2018 to support this initiative across industries for a cashless society. According to its roadmap, the percentage of cashless payments in Japan rose from 13.2% in 2010 to 32.5% in 2021. This is slow compared to other Asian countries: South Korea, China and Singapore all had higher percentages in 2020, at 93.6%, 83%, and 60.4%, respectively.

Japan has recently eased its COVID-19 entry restrictions, and expectations have been rising for the economic benefits that tourism could bring. Foreign tourists are accustomed to the convenience of cashless payments, and Japan needs to move fast on this in order to fully take advantage of this economic opportunity.

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