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Market Research Report

Japan Payments Market Outlook (2017-2030): Based on Type, Based on Application with COVID-19 impact

Published Date :

2020-09-17

Report Pages :

713

Format :

PDF

Region Covered :

Japan

Japan Payments Market Outlook (2017-2030)

The Japanese are the most cash-loving population in the world and everyday transactions are usually completed in notes and coins. The main reason why Japanese people continue to use cash is because its convenient, as cash is accepted everywhere, but surprisingly, there are many stores that don’t accept credit cards in Japan. In fact, even many big chain stores don’t accept credit cards in Japan. Almost 80% of transactions in Japan are still made in cash, which can be seen as a great opportunity for new businesses, such as implementing new phone payment solutions in Japan. However, the Japanese government is also very serious about the changing preferred payments in Japan. They set an ambition goal to increase the ratio of cashless payment transactions up to 40% by 2025. The market size of mobile payment will reach USD 50 billion by 2023, which is four times up from 2017. Unlike countries such as China, where one or two digital payment systems dominate the market, Japan has a plethora of offerings competing against each other. Though, Japan has numerous platforms for cashless settlement, but they have yet to overwhelm the usage of cash, one such solutions could be to enhance the inter-operability of digital currencies and infrastructure.

Cashless Japan: A new vision

Outside the strange optics of this culture of cash, there are serious concern about the risks and costs, both real and opportunity costs, associated with it. Japan loses over USD 18 billion every year on printing notes, maintaining ATMs, along with other administrative costs associated with handling cash. This dependency on cash has an additional effect on revenue from tourism too. Japan, which will be hosting the Summer Olympics in 2020, expects to host 40 million tourists. With the government looking to the tourism sector to boost the country’s GDP, the culture of cash, predominant at business establishments across the country, would certainly undermine tourists spending. Therefore, to curb these risks and reduce these unnecessary costs, going cashless can be a huge stimulus for economic growth. Cashless payments have shown to increase household expenditure by 0.2% every year, besides creating 2.6 million jobs annually and increasing GDP.

E-commerce payment trend in Japan: Cards dominate, but cash persist

Cards are Japan’s primary way to pay for online shopping, taking a 65% share of the market, or USD 98 billion in sales. Use of this method is estimated to rise slightly, at a CAGR of 3.5%, to 2021. Debit and credit cards are also popular in Japan, with brands including BitCash and Mint. Credit cards are more likely to be used than debit cards to complete an online shopping transaction. Further, bank transfers, known as furikomi, are the second most utilized payment method in Japan, accounting for around 14% of sales, such as PayEasy, a popular bank transfer service, offers the ability for shoppers to pay at post offices, banks and automated teller machines.

Technological advancements that are driving growth in Japan

Digital Channels:

These channels provide a step to change to customer experience that allows for the evolution of digital treasurer workbenches, catering the needs of different users in one solution and finally delivering on the promise to move away from separate corporate portals that are loosely integrated at best.

Open APIs:

These are the software interfaces that enable access to bank’s product and services externally in an easy, safe and standardized manner. Although, much of the attention has been given to retail applications, the potential benefits of open APIs are at least as powerful in GTB settings and could facilitate the entry of third-party attackers. For instance, by allowing payment initiation through an app developed by a trusted third party rather than exclusively through the bank’s exclusive website, the corporate payments space that was once dominated by banks can be altered by the entry of these third parties, who can develop value plans for bankers based on collection of different services.

Advanced Analytics and Artificial Intelligence:

Applications based on advanced analytics and artificial intelligence can further enhance the delivery of value-added services. This technology can be used to enhance the front office solutions with features including liquidity forecasting and exposure management, as well as middle office operations. Further, in operations, artificial intelligence can be used in credit scoring, fraud prevention and natural language processing, which in turn can enable intelligent automation of document processing.

Blockchain:

These initiatives are particularly beneficial to the field of trade finance and continue to draw significant attention and investment outside the established use cases in cross-border payments and correspondent banking, such as those developed by Ripple. This distributed ledger technology, enables the secure and trusted sharing of validated data among all participants in a given transaction in real time, which is a powerful value proposition to increase the efficiency and safety of most trade finance products.

Japan Payments Market Segmentation

Based on Type

  • Credit Transfer
  • Direct Debit
  • Check Payment
  • Cash Deposit

Based on Application

  • Banks
  • Non-Banking Financial Institutions
  • Others

Overview of Japan Payments Market

The growth of the payments in Japan is driven by combination of factors, such as strong growth in account liquidity and the increased growth in the electronic payment transactions. Digital Payments segment is expected to reach USD 165,210 million by the end of 2020, owing to the growth of e-commerce, amid COVID-19 pandemic. Digital Payments is projected to reach USD 267,875 million by 2024, growing at a CAGR of 13%, during the forecasted period. However, the Digital Payments market largest segment is Digital Commerce with a projected total transaction value of USD 148,000 in 2020. Globally, electronic payments transactions have been growing at a stunning rate of 22% in emerging countries over the last five years. Further, roughly 45% of revenue growth of payments is expected to be derived from account-liquidity revenue, which is an increase from approximately 40% over the past five years. Global Payments Market is estimated to grow at a Compound Annual Growth Rate (CAGR) of 7%, during the forecasted period i.e. 2017-2030.

According to the Goldstein Market Intelligence Analyst, Japan Payments Market is estimated to grow at a Compound Annual Growth Rate (CAGR) of 7%, during the forecasted period i.e. 2017-2030.

Factors Driving the Growth of Japan Payments Market

Growth is fast-tracking in non-traditional areas: While secular transaction growth remains healthy, it is decelerating and is generally is in the mid-single digits in the developed markets, where most of the leading players reside and derive the majority of their volume. As strong remains to be clustered in few pockets, emerging markets, cross border, digital channels, and nontraditional car verticals. 

Growing unmet needs for integrated solutions, especially for SEM’s: The changing needs of customers also demand a shift in dynamics across the payments value chain, as the secular proliferation of payment options has compounded complexity. In response, many merchants, especially SEM’s, are opting for competitively priced solutions that can streamline the process while meeting customer expectations.

Need for cost efficiency has become more important: Interchanging regulations and competitive pressure from new account based have restricted the ability to leveraging pricing as a means of management, due to which the focus shifts to the cost side for margin preservation.

The Emerging era of PaaS (Public-as-a-Service)

Banking is continuously seeing transformations because of new technology, regulation, and operating models. An important such example is the rise of banking as a service (BaaS), a new approach to delivering banking services and products. BaaS providers offers their customers, the ability to connect to a cloud-based platform on which they can manage the end-to-end value chain for a banking product or service. From this platform, they can more easily iterate an internally developed service or offer their customers a variety of products and service. Further, BaaS model gained grip in payments due to payment’s massive reach, high volumes, and transactional nature. Though, several payments as a service (PaaS) player are already active in the industry, with a wide range of business models. Some are developing payments solutions and delivering these services to their customers, while others market their solutions on a white label basis to financial institutions, which in turn design services catering to the needs of their consumers and business customers.

Major Players of Japan Payments Market

  • 2Checkout
  • BrainTree
  • Chase Paymentech
  • CyberSource
  • Digital Garage
  • eContext
  • Litle&Co
  • NTT Data Corporation
  • PacNetServices
  • PayPal
  • Webpay
  • WorldPay

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Key questions answered in this Japan Payments Market Outlook Report

  • What is the total market size by 2030 and what would be the expected growth rate of market?
  • What is the total revenue per segment and region in 2016-17 and what would be the expected revenue per segment and region over the forecast period?
  • What are the key market trends?
  • What are the factors which are driving this market?
  • What are the major barriers to market growth?
  • Who are the key vendors in this market space?
  • What are the market opportunities for the existing and entry level players?
  • What are the recent developments and business strategy of the key players?

Reasons to buy this market study

  • Facilitate decision-making based on strong historic and forecast data for Japan Payments Market
  • Develop strategies based on the latest regulatory framework
  • Position yourself to gain the maximum advantage of the Japan Payments Market’s growth potential
  • Identify key partners and business development avenues across the globe
  • Respond to your competitors’ business structure, strategy and prospects
  • Strategically analyze micro-markets with respect to individual growth trends, future prospects, and their contribution to the market
  • Analyze competitive developments such as expansions, investments, mergers & acquisitions, new product developments
  • Analyze the opportunities in the market for stakeholders and draw a competitive landscape for market leaders
  • To strategically profile key players and comprehensively analyze their market shares and core competencies



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Japan Payments Market Outlook (2017-2030): Based on Type, Based on Application with COVID-19 impact

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