In Japan, 80% of consumers pay for transactions with cash.
That’s why Amazon Japan’s decision to introduce Amazon Pay in partnership with startup Nippon Pay shows they are in the cashless payments market for the long term.
With only 20% of Japanese consumers using other forms of payments than cash, there’s a lot of education, marketing, and social hurdles before consumers embrace new cashless forms of payment.
How Amazon/Nippon Pay will work
With a smartphone and Amazon.com app, consumers display a QR code when they’re ready to make a purchase. A merchant’s Nippon Pay tablet camera scans the QR code and completes the transaction.
All that consumers require is a credit card and the mobile app to get started with the new service.
Amazon stores in the US already accept QR code payments but Japan is the first market for Amazon to roll out its QR code payment system.
Japanese love to pay cash
With only 20% of consumers using credit cards, electronic money, and other cashless systems, Japan is a tempting growth market. Contrast that with China where 60% of consumers use cashless payments or South Korea where it is 90%.
But how fast will Japanese consumers convert to cashless?
Takuya Inokawa, head of Amazon Japan’s Amazon Pay Division, said the company is starting with small retailers who normally do not accept credit cards.
Japanese merchants typically pay 3 to 4% in cashless payment transaction fees, but Nippon Pay will cover transaction fees until the end of 2020 for merchants who sign up Amazon Pay service before the end of the year.
According to Nikkei Asian Review, Nippon Pay has provided an estimated 15,000 merchants with payment tablets.
Cashless pay competition is growing
These Nippon Pay tablets are also synced with Alipay which has also entered the mobile payments market in partnership with Yahoo Japan and SoftBank Group.
Amazon competitor Rakuten, Japan’s largest e-commerce company, also has a mobile payments service as do mobile provider NTTDocomo and popular chat app Line.
In the short-term, Amazon’s deal looks like a good one for Japanese retailers but stay tuned for cashless payments competition to intensify.
Visuals courtesy of Amazon, Rakuten, Nippon Pay
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