By Barrett Ishida

 

When you first arrive in Tokyo, you may believe that you’ve stepped into the future. That is, until you buy something.

As smooth and efficient as Japan can be, paying for something is still a tedious dance of counting bills and coins. Many retailers and restaurants don’t even accept credit cards, and at ones that do, easy to use card payment terminals with swiping or tapping are nearly non-existent. This is why you need to adapt your payment methods when selling to Japanese.

Japan is still very much a cash-based society.

With Tokyo’s crime rate scoring an impressive “very low,” it’s common for people to carry a few hundred dollars in cash around with them without a worry. More so than the crime rate, though, it’s because of cultural reasons that Japanese people favor cash. They highly prefer tangible items that they can quickly see and feel because they're easier to trust.  

Online businesses often make the mistake of only offering payments by credit card and PayPal when selling to Japan.

While that’s completely normal when selling online in the US, e-commerce sites in Japan offer more to cater to the people. It is important for foreign companies to localize in this way.

A few typical payment options in Japan:

  • COD (Cash on Delivery): Customer pays cash to the delivery agent when the item is received at home. 
  • Bank transfer: Customer pays via an ATM. They’re given bank and account information on where to send the payment to.
  • Convenience store payment: Customer brings their purchase information to a convenience store and pays for it at the register. In some cases, purchase information is retrieved at a special kiosk in the store.
  • Post office transfer: Customer pays via the post office (Japanese post offices provide multiple services beyond mail delivery)

Rakuten's payment options in the US

Rakuten's payment options in Japan

The availability of so many options combined with the Japanese nature to be wary of new things inherently possessing a risk has presented a lot of challenges for companies like PayPal. While Stripe has followed suit in their push to Japan, it may be a while before other mobile payment services such as Venmo or PayPal’s PayPal.me enter and find success. You won't see a group of friends in splitting dinner via an app.

While a huge market, Japan wasn't one of PayPal.me's initial targets

In the US, 75% feel relieved at the prospect of using P2P payment services to settle small debts, and mobile P2P is forecasted to grow by 31 times by 2019. In Japan, however, you’d better carry cash and offer cash payment options when selling online to Japanese customers. The more Japanese your business is, the better.

 


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