Surge in QR Code Transactions in Japan as Digitalization Push Gains Momentum

In Japan, a significant Surge in QR Code Transactions has been observed, driven by efforts from municipalities to promote digitalized consumption through electronic payments.

These initiatives, often conducted in collaboration with local businesses, have gained traction despite encountering resistance from certain demographics, particularly the elderly and those less familiar with digital devices.

Elderly Digital Transition

The country’s considerable elderly population, which has shown less enthusiasm for adopting electronic payment systems, has contributed to Japan’s gradual transition to cashless transactions. This trend has become more pronounced during the COVID-19 pandemic. To address this digital gap, local governments are implementing measures such as offering paper gift certificates and organizing smartphone workshops for seniors.

A notable example is the city of Tagawa in Fukuoka prefecture, known for having one of the highest proportions of elderly residents in the region. Despite this demographic challenge, local officials have been persistent in promoting their cashless payment initiatives, including the implementation of QR code programs.

Typically, these campaigns are conducted in partnership with major QR code payment system operators, with financial support sourced from regional revitalization grants provided by the central government.

QR codes, initially developed by Japanese industrial equipment manufacturer Denso Wave Inc. in 1994 for inventory tracking purposes, have since evolved into versatile tools with broader commercial applications, including contactless payment methods.

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In Tagawa, there has been a notable increase in QR code users, reportedly rising by 30% following the introduction of the first program in October 2020. This initiative offered a 20% discount on purchases made using the payment system. Despite this surge, individuals unfamiliar with digital devices, especially many elderly individuals without smartphones, have expressed skepticism about the benefits of such programs.

Cashless payments

Cashless payments have faced initial resistance, but Tagawa and an increasing number of local governments have persisted in running similar campaigns. PayPay Corp, which initiated the program in July 2020, disclosed that 457 municipalities had either implemented QR code drives or had plans to do so.

These programs have proven beneficial for both local governments and consumers. They streamline processes by eliminating the need for issuing and printing shopping vouchers for refunds, while also enabling consumers to make purchases conveniently from home.

Efforts to transition individuals reliant on cash to cashless payments are ongoing, particularly targeting seniors who are often categorized as digitally challenged. A survey conducted by the Cabinet Office in 2023 revealed that about half of respondents aged 70 and older admitted to rarely or never using digital devices.

In response, municipalities like Tagawa have continued to issue paper-based shopping vouchers, first introduced in 2009. Additionally, cities have been organizing seminars to teach the elderly how to operate smartphones.

Mitsugu Setoguchi, a 46-year-old official from Tagawa city, suggests that educating people on smartphone usage is crucial in promoting cashless transactions.

“First and foremost, we hope to use this opportunity of having people learn about cashless payments to familiarize them with how to operate smartphones,” he stated.