TOKYO – Tourists from Singapore and seven other Asian countries will soon find it easier to pay for their purchases in Japan using their local QR code wallets under a new joint payment scheme.
Japanese travellers will likewise be able to, for example, scan and pay for their chicken rice meal at a Singapore hawker stall that accepts QR code payments.
Japan aims to begin the scheme in time for the Osaka World Expo, which begins on April 13, 2025, and is working to ensure that its JPQR payment system is compatible with the unified standards of eight other countries.
The countries are Singapore (SGQR), Malaysia (DuitNow QR), Indonesia (QRIS), the Philippines (QRPh), Thailand (Thai QR Payment), Cambodia (KHQR), Vietnam (VietQR) and India (BharatQR).
But Japan faces the urgent challenge of increasing the usage of its JPQR system, which is now available in just 15,000 businesses across the country, mostly small ones.
Few of these are frequented by foreign tourists.
“One single QR code in a store can process payments from multiple payment operators across Asia,” Mr Kenichi Matsuguma, director of the cashless payment promotion office at Japan’s Ministry of Economy, Trade and Industry, told The Straits Times.
JPQR will be compatible with an array of Japanese as well as foreign payment wallets. So Singapore visitors to Japan can use, say, GrabPay or PayNow, to make a JPQR payment.
But he added: “The challenge is that not many Japanese businesses are on board, though we hope the potential use by foreign visitors will be a catalyst to convince them to adopt JPQR.”
Mr Matsuguma admitted that Japan has been a laggard in going cashless compared with Asean. In 2022, Singapore, Indonesia, Thailand, Malaysia and the Philippines signed a pact to unify their QR code payment systems.
In 2023, 39.3 per cent of all transactions in Japan were cashless ones, nearly triple the 13.2 per cent in 2010, according to Economy Ministry data. But the figure is much lower than that in neighbouring China and South Korea: In 2020, cashless payments made up 83 per cent of all transactions in China and 93.6 per cent in South Korea, according to a March 2023 report by a Japanese government study group on cashless payments.
Mr Matsuguma said the aim is for Japan to achieve 40 per cent cashless transactions by 2025, and eventually, 80 per cent, though no target year has been set for the latter goal.
Credit card payments formed the bulk of cashless transactions in Japan in 2023, at 83.5 per cent, while QR code payments across the country’s array of QR payment wallets accounted for 8.6 per cent.
Most of these QR code transactions are made through what is known in the industry as “consumer-presented mode” (CPM), which is by far the prevailing method in Japan and used at millions of stores including convenience stores, drugstores and restaurants.
However, the JPQR-unified QR code, which visitors from eight Asian countries including Singapore will be able to use, is known as “merchant-presented mode” (MPM), which is similar to Singapore’s SGQR.
Under the CPM model, the retailer scans a QR code generated by the shopper’s mobile device. With the MPM, the consumer scans a retailer’s QR code and, in most instances, has to manually key in the purchase amount.
Mr Yoshio Fukuda, general director of the Payments Japan Association, which promotes cashless payments in Japan, told ST that both methods have their pros and cons.
The CPM has far higher set-up costs and transaction fees, and requires businesses to enter agreements with individual payment operators, Mr Fukuda said.
But it is more efficient as it is linked directly to a business’ point-of-sale (POS) system. This allows easier data analysis of consumer preferences as well as best-selling products. One major advantage is its ability to centrally manage information from multiple stores, he added.
The MPM, meanwhile, requires almost zero set-up costs and requires the retailer to only display a QR code without any investments in scanning devices.
However, it is less efficient as employees have to check the entered billing amount, and it does not collect as much data as the CPM model.
“Convenience store operators, for instance, may think that the MPM is too burdensome since it cannot be linked directly with the POS register,” said Payments Japan Association director Mayu Suzuki.
“Since most places that inbound tourists visit are already using the CPM method, our challenge will be to convince them to concurrently adopt the MPM,” she added.
While all 47 prefectures are represented among the 15,000 businesses using JPQR, many of these businesses are centred in five prefectures where a trial was carried out in 2019 – Fukuoka, Wakayama, Iwate, Nagano and Tochigi.
The association aims to expand JPQR to at least 100,000 stores by the launch of the joint QR code payment system, Mr Fukuda said. It believes that the current low adoption rate stems from a lack of awareness, and plans to proactively promote JPQR to individual businesses.
