Despite being one of the most technologically advanced nations in the world, Japan has been slow to adopt a widespread cashless system of retail and utility payments. When compared to South Korea and China, Japan is a country where consumers are still enamored with their yen notes and coins, but there are strong plans to turn this sentiment around on a national level.
Prime Minister Shinzo Abe is known as a leader who understands the views and economic attitudes of his country's aging population; to this effect, his Abenomics plan to reform and modernize the Japanese economy takes into account the challenge of persuading older consumers to go cashless. Instead of going directly towards smartphone payments, the Abenomics plan calls for an initial stage of refillable cash cards.
Through a partnership with e-commerce giant Rakuten and the national rail and bus system of Japan, the government hopes to move society closer to a cashless ideal. The government is ready to introduce a rewards program to encourage consumers to use Suica cards that can be refilled with hard yen or bank transfers, but there is no indication that cryptocurrency could be used because financial regulators have yet to establish a legal framework in this regard.
While blockchain development in Japan has advanced considerably in recent years, digital currency adoption has been slow, and this is hardly surprising given the strong attachment to cash payments. Some economists believe that Japan's lack of enthusiasm for digital payments could result in a loss of regional competitiveness. In South Korea, for example, just 20 percent of payments are made with cash, and this happens to be the current rate of electronic payments in Japan.
One of the goals found within the Abenomics plan is to reach 40 percent of total digital payments across Japan by the year 2027. It is not clear how much of this rate is intended to be cryptocurrency transactions, but just getting older consumers to use their Suica cards would be a step in the right direction. The Bank of Japan has actually made a digital version of the yen on an Ethereum blockchain, but it is in no rush to put it in circulation.