Has the cashless society arrived? A comparison between China, Japan and South Korea

In the era of the Fourth Industrial Revolution, cashless payment methods have changed the lives of many people. However, people around the world are not all so subjective about this convenient payment method . Taking the data of China, Japan and South Korea as an example , it can be seen that these three countries have obvious national trends.

China and South Korea: Cashless Society

South Korea is often seen as the cashless champion in Asia. According to research, only 14% of payments in South Korea involve cash . One could argue that it is already a cashless society and the main reason it happens is that Koreans love to use it .

South Korea has a smartphone penetration rate of nearly 100% , and the younger generation's demand for fast and convenient payment methods is growing. According to The Korea Herald , Koreans are more familiar with digital payments than ever before, thanks to the booming e-commerce industry during the pandemic , with mobile shopping accounting for more than 70% of online sales.

Even before the pandemic, cash was dwindling.   In South Korea, where more than half of the country’s 1,600 bank branches no longer accept cash deposits or withdrawals , businesses are looking into virtual and prepaid cards, and the country has passed the world ’s first comprehensive cryptocurrency law.

Cash payments as a percentage of all payments in some countries and regions Image source: Statista

Meanwhile, in China, about 60% of payments are cashless, but the other 40% are still in cash . The only reason our country doesn’t rank higher is its large population. However, with the rise of dominant fintech platforms, China is quickly becoming one of the most cashless societies in the world.

China is the undisputed leader in e-commerce in Asia , with approximately 52.1% of retail sales in the country expected to come from e-commerce by 2021. China is a mobile-first country, and mobile payments using QR code scanning have been accepted by mainstream society from major cities to more rural areas .

Sales via mobile devices account for 60% of China's entire e-commerce market , according to JPMorgan .

Japan’s loyalty to cash

Image source: Reuters

Japan has long been known for its heavy use of cash. About 82% of payments involve the use of cash, and while the pandemic has prompted cash-loving Japanese to abandon physical currency, Japan's rapidly aging population is resisting change.

According to Reuters, during the pandemic, Japan's currency in circulation and bank deposits have even grown at a record pace, prompting businesses and households to continue hoarding cash. The proportion has risen with the elderly, some of whom insist on using cash to prevent wasteful spending.

Japanese society in general remains more cash-dependent, largely due to the frequency of natural disasters.   The government has set a target of increasing cashless payments to about 40% of transactions by 2025, from about 20% currently .

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