One of the most common questions we hear from e-commerce companies entering Japan is what payment methods Japanese users expect when shopping online. While credit card is by far the most popular (and it is usually fine to only offer credit card payments), Japanese online shops also feature some other unique payment methods that are worth considering for certain businesses.
1. Credit Card (About 80% of online shopping payments)
As with most countries, credit cards are the most common way that Japanese consumers make purchases online, representing around 80% of all online purchases.
According to a study in 2020, Visa is the most popular credit card brand in Japan, representing 50.8% of credit cards, followed by JCB with about 20% and Mastercard with 17.8%. Japanese websites often allow for users to pay with credit card via local payment providers such as Rakuten Pay or Amazon Pay, which offer the convenience of not having to re-enter their card number, and allows users to use points to pay for some or all of their purchase.
One unique feature of credit cards in Japan is the ability to split payments into installments. Many local websites allow users to enter a preferred number of installments that they can split up their payment into, which is particularly popular for large purchases like electronics or furniture. However, most credit card providers allow users to split payments up through their websites after payment, meaning that it is not essential to offer this feature at checkout.
2. Convenience Store Payment (About 7% of online shopping payments)
The next most popular payment method is convenience store payment, where users are issued with a barcode or number that they take to a local convenience store to pay. Visa/Mastercard debit cards were still rare in Japan until about 10 years ago, meaning that many people did not have a card that they could use for online purchases. This fueled the growth of this payment method. However, it has decreased in popularity recently as credit and debit cards have become more accessible. It is still a preferred payment method for some users, with it being seen as a safe and convenient way to pay.
It can be a good idea for foreign businesses entering Japan to offer convenience store payment as an option depending on the product and target users. If your brand is unknown, users may be reluctant to enter their credit card details on your website, and prefer to opt for the safety of a convenience store payment for their first purchase.
3. Carrier Payment (About 3% of online shopping payments)
The third most popular payment method is Carrier Payment, which allows a user to charge payments to their telco provider and pay it with their monthly phone bill.
Historically, Japan has had a tightly regulated telco industry with the majority of the country having a contract with one of three telco providers - NTT Docomo, Softbank or au. However, deregulation has resulted in many new companies appearing over the last decade that offer cheaper phone plans and do not offer carrier payment services. This has resulted in a large drop in the popularity of this payment method. It is now rare to find on e-commerce websites, and is more common for small in-app purchases on gaming apps for example.
4. Cash on Delivery (About 3% of online shopping payments)
Japan's postal services and couriers are reliable and convenient for shoppers, with the ability to select 2 hour windows for packages to be delivered. Many Japanese ecommerce sites still offer cash on delivery as an option for payment, with the courier taking payment on delivery, either in cash or with digital money (explained in our article about in-store payment methods).
However, since COVID face to face delivery has been reduced, and many online shoppers now request that their deliveries be made to package lockers in their building. This, combined with the inconvenience of needing to be home to receive and pay for the delivery, has resulted in it becoming less and less popular.
Today, credit cards are the norm for online purchases in Japan. Despite this, it can be beneficial to offer other payment methods, such as convenience store payments, to ensure that those without credit cards can still make purchases. This is especially important for foreign brands, to which Japanese consumers may be more reluctant to provide their credit card details.
At Wayfinder, we offer Japan UX Research services to understand how Japanese users are perceiving your checkout flow. We also offer Japan Market Entry services to help you understand what payment methods are most appropriate for your product and target users. Contact us to learn more.
