Introduction to Japan

An overview of Japan's currency, population and key statistics.

Cash currency

The yen (¥) is the official currency of Japan. The currency uses the ISO 4217 code "JPY" in the foreign exchange market. It is the third-largest currency in global reserves after the US dollar and the euro. Under the New Currency Act of 1871, the yen is subdivided into 100 sen, or equal to 1,000 rin.

Yen banknotes circulated in Japan are ¥1,000, ¥5,000, and ¥10,000. The Bank of Japan also prints ¥2,000 notes, but they are rarer than the others. Meanwhile, yen coins come in ¥1, ¥5, ¥10, ¥50, ¥100, and ¥500 denominations.

Digital currency

In recent years, the Japanese government has committed to incorporating digital currency into its economy. The country's Financial Services Agency (FSA) oversees the crypto sector. It collaborates with the Japan Virtual Currency Exchange Association and the Japan Security Token Offering Association to perform the task.

Under the Payment Services Act, crypto payment is a payment method not denominated in fiat currency and used to pay unspecified entities. This regulation demands crypto exchanges to register with the FSA. It imposes no restrictions on citizens owning or investing in cryptocurrencies. 

Japanese population

Japan had a population of 125,308,928 as of July 2023, according to the latest United Nations data. The country has a total land area of 364,555 square kilometres, meaning its population density is 347 people per square kilometre. Census data shows that 91.8% of the country's people live in urban areas such as Tokyo and Osaka. Japan has seen its population shrink since 2015 due to low birth rates.

Languages spoken in Japan

Japan's official language is Japanese, which uses a character-based script. The Japanese writing system encompasses kanji, hiragana, and katakana. Some regions in Japan have traditional dialects, including Ainu and Amami. Other languages spoken in the country include English and Chinese.

Key statistics

Japan had a gross domestic product of $4,231.14 billion in 2022. This accounted for 1.89% of the global GDP that year. The  GDP in 2022 was significantly lower than the $5,005.54 billion achieved in 2021. Experts say Japan will see GDP growth in 2023, fuelled by increased private spending. Factory activity also showed signs of recovery as of the middle of 2023.

Japan's GDP per capita stood at $33,906 as of December 2022. According to the World Bank, the country had a gross savings rate of 25.1% in 2021, relatively unchanged from the previous year. The global average gross savings rate stood at 23.15% in this period, which indicates that Japan has a higher savings rate than most countries.

Japan internet and mobile phone trends

Japan had an internet penetration rate of 94% in early 2022. According to an analysis, the number of internet users in Japan grew by around 844,000 between 2021 to 2022. Experts say the coronavirus pandemic accelerated internet adoption in Japan.

Recent data showed that 85% of the country's population owned mobile phones in 2022. Nearly 97% of Japanese households owned at least one smartphone that year. Experts estimate the number of mobile users in Japan to increase to 94% of the population by 2027.

Japan e-commerce stats

Japan is the third-largest e-commerce market in the world. eCommerceDB predicts that this sector will generate $153.98 billion, placing Japan ahead of the United Kingdom. Experts estimate that Japanese e-commerce will grow at a compound annual growth rate of 9.8% between 2023 and 2027. This means the sector could achieve annual revenue of $223.49 billion by 2027.

The food & personal care category contributes 36.9% to the Japanese e-commerce market. Other popular categories are fashion, electronics, and furniture & appliances.

Summary of Japan's fiscal policy

Japan follows a rigid fiscal policy, causing the country to experience slower growth than other major economies. The country's annual growth rate averaged 0.6% over the past 20 years while the US saw 1.9% growth and Britain 1.5% growth in the same period.

Revenues from taxes, social security premiums, and other income sources increased by 130% in Japan over the past two decades. Meanwhile, the US saw an increase of 260% and Britain an increase of 230% in the same period. Japan's tax revenues are expected to hit a record ¥69 trillion in the 2023 fiscal year, but the growth rate is slower than the country's peers.

Experts say Japan's limited tax revenues restrict the government's ability to manoeuvre the budget. The government can only direct 30% of its budget to expenses outside mandatory spending. In the 2023 fiscal year, nearly 70% of public expenditures were for debt service costs, social security, and tax allocations to local governments.

How people pay in Japan

An overview of how people in Japan choose to make payments.

Most popular payment methods

  • Cash

  • Bank transfers

  • Debit cards

  • Credit cards

  • Konbini

  • Mobile wallets

Traditional payment method

The primary traditional payment methods used in Japan


In 2021, Mastercard's market share in Japan was 21%. The payment processor mostly dominates in the European region. Several large commercial banks in Japan, such as Tokyo-Mitsubishi UFJ, offer Mastercard products to their customers.


By transaction value, Visa is the largest global card network. In 2021, Visa had a 30% market share in Japan. Since 2016, the number of Visa card users in Japan has decreased every year. Several Visa card providers in Japan are Sumitomo Mitsui and Tokyo-Mitsubishi UFJ.


JCB, a Japan-based global payment brand, is a leading credit card issuer and acquirer in the country. Across the globe, the payment provider has worked with more than 34 million merchants. The issuer offers various credit card products to consumers, such as JCB Gold and JCB The Class. This financial firm has more than 140 million cardholders worldwide.

Alternative payment methods (APM's)

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Konbini payment is an online payment method used in Japanese convenience stores. It accounts for 10% of purchases made in Japan because of the high availability of convenience stores across the country. Locals pay their phone bills, online purchases, games, and movie tickets with this payment method.


PayPay is a digital wallet that requires users to have a Japanese phone number to register. Users can link their bank accounts for transfers. They can also top up the PayPay account at ATMs or via gift cards. When making payments with this wallet, users scan the shop's QR code. In Tokyo, PayPay is a widely accepted payment method.

Line Pay

This digital payment system is linked to Japan's popular messaging app, Line. Users must register to the Line app to use this payment method. Line Pay users can top up their balances using cash at convenience stores or link their accounts to their bank accounts. Besides making payments at merchant stores, users can transfer money to their Line contacts.

Rakuten Pay

Rakuten Pay is connected to the Japanese online shopping platform Rakuten. This app is only available in Japanese, making it difficult for foreigners to conveniently use the payment service. The benefits users can get from this payment method is its reward system. Account holders can earn points when using Rakuten Pay. They can use these points to purchase items at the Rakuten platform or convenience stores.


PayPal entered Japan in 2010, via the e-commerce site eBay. However, the payment system has seen slow growth in Japan because of the popularity of other payment methods. This payment system allows customers to make payments domestically and internationally.

Google Wallet

In Japan, Google Pay has already been replaced with an upgrade, Google Wallet. It offers similar functionalities as its predecessor app. Users can make contactless payments via their mobile devices. Several Japanese merchants accept the use of Google Wallet.

How to accept payments in Japan

A guide to accepting payments in Japan

How to accept online payments in Japan

Firms that operate in Japan select their preferred online payment methods. Usually, the choice is based on the service fees and the popularity among their target markets. Once the payment methods have been selected, these firms choose the payment gateway provider and authorisation service.

Several service providers help merchants accept payments from consumers. The general online payment process in Japan is similar to other regions. It involves the acquirer, issuer, merchant, and customer. The following is the process of online payment acceptance in Japan.

1. The customer chooses their preferred payment method when checking out items on the merchant's platform. The person's choice may depend on the availability of payment methods or promotions offered.

2. The merchant will send payment details to the acquirer or the payment processing firm.

3. The payment processing firm, such as JCB or Visa, sends a payment request to the issuer (a bank or another financial institution that issued the payment account to the customer) for that transaction.

4. The bank or financial institution ensures that the customer has enough funds in their account to cover the purchased item. If the fund is sufficient, the issuer will send an authorisation code to the acquirer.

5. The payment processing firm forwards the authorisation code to the merchant, marking the completion of the transaction.

How long does it take to make an international payment from Japan?

Payment method choice also influences the length of payment completion. Certain methods may be faster than others.

  • Debit/credit cards: It takes two to five business days to complete international transactions with debit cards in Japan. 

  • Wire transfers: International bank transfers from Japan may take one to two business days. There is a cutoff time every working day, and customers are advised to send money before that period to speed up processing.

  • Online money transfers: Online money transfer takes minutes up to 24 hours to complete. It is the faster transaction method, lending to its increased popularity in Japan.


Merchant fees

The choice of payment methods and processing services will determine the total fees for each transaction. The fees will affect the profitability of a business, so choosing the right providers is important. Some merchants may pass all or some of the payment costs to customers. However, customers may be deterred from completing transactions due to the high costs.

  • Interchange fees: Banks charge interchange fees to merchants for payment processing services. The Japan Fair Trade Commission demands all providers disclose their fees.

  • Payment gateway fees: Gateway providers charge this fee to merchants for platform use. Some providers implement a flat fee, while others charge based on transaction values.

Other fees

  • Cross-border fees: Cross-border fees depend on the target country. For example, a transfer from Japan to Europe may see a cross-border fee of up to 0.6% of the transaction value.

  • Merchant discount rate: This fee applies to merchants when customers use debit or credit cards for transactions. It usually varies from 1% to 3%.

Security challenges of online payments in Japan

The Japanese government has pushed toward digital transactions. Security challenges remain a major barrier to online payment adoption in Japan. There have been reports of security breaches and inappropriate use of personal data by Japanese authorities in recent years.

One of the government's efforts to improve the country's payment security is adopting international standards, such as PCI Data Security Standard. The adoption of international security standards allows Japan to speed up the rollout of global credit and debit cards in the country.

Key sectors & industries in Japan

Experts say Japan is a market-oriented, well-developed economy. It is one of the largest economies in the world. The following are key sectors that contribute significantly to Japan's economy. 


The agriculture sector in Japan contributes about 1.4% of the national GDP. According to data, approximately 12% of the land in Japan is appropriate for agricultural activities. In small regions, farmers use the terrace system to grow crops due to the lack of arable land. It results in a high crop output per unit area. Japan has an agricultural self-sufficiency rate of around 50% on less than 14 million acres of land.


Japan has a diverse manufacturing industry, from consumer electronics to automobile manufacturing. In the food manufacturing sector, the country is also leading in biochemistry and the fermentation process. Japanese companies such as Toyota and Honda have manufacturing facilities in various parts of the world. Due to the government's policy, Japan can sell products at lower prices to international buyers. This policy drives the country's exports.


More than 50% of Japan's total fish production comes from medium-sized boats fishing offshore. Deep fishing from large vessels also accounts for a significant portion of the country's fishery sector output. The country's saltwater fish production includes tuna, mackerel, sardines, and trout. There are around 300 fish species in Japanese rivers, from crayfish to herring. This country has a high domestic demand for fish because it is one of the main staples of Japanese people.


Tourism has been a growing industry in Japan over the past decade. The pandemic disrupted the country's tourism sector for more than a year. Once borders reopened, Japan made an effort to draw in international tourists. The country is known for its cultural attractions. Besides that, Japan also offers nightlife experiences for tourists in places like Ginza and Shibuya.


This industry accounts for up to 73.1% of the country's economic output. It also draws 69.8% of the labour force in Japan. Real estate and transport are among the major sub-sectors in the country's service industry. Japan has complicated regulations for businesses, making it challenging for small service firms to expand in the country.


Japan's deposits of raw earth materials are mainly located in coastal areas. The country has limited natural resources. It works with resource-rich countries, such as Canada, to obtain supplies of raw materials. Japanese trading firms, smelters, and mining companies invest in various countries around the globe. They import raw materials to the country for smelting and refinement. These companies sell finished products to domestic manufacturers and international customers. Some Japanese firms also sell their output directly from foreign mines to international buyers.

Information & Technology

Japan is known for its advanced technologies. Technology has infiltrated various aspects of its citizens' lives, with many people using modern gadgets in their daily activities. Japanese multinational conglomerates continue to dominate the global information and technology industry. The current trend leans toward e-health, which is the country's way to deal with its rapidly ageing population. Experts also predict that cybersecurity and emerging technologies will thrive in the coming years.


Data showed that Japan is the third-largest pharmaceutical market in the world. The Japanese government promotes its healthcare industry, including it in the country's economic revitalization plan. The pandemic further heightened the government's attention to this sector. In 2020, the Japanese market of prescription and nonprescription pharmaceutical products was worth $109 billion. According to experts, Japan must improve its drug discovery system to help meet the growing market demand. Japan still imports drugs from other nations, including the United States


There is a high level of interdependence between the Bank of Japan, commercial banks, and industry. Enterprises rely on loans provided by commercial banks. Analysts say the central bank has a significant influence on commercial banks because they rely on large-scale borrowing to fund their operations. Besides the booming lending service, Japan is known for its robust capital market. Japanese stock exchanges have become one of the pillars of the global financial market.


The Japanese retail sector is one of the most sophisticated retail markets in the world. The country is the third largest fashion market after China and the US Over the years, analysts note that Japan has seen moderate growth in this sector. There are over 3,000 shopping malls, 52,000 convenience stores, and 240 department stores spread across the country. Some of its largest retail stores can generate up to ¥720 million daily.

Regulation in Japan

The regulatory environment of Japan.

Summary of the regulatory environment in Japan

The Japanese government has implemented regulations to ensure fairness and optimum outputs for enterprises across the country. These regulations also provide protection to every stakeholder, from consumers to employees. 

  • Company law: The Japanese Companies Act regulates the creation of business entities in the country. This law encompasses a limit on shareholder proposals, requirements for at least one external director, and digital documentation.

  • Labour law: The regulation regarding labour in Japan provides guidelines for working conditions, working hours, wage system, and contract establishment. This regulation also oversees the resignation and termination of contracts.

  • Trademark and design protection: Japan provides protection for each registered business' trademark and design. Besides protecting the company's intellectual property, this law safeguards consumers' interests. This law uses the first-to-file system.

  • Foreign investment law: Japan does not have tight restrictions on foreign investments. Regardless, certain sectors have different regulations regarding foreign investments, such as agriculture and aviation.

  • Consumer protection law: Japan implements the Basic Act on Consumer Policies to protect consumers. This law ensures that companies provide products as services that fit the advertised purposes, standard quality, and descriptions.

  • Data protection law: In the early 2000s, Japan proposed the Act on the Protection of Personal Information Act. This law provides guidelines about the collection and processing of personal consumer data.

How card payments are regulated in Japan

Japan has several regulations to manage the country's payment system. The Instalment Sales Act regulates the issuance of credit cards to consumers across the country. A card-issuing bank must be registered with the FSA. The bank should also register with the Ministry of Economy, Trade and Industry. 

Banks must also adhere to the Consumer Contract Act and the Act against Unjustifiable Premiums and Misleading Representations. The Consumer Affairs Agency monitors card issuers' compliance with said laws to ensure Japanese consumers are well-protected.

Do I need a licence to do business in Japan?

Businesses require a licence or permit (Kyoninnka) to operate in Japan. The company must fulfil material, capital, and personal requirements implemented by Japanese authorities to run the business there. Depending on the sector, the business will need to go through a certain application process. For example, a food and beverage company must receive a special permit from the public health centre or the prefectural governor.

Payment solutions in Japan

An overview of how to accept payments from customers in Argentina.

Payment gateways and providers in Japan

A streamlined payment experience has become essential in ensuring customers are closing transactions. It is difficult for businesses to maintain competitiveness because others are working to make payments easy for consumers. Japanese merchants can work with London-based payment technology provider APEXX to streamline checkout processes.

APEXX's technology allows companies to accept payments from multiple providers. The Payment Orchestration Layer (POL) links several payment providers in one platform. This payment processing hub makes the payment experience simpler for customers and merchants. It also means optimised payment costs. 

The POL detects the customer's currency and location. Its smart routing feature will choose the right payment providers for every transaction with consideration of costs, conversion rate, and risks. Customers and merchants will see lower fees and less chance of transaction failures.

APEXX provides several APIs that enable companies to integrate POL into their payment systems. There are also pre-built plugins to simplify integration with merchants' point-of-sale systems and digital commerce platforms. A seamless integration minimises disruption in transitioning to digital payments. It means that businesses can proceed as usual.

Cheapest payment solutions in Japan

Merchants in Japan can use the following strategies to lower transaction costs yet maintain optimum processes.

  • Choosing the right provider: Merchants must shop for payment providers to determine the lowest rate available in the market.

  • Adding alternative payment methods to the system: Alternative payments like electronic wallets can lower fees and speed up transaction processing.

  • Discussing fees with providers: Large-scale companies have the power to negotiate fees with payment providers because they process larger transactions regularly. It can further lower costs.

  • Avoiding chargebacks: A chargeback refers to the return of credit card funds used to pay merchants back to the customer. It happens when there is a payment dispute due to complaints or alleged fraud. Banks will charge merchants for processing the claims.

  • Keeping up with recent fees: Payment processors often revise their fee policies. Because of that, companies must keep up with the changes to get opportunities to lower costs.

Service providers like APEXX allow merchants to manage their payment systems with less strain on resources. The provider will list the most updated fees among Japanese payment providers. It ensures a payment routing system that is most efficient for each transaction.

BNPL in Japan

The buy now, pay later (BNPL) sector in Japan is expected to see an annual increase of 56.5%. Experts estimate that the market will hit $14.635 billion in 2023. The market is expected to increase at a compound annual growth rate of 31.7% to $58.085 billion between 2023 and 2028. 

According to analysts, the speed of BNPL adoption in Japan is more moderate than in some other countries. They explain that it is because of people's financial habits. Most Japanese do not like to be in debt, which is one of the reasons the country's credit card system differs from others.

Regardless, the BNPL sector will grow due to the country's growing e-commerce activities. Some of the most popular BNPL services in Japan are Paidy, Sakuro Kanko, and Splitit.

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