[Asia Approach] Why Does the Solitary Gourmet Only Pay with Cash?

Inogashira Goro, the protagonist of "Kodokuna Gourmet," calculating 1500 yen in bills.

The Japanese food program "Kodokuna Mishigura" (The Solitary Gourmet), well known even in Korea, features the protagonist Inogashira Goro finishing work and starting with the phrase "I'm hungry," then searching for a good restaurant, enjoying delicious food, paying the bill, and leaving the restaurant feeling full. Watching from Season 1 to the most recent Season 8, the protagonist always pays the food bill in cash. The food prices are mostly remembered to be between 1,000 yen and 2,000 yen, up to 3,000 yen. He often takes out coins to pay and occasionally uses bills. Using a convenient conversion of '1 yen = 100 won,' this corresponds to 10,000 won to 20,000 won, 30,000 won. While we often use credit cards, debit cards, or mobile payments like ㅇㅇPay, the protagonist always takes coins out of a small coin purse and pays in cash.

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Japan's popular program "Kodokuna Mishigura"
The protagonist who says "I'm hungry," always pays the meal in cash

Japanese coins start from 1 yen (10 won), 5 yen (50 won), 10 yen (100 won), 50 yen (500 won), 100 yen (1,000 won), to 500 yen (5,000 won). Bills include 1,000 yen (10,000 won), 2,000 yen (20,000 won), 5,000 yen (50,000 won), and 10,000 yen (100,000 won). If the food bill in "Kodokuna Mishigura" is 2,300 yen (23,000 won), the protagonist pays with two 1,000 yen bills and three 100 yen coins, or five 500 yen coins, and receives 700 yen in change. Compared to Korea, where it is hard to even see 10 won or 100 won coins, let alone 500 won coins, and compared to the era of split bills where four people eat together and pay with four cards, this is a strange sight. It is also distinctly different from China, where "even beggars use smartphones to beg."

While the world is moving toward a cashless society, why does Japan insist on cash? Japan is a "cash paradise," with 71.6% of consumers paying in cash for small payments (1,000 yen to 3,000 yen). This is because Japanese consumers have a significantly higher preference for cash. According to KOTRA, unlike many countries where cash circulation has gradually decreased since the advent of mobile payments, Japan's cash circulation reached 115 trillion yen in 2018, a 33.7% increase compared to 10 years ago. In in-depth interviews conducted by Hakuhodo Institute of Life and Economy and Toyo Keizai with consumers who prefer cash, many answered that cash payments are easier to understand and manage because the actual payment and the timing of payment are the same, unlike credit cards. Other responses included concerns about points having expiration dates and reluctance to change current consumption habits.

Chinese homeless people begging with smartphones equipped with QR codes.

Japan's preference for cash can also be seen in the growth of Seven Bank. Seven Bank, which specializes solely in cash ATMs, is recognized as the only bank in Japan that remains stable despite negative interest rates. Seven Bank's largest shareholder is Seven-Eleven Japan (38.09%). Based on the 2017 fiscal year (April 2017 to February 2018), total assets were 1.023 trillion yen, deposits were 623 billion yen, and net income was 25.3 billion yen. Seven Bank's ATMs are characterized by allowing cash cards from major banks, regional banks, post offices, credit unions, and agricultural cooperatives to be used. They support 12 languages including English, French, Chinese, and Indonesian. Typically, on the first floor of a major bank's headquarters, there is no ATM of that bank but a Seven Bank ATM instead. From a banking perspective, installing another bank's ATM inside a headquarters building is unthinkable. For ATMs, withdrawals are overwhelmingly more frequent than deposits. As of 2016, the annual usage of Seven Bank ATMs reached 780 million times, about 80% of which were cash withdrawals, with an average withdrawal amount of 38,000 yen per transaction.

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In China, "even beggars use smartphones to beg"
In Japan, over 70% of small payments are in cash

As of 2015, Japan's cashless payment ratio was 18.4%, very low compared to major countries like Korea (89.1%), China (60%), and Canada (55.4%), where payment ratios reach 40-60%. The Japanese government has set a goal to raise the cashless payment ratio (final consumer expenditure) to 40% by 2025. According to Yano Research Institute, Japan's cashless payment market size was about 82 trillion yen in 2018, nearly 90 trillion yen in 2019, and is expected to exceed 100 trillion yen in 2020.

A representative example is PayPay, which appeared at the end of 2018. PayPay, established by SoftBank under Masayoshi Son and Yahoo Japan, ran the "Let's Give Away 10 Billion Yen Campaign" from December 4, 2018, to March 2019. This campaign returned up to 20% of the amount consumers paid via PayPay as points to be used later, effectively giving consumers a total cashback of 10 billion yen (about 1.079 trillion won). The campaign caused a huge sensation known as the "PayPay Chaos," and ended early on December 13, 2018, just 10 days after launch, when the refund amount reached 10 billion yen and the campaign funds were exhausted.

A PayPay 10 billion yen cashback campaign screen that returns 20% of the purchase amount.

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Mobile payments including PayPay spreading
Late start but cashless payment market expected to exceed 100 trillion yen this year

According to a survey by the Japanese research company Values, as of February 2019, about 7.74 million people had the PayPay application, and 5.99 million were actual users. PayPay was a latecomer in the mobile payment market, but from November 2018, right after the campaign announcement, the number of users rapidly increased, surpassing competitors Rakuten Pay (3.3 million) and Origami (1.41 million) to become number one in users. With the Tokyo Olympics approaching, the Japanese government is actively working to establish cashless payments, and in 2020, the utilization of cashless payments is expected to increase not only among consumers but also businesses. Although it is uncertain how long the seasons of "Kodokuna Mishigura" will continue, the day when Inogashira Goro pays for meals with mobile payments instead of cash does not seem far away.