Payment methods have been diversifying recently in Japan. A variety of checkout channels are now available, both at physical shops and on e-commerce sites, such as EC malls. While shopping on these platforms, you'll often see a wide selection of payment choices presented, in addition to the standard credit cards issued by Visa and JCB.

Among these options, smartphone payment is prevalent and has become indispensable for Japan's e-commerce businesses. In this article, we'll explain the major varieties of phone-based transactions, highlighting representative examples. We'll also look at the advantages and considerations for Japanese e-commerce businesses looking to integrate smartphone payments into their checkout environment.

What's in this article?

• What are smartphone payments?
  
• What kinds of smartphone payments are used in e-commerce?
  
• How can e-commerce businesses adopt smartphone payments?
  
• Advantages of smartphone payments for e-commerce businesses
  
• Considerations to make before adopting smartphone payments
  
• How can e-commerce businesses choose the right smartphone payment service?
  
• How do smartphone payments improve the checkout process?
  
• How Stripe Payments can help
  

What are smartphone payments?

As the name suggests, smartphone payments are made straight through a handset. Also called mobile payments, this method enables users to pay via an app installed on their smartphone. It is used by many customers who value convenience, because it will allow them to shop without having to carry around a wallet. On e-commerce sites, mobile checkouts have gained popularity recently, along with credit card settlements and Konbini (convenience store) charges.

Smartphone vs cashless payments

As discussed, buyers make smartphone transactions directly through their handset. In contrast, cashless payments have a much broader definition – being any checkout conducted without cash. Although smartphone and cashless payments sound like similar terms, it's important to note that phone-based transactions represent one subset.

What kinds of smartphone payments are used in e-commerce?

There are various kinds of checkout choices, but for online shopping, there are three main types: QR code, ID and carrier payments. This article excludes one kind of smartphone transaction: NFC-based options (contactless IC payment) such as Apple Pay and Google Pay. These contactless methods are used solely in physical shops, not on e-commerce sites.

QR code payments

QR code payment is a method that allows users to finalise a purchase by scanning a code. It is widely used not just in brick-and-mortars such as convenience stores and restaurants, but within internet storefronts. After downloading a payment app to their smartphone, the customer creates and registers a profile. Once they've linked a credit card or bank account, they're ready to make a QR code transaction.

Here are the general steps for completing a QR code payment:

• Check the code displayed on the checkout screen of the webshop.
  
• Launch the appropriate app on your smartphone and scan the on-screen code.
  
• Once it is recognised and approved, follow the identification verification steps prompted by the app (these might vary).
  
• Complete payment.
  

Examples of major QR code payment brands include PayPay, Merpay and WeChat Pay.

User ID payments

QR code payments are often limited to in-person retail. Many of these services enable web purchases via user ID payments. This approach leverages data from the shopper's QR code payment account instead of a physical one displayed at the counter.

The QR code payment service au PAY, for instance, lets buyers scan at a physical shop and use their user ID to pay on an e-commerce site. Since the customer only has one such profile, the process for making transactions is mostly the same. To pay on an e-commerce portal with au PAY, shoppers can log in with their au ID and enter the amount owed. This enables online payments on the storefront.

Carrier payments

Carrier payment is a billing option from major mobile networks such as NTT Docomo, au and SoftBank. It allows customers to settle the charge of goods together with their phone subscription fees. Because identity verification and billing details are established during the mobile contract, people don't need to re-enter this information when making a carrier transaction on an e-commerce site. However, carrier billing only supports lump-sum charges and has a spending limit, which might restrict its use for high-value purchases.

Here is how customers can make carrier settlements on an e-commerce site:

• Find your network and select carrier payment at checkout.
  
• Log in to your network's website.
  
• If your network approves payment, the transaction is finalised.
  

Examples of major operator-billed brands include dBarai (NTT Docomo), au Kantan Kessai and SoftBank Matomete Shiharai.

How can e-commerce businesses adopt smartphone payments?

There are two ways to add phone-based checkout: direct agreements with a provider or contracting through a payment agent. We recommend using an intermediary when integrating smartphone transactions into your checkout flow.

When signing agreements directly with individual services, each one requires its own contract and compliance review. You'll need to prepare different paperwork and invest time for setup and technical onboarding. On the other hand, when using a payment agent, organising all of these documents and information can be outsourced. After integration, you can also use the tools offered by the provider to manage your storefront centrally, simplifying operational tasks.

Here is an overview of how you can work with an intermediary to make things easier:

• Request a quote from a payment agent.
  
• Confirm all expenses, such as initial charges and handling fees, and apply for their service.
  
• Complete the payment agent's screening process.
  
• Upon passing the review, you can conclude the contract.
  
• Test the new checkout service to ensure it works smoothly without any problems.
  
• Offer smartphone payments to customers.
  

Note that it could take some time – anywhere from one to several months – for smartphone transactions to be enabled on your e-commerce site, so allow enough time for preparation.

Advantages of smartphone payments for e-commerce businesses

There are many upsides to adding smartphone payments to your storefront:

Expanded sales opportunity and increased revenue

By diversifying the checkout choices your e-commerce business accepts, you can appeal to a wider audience, attracting both repeat and new customers. Effectively engaging a larger clientele in this way can increase revenue.

Cashless payments as a whole – smartphone transactions included – continue to gain traction in Japan. The Ministry of Internal Affairs and Communications reported that the rate of non-cash checkout reached 42.8% in 2024, marking an increase from the previous year and surpassing the government's 40% target. With a future goal of 80%, the authorities signal that phone-based transactions will continue to grow in popularity.

Reduced cart abandonment

Customers who find a product they like might still abandon the purchase if their preferred payment method isn't available. Offering a range of handy smartphone payment options helps shoppers choose what suits them best, reducing cart abandonment and boosting satisfaction.

Considerations to make before adopting smartphone payments

If you are considering integrating smartphone payments into your e-commerce site, you must consider the following points:

Initial expenses and fees

Along with start-up costs, adding smartphone checkout will incur monthly usage and transaction fees. That means that revenue generated through mobile payments is not all profitable for the business. Additionally, the pricing structure is highly variable. Some providers could take a percentage of turnover, while others bill a fixed monthly amount regardless of sales. It's important to review the pricing model in advance and weigh the overall cost-effectiveness of the associated costs.

Potential cash flow delays

It is key to factor in the time between a finished transaction and when your business receives the payout. Settlement timelines differ greatly by provider. Confirm the cycle beforehand to avoid liquidity issues and keep your finances stable.

Complicated integration processes

As mentioned earlier, each payment service requires its screening and review, adding time and effort to your workload. After approval, setup can still be intricate and take longer than expected. One way to reduce the burden is to outsource processing to a payment agent.

How can e-commerce businesses choose the right smartphone payment service?

So far, we've discussed the advantages of smartphone payments and what to consider before adopting them. But how can you determine which service is right for your business? Consider the key points below:

Suitability for your business

First, verify whether the products you sell on your e-commerce site or app are suitable for smartphone payments. Digital content – typically consumed on handheld devices – pairs well with options like carrier billing, which lets users complete the purchase on the same screen.

Analyse demographic checkout preferences, then judge whether smartphone transactions are a suitable choice for your storefront.

Security measures

It is key to ensure the safety of your customers. Compliance with laws and regulations such as the Personal Information Protection Law is of utmost importance. If there are security issues or non-compliance occurs, you risk losing clients and also suffering a significant loss of trustworthiness. Such incidents can lead to a sharp decline in revenue, so every business needs to carefully select a provider with robust security measures.

How do smartphone payments improve the checkout process?

Smartphone payments have grown tremendously in recent years. By increasing the number of checkout options available on your e-commerce site, buyers can pay more conveniently. If this leads to increased customer satisfaction, you can expect continued use of your products and services, ultimately leading to increased sales while mitigating cart abandonment.

Avoid rushing to introduce every mobile-based option. To determine suitability, analyse both the compatibility between your business' offerings and smartphone payments, and whether it will be beneficial to your customers.

If you plan to implement multiple options at once with minimal time and effort, partnering with a payment agent that offers strong support tools – such as sales tracking and purchase-trend analytics – can be reassuring.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multi-currency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.