Cashless payments have rapidly gained popularity in Japan. They are now an indispensable payment method in a variety of shopping situations, including brick-and-mortar and online stores. For businesses, the adoption of cashless payments is considered a key factor in business growth. It can lead to expanded sales opportunities and simplify accounting work.

Those considering implementing cashless payments might wonder which cashless payment methods are the best to adopt, including necessary costs and implementation methods.

In this article, we explain the basics of cashless payments, including their benefits, associated costs, implementation methods, and key considerations when selecting a payment processing service. We also cover how Stripe Payments can help businesses that are considering the adoption of cashless payments.

Key takeaways

• Cashless payments are a type of payment method that doesn’t use physical cash.
  
• Credit card payments are one of the most common forms of cashless payment and are the most widely used payment method in Japan.
  
• Cashless payments offer benefits such as preventing customer churn and simplifying administrative work.
  
• Two methods are available for implementing cashless payments: direct contracts and payment service providers. Using a payment service provider can reduce the administrative burden and time required for implementation.
  
• With Stripe Payments, which supports a range of payment needs, businesses can simplify their payment operations and create secure and convenient payment environments.
  

What are cashless payments?

The term “cashless payments” refers to all payment methods that do not involve the use of cash, whether at physical stores or on ecommerce sites. The most common examples are credit card payments, e-money payments, and quick-response (QR) code payments.

According to the Ministry of Economy, Trade and Industry, the proportion of cashless payments reached 58% in 2025. That is more than double the 22.5% figure recorded 10 years earlier. As digital transformation in retail advances, the adoption of cashless payments is considered necessary for improving customer convenience and preventing businesses from losing sales opportunities.

Against the background of the recent growth of inbound demand in Japan, there is an urgent need to establish a cashless payment infrastructure aimed at attracting foreign tourists to brick-and-mortar stores.

Main types of cashless payments

Some of the most common types of cashless payment methods are listed below. It is important for businesses to understand the characteristics of each payment method and select the ones that best suit their business models:

• Credit card payments
  Credit card payments are the most widely used form of payment both in Japan and around the world. They are accepted at a broad range of both brick-and-mortar stores and online retailers. They have gained popularity with a large number of customers because they offer flexible payment methods that are customized for customer needs, including installment payments and revolving payments in addition to traditional lump-sum payments.
  
• Debit card payments
  Unlike credit card payments, when a debit card payment is processed, the amount is immediately deducted from the bank account linked to the card. While this prevents making payments that exceed the account balance, it does make it easier for customers to manage their money and avoid overspending.
  
• E-money payments
  E-money payments use digital data representing money instead of physical cash. For example, when using transit fare integrated circuit (IC) cards—such as Suica or PASMO—at physical stores, the biggest appeal is speed. A payment can be completed almost instantly by holding the card up to the dedicated terminal at the register. As a result, these methods have gained popularity on public transportation and for everyday shopping. There is often a limit that can be put on the card, so this method is better suited for small transactions rather than large purchases.
  
• QR code payments
  QR code payments—which are one type of mobile payment—allow customers to make payments by scanning a QR code with their smartphones. Payments are deducted from credit card or bank accounts previously linked to the mobile accounts. Because this eliminates the need to carry a wallet and allows customers to make payments with a smartphone, the biggest advantage is the high level of convenience across a wide range of payment situations.
  

Advantages of implementing cashless payments

The adoption of cashless payments offers the following advantages for businesses.

Prevents lost opportunities and increases sales

Meeting customers’ diverse payment needs is the most effective way to prevent lost opportunities and maximize sales. Offering multiple cashless payment options can help lower the psychological barriers for customers who don’t have cash on hand.

Creating an environment where customers can make payments smoothly will ultimately lead to further sales growth.

Reduces workload for cashiers and improves cash management

When handling cash transactions at a physical store, it is important to have enough change on hand.

In contrast, cashless payments eliminate the hassle of managing physical cash and speed up transactions. This can reduce congestion around the register. In addition, cashless payments can help prevent human errors, such as giving the wrong change. This can improve the efficiency of store operations.

Simplifying the payment process can help lower customer stress, which can improve customer satisfaction.

Reduces the risk of uncollected payments

Cashless payment methods—such as credit card payments and electronic money payments, which are the primary payment methods used in online stores—confirm payment as soon as the transaction is completed. This can reduce the risk of uncollected payments associated with buy now, pay later (BNPL) options.

However, regardless of the payment method used, there is always a risk of forced reversal of sales (i.e., chargebacks) due to fraud or other reasons. This demonstrates that the risk of uncollected payments can never be completely eliminated. In addition to implementing measures such as AI-based credit card fraud detection and 3D Secure 2, it is important to have detailed fraud prevention measures to prevent fraudulent use before it occurs.

In addition, cashless payments avoid receipt of counterfeit bills and are an excellent preventive measure against theft at the register during in-person transactions at physical stores. Using cashless payments to create an environment where payments can be collected safely and reliably can give businesses peace of mind.

Expenses for cashless payments

When implementing cashless payments, there are generally three types of costs involved. It is very important to properly understand the cost structure in advance.

Initial costs

Initial costs are the expenses incurred during the beginning stages of launching a business, such as the costs of installing equipment and systems.

Specific examples include the screening procedures conducted with various payment institutions through a payment agent, as well as the costs associated with integrating payment systems. In addition, when operating a brick-and-mortar store, there are often separate costs associated with hardware, such as payment terminals and receipt printers. Therefore, it is important to understand in advance what expenses will occur.

Fixed monthly expenses

A fixed monthly expense is a set amount that is incurred every month, regardless of how often a service is used or the amount of revenue generated. These types of expenses include system usage fees, data management fees, and other charges. The pricing structure varies depending on the payment processor and the features used.

Because these must be paid every month, there is a risk that they will put pressure on profits. Therefore, it’s important to estimate fixed expenses and then carefully compare and evaluate them from a long-term perspective.

Please note that while the following fees are often confused with monthly fixed costs, they are offset on a case-by-case basis at the time of receipt. They are also classified as “variable costs” because they fluctuate depending on factors such as sales revenue and the frequency of payments:

• Transfer fees: Fees charged when sales proceeds are deposited into a bank account
  
• Early payout fees: Fees for receiving sales proceeds earlier than originally scheduled
  

Payment fees and cancellation processing fees

Payment processing fees vary with each transaction and are calculated as fixed percentages of transaction amounts. Payment processing fees depend on the payment method and the contract terms with the payment service provider.

Make sure to carefully check the terms and conditions and cancellation fees that will be triggered when a refund is issued for canceled orders. This protects the business from unexpected charges.

Two methods for implementing cashless payments

There are two main options for implementing cashless payments: direct contracts and contracts through payment service providers. Below, we discuss the characteristics of each method.

Direct contracts: Individual contracts with each payment provider

The first option is to enter into separate, individual contracts with the providers operating the cashless payment systems the business wishes to implement.

When concluding direct contracts, each payment service provider requires its own contract and screening process. Each provider also has its own unique preliminary steps. As a result, direct contracts—which require handling each provider individually—are time-consuming and demand detailed, specialized knowledge regarding the implementation of each payment service.

Payment service providers: Mass implementation through an agency

By using payment services provided by fintech businesses and others, businesses can have the various procedures involved in implementing cashless payments handled on their behalf.

This is a particularly convenient method, especially when businesses want to support a variety of payment methods, as it allows them to complete the implementation all at once. Furthermore, even after implementation, improvements in back-office operations can be expected by using the centralized management system provided by the payment service provider.

Furthermore, when expanding into cross-border ecommerce and adapting to the payment services of the target country, it is common practice to engage a payment service provider that handles major global payment methods and operates on a global scale, rather than entering into direct contracts. For example, a provider such as Stripe—which supports various currencies and languages—allows businesses to implement the necessary payment methods all at once and helps create a payment environment that meets the needs of local customers.

Implementation steps through a payment service provider

Implementation through a payment service provider generally proceeds in the following four steps. Because it typically takes anywhere from one month to several months until the payment processing is available, make sure to leave plenty of time to prepare for implementation.

Application

First, check the official website or contact center of the payment service provider you want to use. Confirm the relevant fees—such as initial fees and transaction fees—and request a quote. If there are no issues with the terms and fees listed in the quote, proceed to the formal application step.

Screening

Next, prepare and submit the documents required to implement cashless payments, and proceed with the merchant screening process. After the documents are submitted, the payment service provider will request a review from the payment services and credit card businesses on behalf of the business. The contract is finalized once the screening process is passed. Please note that the screening period can range from a few days to several weeks.

Terminal setup, system integration, and test payments

You can access the management dashboard to use the various services provided by the payment service provider. In addition, if you plan to use the service at a physical store, a payment terminal will be delivered to you. In that case, follow the instructions to complete the initial setup and verify the connection. If you plan to use the service on an ecommerce site, follow the instructions to integrate the system with application programming interfaces (APIs) and other components.

Whether online or offline, it is important to always test each payment method after implementation to ensure in advance that payments can be made without any issues.

Launch

Once the payment environment is in place, you can begin offering payment services at your physical store or on your ecommerce site.

However, even after you start offering various payment methods to customers, be sure to regularly check on the payout cycles, analyze sales data, and review security measures.

Doing so can help you respond quickly to operational challenges and refine your payment management processes. Furthermore, as part of your safety review, implementing a more accurate fraud detection system can help prevent fraud before it occurs and maintain a payment environment where customers can shop with confidence.

Key points when choosing a payment service provider

To determine which payment processing service is best for your business, it is important to consider the following points when making your selection.

Total cost

Care must be taken to ensure that total costs do not put undue pressure on profit margins. Don’t focus solely on price. Instead, make sure that you consider the service holistically, taking into account the support system and the range of features as well.

For example, it’s important to compare total costs, which include the ongoing transaction fees, initial setup fees, monthly fixed fees, transfer fees, and terminal costs. By carefully reviewing these running costs, you can develop a stable financial plan to support long-term operations.

Payout cycle and billing method

It is important to consider the time required for your business to receive the payout after the payment is completed. The amount of time it takes to receive your payout varies widely depending on the payment service and payment processor you are using. Make sure to check the payout cycle in advance so there are no cash flow problems before the payment is received on your end.

Another important factor to consider when selecting a payment processing service is whether the payment methods your business needs are supported. For example, if you are developing a subscription-based business, you need to select a payment service that supports recurring billing rather than just single payments.

Range of supported payment methods

The most important factor when choosing a payment processing service is whether it supports many of the major payment methods and whether it can meet your customers’ payment needs. Therefore, it’s important to consider payment processors that support frequently used credit card payments and offer a wide range of other payment methods that appeal to your business’s customer base. This will allow you to attract a wide range of customers as well as avoid cart abandonment.

Preparations for security and communication disruptions

Ensuring customer safety and complying with laws and regulations—such as the Personal Information Protection Act—is one of the most important actions you need to undertake. If even a single incident occurs due to a failure to comply with laws and regulations or a security lapse, your business can lose customers and suffer damage to its social credibility.

Therefore, choosing a payment service provider that can effectively build a highly secure website environment and implement thorough security measures is a key factor that all businesses need to consider.

Also, because a stable network environment is the key to cashless payments, you must check whether the service provider has backup measures and a support system in place in case of an outage.

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:

• Optimize your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment UIs, access to 125+ payment methods, and Link, Stripe’s consumer network.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency 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 personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

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

FAQs about the implementation of cashless payments