In recent years, Japan has seen an increased demand for cashless payments. Credit card payments in particular have become an important factor for businesses to remain competitive.

With the expansion of online transactions and the rebound of Japan’s tourism industry, businesses can no longer rely solely on cash payments, as many customers expect cashless options. To respond to this evolving dynamic, adopting credit card payments is an important step toward bringing a business into the modern age.

In this article, we focus on how businesses can adopt credit card payments in Japan. We also explain the advantages and disadvantages of this payment method—from the perspectives of businesses and customers—as well as factors to consider when choosing a payment service provider.

What’s in this article?

• What are credit card payments?
  
• How can businesses in Japan adopt credit card payments?
  
• The process of adopting credit card payments
  
• Advantages of credit card payments for businesses
  
• Disadvantages of credit card payments for businesses
  
• Advantages of credit card payments for customers
  
• What are the costs associated with adopting credit card payments?
  
• How can businesses in Japan select a payment agent?
  
• What business opportunities do credit card payments enable?
  

What are credit card payments?

Credit card payments involve using a card issued by international brands—such as Visa or Mastercard—to pay for goods and services.

According to the Ministry of Economy, Trade and Industry (METI), the ratio of cashless payments in Japan has been on the rise, reaching 42.8% (¥141 trillion) in 2024. Of those cashless payments, credit card payments account for 82.9% (¥116.9 trillion) of all payments, establishing their position as the primary form of cashless payment.

Adopting credit card payments is important for businesses to remain competitive and meet customers’ diverse needs.

How can businesses in Japan adopt credit card payments?

To adopt credit card payments, businesses in Japan have two options: working with a credit card issuer or a payment agent, also known as a payment processing company.

Working with a credit card issuer

Working directly with a credit card issuer has the following advantages and disadvantages:

Working with a payment agent

Payment agents act as intermediaries between businesses and various payment institutions to handle credit card payments. Here are the advantages and disadvantages of using them:

The process of adopting credit card payments

The process of adopting credit card payments differs depending on whether you work directly with a credit card issuer or use a payment agent.

Credit card issuers

Here is the process for contracting directly with a credit card issuer:

• Select a credit card issuer.
  
• Prepare the submission documents.
  
• Apply for screening.
  
• Sign a contract.
  
• Adopt the payment system.
  
• Start operations.
  

After selecting a card issuer, business owners should gather all the necessary documents and submit an application to the credit card brand. After passing the screening process, they can adopt the payment system and begin operations. Please note that this process must be carried out for each credit card issuer separately.

After adoption, businesses must handle credit card management and common issues, such as chargebacks. This can increase the amount of administrative work and complicate management. Because of this, working directly with card issuers is not the most common approach to credit card adoption.

Payment processing company

Here is the process for working with a payment agent:

• Select a payment agent.
  
• Use the service immediately after passing the screening.
  
• Integrate your site with the system.
  
• Start operations.
  

Business owners should compare the fees, features, and support systems each payment agent offers. Then, they can select the payment processing service best suited to their business and create an online account.

Payment agents provide screening applications online. In almost every case, businesses can use the service immediately after passing the screening. This is a much faster adoption process than working with credit card issuers. Next, businesses can integrate the application programming interface (API) with their systems and begin business operations.

Advantages of credit card payments for businesses

Adopting credit card payments offers businesses a variety of benefits, such as increased sales and improved customer experience.

Increased sales

Adopting credit card payments allows businesses to attract customers who prefer cashless payments. Currently, many customers don’t carry cash, so stores and services that can’t accept card payments might lose out on sales opportunities.

With online shopping and digital services, credit card payments are necessary. In brick-and-mortar stores, it’s important to provide flexible payment options that can meet diverse customer needs. Increasing the number of payment methods—whether online or offline—is an important step that can lead to increased sales.

Higher customer spending

Because customers no longer have to carry cash, credit card payments tend to increase the average purchase amount per transaction.

For subscription-based businesses, credit cards are an important method for receiving ongoing payments. Credit card payments can also facilitate additional purchases, such as higher price plans or optional services and add-ons. The ability to handle installment payments and bonus payments allows customers to make high-value purchases and can improve long-term sales growth.

Simple management

Credit card payments provide centralized sales information and payment management, greatly improving operational efficiency. When working with a payment agent, business owners can simultaneously check transactions from multiple card brands, which can significantly reduce administrative workload. Furthermore, visualization of sales data can provide an improved understanding of business conditions and better financial planning.

Disadvantages of credit card payments for businesses

Although credit card payments can provide many benefits for businesses, there are also some drawbacks. It is important to thoroughly understand these disadvantages so your business can respond if something goes wrong.

Handling fees

Credit card payments incur a transaction fee based on the total price of each sale. Compared to cash transactions, businesses might see less profit on each sale with credit card payments. Handling fees vary depending on the card brand and contract type. Before adopting credit card payments, it’s important to conduct thorough research and compare options to find the one best suited to your business.

Payment cycle

For cash transactions, businesses immediately receive sales proceeds. On the other hand, it can take several days (or even weeks) after a sale of goods or services to receive credit card payments. For businesses where short-term cash flow is important, a financial plan that considers this timing is necessary to avoid impacting cash flow.

Risk of chargebacks

Credit card transactions carry a risk of chargebacks. A chargeback occurs when the credit card issuer cancels a sale because of fraudulent card use or a dispute from the customer.

If a chargeback occurs, the business must refund the amount charged to the credit card issuer, but the product will not be returned. These rules are designed to protect cardholders and ensure that they can make credit card payments with peace of mind. For business owners, however, it’s important to understand the operational burden and risks associated with chargebacks.

Advantages of credit card payments for customers

Here are some of the specific benefits credit card payments present for customers:

Credit card rewards

Many financial institutions offer rewards—such as points or cashback—when cardholders make purchases with their credit cards. Using a credit card offers more incentives than cash purchases, and some customers prefer to pay by credit card because of these rewards.

Smooth payment experience

Paying with a credit card eliminates the need for cash transactions, and customers can pay quickly. The convenience of fast purchases can lead to increased customer satisfaction.

Variety of payment methods

When making credit card payments, customers have a wide range of payment options, including lump-sum, installment, and revolving payments. Customers can adjust the timing of payments, making it easier to purchase expensive items.

Therefore, businesses that adopt card payments provide customers with convenience and flexibility, which can enhance the quality of the shopping experience.

What are the costs associated with adopting credit card payments?

There are multiple costs involved in adopting credit card payments, including initial fees, monthly fees, and payment handling fees. Here are the approximate costs of fees associated with using a payment processing company:

Initial fee

This is the cost to install the payment agent’s system, including setup and terminal purchase. Depending on the payment agent, this can cost ¥10,000+.

If a business purchases a terminal separately for in-person payments, the cost of the terminal will likely be around ¥20,000.

Monthly fee

This is a fixed monthly payment charged after a business adopts credit card payments. Some payment agents have no monthly fee but charge a per-transaction fee. Others charge a fixed monthly fee that includes the cost of support services and leasing the payment system equipment.

Payment handling fees

Payment handling fees are charged on a case-by-case basis based on the amount of the sale. For each payment, a cost of around 2%–5% is incurred.

Online payments often have slightly higher handling fees than in-person payments.

Transaction fee

The payment processing company might charge a transaction fee in addition to the payment handling fee. The transaction fee is a fixed fee per payment, ranging from a few yen to ¥10+ for each payment processed, regardless of the amount. Transaction fees are mainly used for online payments.

Bank transfer fee

Businesses can incur this fee when transferring sales proceeds from the payment processing company to the business’s bank account. A fee of several hundred yen per transfer is deducted from the sales proceeds, and the remaining amount is credited to the bank account. However, some payment agents might waive this fee for transfers over a certain amount or when a business uses a designated bank.

Cancellation fee

When a customer cancels or returns an order, the business must cancel the credit card payment. Normally, when a business cancels a credit card payment, the credit card issuer will charge the business a certain amount for the cost of reversing the transaction and processing the refund. In Japan, this fee is set to a range of around ¥0–¥5 per cancellation. Even if the payment is canceled, the payment handling fee is typically not refunded to the business.

How can businesses in Japan select a payment agent?

When selecting a payment agent to work with, it’s important to choose a service suitable for the size of your business and operational structure—not just a service with low fees. Here are some points to consider:

Cost

Try to be as accurate as possible about the total cost, including initial, monthly, transaction, bank transfer, and cancellation fees. Knowing this information can also help you negotiate a review of fees if you decide to expand your business.

Adoption speed

The speed of adoption varies among payment agents. If the screening process is strict or lengthy, it can present significant obstacles, especially for new businesses.

For startups and new businesses that need to launch their services quickly, choosing a payment agent that offers a smooth screening process and quick adoption might be the best option. If speed of adoption is important to you, be sure to confirm how long implementation takes before applying.

Support

Payment services can present unexpected problems. It’s important to choose a payment agent that offers a support system capable of handling problems promptly and properly as they arise.

It is also important to confirm the specific support you will receive. This can include chargeback support, 24/7 customer service, or compensation for issues involving nonpayment.

Security measures

With card payments, it is important to be prepared for fraudulent use and information leaks. Compliance with Payment Card Industry Data Security Standard (PCI DSS) is mandatory. Also, check whether the payment agent supports fraud detection systems and 3D Secure.

Various payment methods

In Japan, credit card payments are widely used alongside Konbini payments and quick response (QR) code payments. Since it is important to adopt a variety of payment methods to expand your business, you should choose a service that can flexibly handle multiple payment methods.

What business opportunities do credit card payments enable?

As demand for cashless payments continues to grow, it’s important for businesses in Japan to accept credit card payments. If you haven’t done so already, now is a great time to consider offering credit card options to help expand your business across a wide range of industries.

By partnering with a payment processing company, you can adopt credit card payments easily and securely—while keeping up-front and monthly costs low. To find the best fit for your business, compare processing fees, security features, and support for various Japanese payment methods.

Stripe Payments offers robust security and flexible support tailored to Japanese payment preferences. Choosing Stripe can streamline your payment process and help lower your operating costs.

If you’re thinking about adopting Stripe, feel free to reach out. We offer clear, easy-to-follow guidance to help you implement payment solutions that match your store’s unique needs.