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Japanese B2B and Global Payment Systems Landscape

By Tony Azzara

U.S. companies sold $120.4 billion worth of goods and services to Japanese buyers in 2018,1 despite significant, and potentially confusing, differences between the U.S. and Japanese payment systems. So, U.S. small and midsize enterprises (SMEs) may benefit through a better understanding of the differences between the two countries’ global payment systems landscapes, including how business to business (B2B) payments are conducted.

Key Differences: U.S. vs. Japan Global Payment Systems Landscape


Among the key differences between how U.S. and Japanese buyers pay for goods and services:


  • Japanese buyers use far more cash—in about 80 percent of all transactions;2
  • Japan uses credit cards far less than the U.S.;
  • In Japan, promissory notes—a form of IOUs—are used prominently for B2B payments;3 and
  • Japan appears to be adopting real-time payment systems slower than in the U.S. and Europe.

What’s more, U.S. SMEs doing business in Japan may struggle a bit when figuring out how to pay their Japanese partners. According to a 2017 report from trade credit insurance firm Atradius, 33 percent of Japanese companies say payment procedure complexity is a main cause of delays when receiving international payments from overseas business partners.4


Japanese Use Far More Cash …


Tradition and modern cultural practices contribute to cash’s saturation of Japanese payments. In Japan, even online purchases can be paid for in cash. For example, the 136,999 ATMs in Japan as of 20175 are more than just widely available cash dispensers, as in the U.S. They include the ability to initiate wire transfers to make payments against online purchases. Japanese buyers also can complete online payments at a “Konbini,” or convenience store.6


Japan’s large older population has been slower to adopt credit and debit cards than in the U.S., and they are resistant to move away from cash.7 This is largely because of convenience and security concerns: cash payments are completed on the spot with no commission fees, and there is no worry of credit information being hacked or stolen.


… And far Less ‘Plastic’


As of 2018, cashless payments—payments made via credit cards, debit cards, and smartphones—made up only a minor part of Japanese transactions in 2018, roughly 20 percent.8 Japan’s government is pushing a “Cashless Vision” to double the country’s cashless transaction volume by 2025. The government’s announced plans include incentives to encourage buyers to embrace credit cards, debit cards, and electronic transactions.9


It’s not just the older population that’s proving to be a hard sell. Retail businesses have also been slow to join the plastic bandwagon. Relatively few stores accept credit cards, but all accept cash. Part of the challenge are credit card fees that average 3.09 percent, which cut into profits.10 However, according to a payments system report from the Association for Financial Professionals (AFP), Japan’s credit card usage is growing—it rose 8.2 percent in 2017 over 2016.11


Promissory Notes Play Major Role in Japanese B2B Payments Systems


Much like an informal IOU promises payment between friends, promissory notes are a Japanese business’ formal way of promising payment to another business.12,13 Known as “yaksuko tegata” or “tegata” for short, these notes typically come due in either a few weeks or 90-120 days. Although precise percentages aren’t available, promissory notes are a very popular part of Japan’s B2B payments system, according to the AFP report.


The AFP report explains that Japan has a well-developed discount market for promissory notes, which is one of the key sources of working capital for SMEs. The market allows a company in need of working capital to sell a note at a discount, so the buyer profits from the difference between the note’s face value and discount price once the note is paid. Further, according to, factoring and other forms of receivables financing are rare in Japan, where some businesspeople feel they violate the buyer-seller relationship.


One reason the promissory note discount market is so successful is that the penalty for failing to honor promissory notes is very high. If a business fails to pay a note twice in six months, it is barred from business-related banking transactions for two years.14


Japan’s Slow Real-Time Payment System Adoption


Like many of its Asian neighbors, Japan lags behind in adopting a widely available instant transfer payments system. The U.K.'s "faster payments" system launched in 2008, and in the U.S. The Clearing House (TCH) launched a limited domestic instant payments system in November 2017. That same month, the SCT Inst instant international payments system went live in Europe for euro transactions. But in Japan, the Financial Times reports, the Zengin domestic payments system closes at 3 p.m. every weekday and charges about $3 to transfer even small sums.15


However, in late 2018, Japan was the first major economy to launch a domestic instant payment app using blockchain technology. Money Tap, licensed by Japan’s ministry of finance, is a joint venture of Tokyo-based SBI Holdings and U.S. blockchain company Ripple. With Money Tap, free instant transfers can be made between accounts at more than a dozen participating banks. And in mid 2019, Money Tap began a live trial extending instant payments to retail locations in the expectation of a broad public launch within the year.16


Comparing U.S. and Japan’s Domestic and International Payment Infrastructure


Despite their numerous differences, Japan and the U.S. have similar core financial payment systems infrastructures, according to the AFP reports on each country.17,18


For domestic payments, the U.S.’s Fedwire and Japan’s BOJ-NET are both real-time gross-settlement (RTGS) run by each country’s central bank. Each is dedicated to high-value and/or urgent payments. Automated Clearing House (ACH) in the U.S. and Zengin in Japan transfer non-urgent and low-value payments.


International payments transferred in the U.S. are most often handled by the Clearing House Interbank Payment System (CHIPS), but Fedwire can also clear international payments as long as they settle in U.S. dollars. The Foreign Exchange Yen Clearing House (FXYCS) is Japan’s RTGS clearing system for foreign exchange transactions and payments involving non-residents.



Japanese consumers’ reliance on cash and businesses’ widespread use of promissory notes are among several key differences between the payment system methods used in Japan and the U.S. Despite these differences, and the complexities they cause in making international payments, Japan and the U.S. remain major trading partners. U.S. SMEs may wish to pursue a deeper understanding of Japanese payment systems trends to help them grow their business relationships in that country.

Tony Azzara- The Author

The Author

Tony Azzara

Tony Azzara is a business technology writer and researcher based in Queens, NY, whose work focuses primarily on financial services technology.


1. “Japan,” Office of the United States Trade Representative;
2. “Japan Tries to Promote Cashless Shopping to Lift Spending,” The Asahi Shimbun;
3. “Japan-Methods of Payment,”;
4. Payment Practices Barometer Japan 2017,” Atradius Collections;
5. Cash and Treasury Management Report Country Report Japan, Association for Financial Professionals;
6. “Payment Methods and Practices in Japan,” The Paypers;
7. “Japan Slowly Buying Into Cashless Future Despite Widespread Misgivings,” The Jakarta Post;
8. Ibid.
9. Ibid.
10. “Japan Hesitantly Moves Toward Cashless Society,” The Japan Times;
11. Cash and Treasury Management Report Country Report Japan, Association for Financial Professionals;
12. “Japan-Methods of Payment,”;
13. “Characteristic of Japanese Banking Practice,” Sumitomo Mitsui Banking Corporation;
14. Ibid.
15. “Japanese banks to offer instant money transfers using blockchain,” Financial Times;
16. “SBI Plans Launch of In-Store Payments With Ripple-Powered 'Money Tap' App,” Coindesk;
17. Cash and Treasury Management Country Report Japan, Association for Financial Professionals;
18. Cash and Treasury Management Country Report USA, Association for Financial Professionals;

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