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The use of noncash payment methods for regular payments and the household demand for cash: evidence from Japan

Hiroshi Fujiki

The Japanese Economic Review, 2020, vol. 71, issue 4, No 8, 719-765

Abstract: Abstract Understanding the demand for cash and noncash payment methods is an important policy concern in Japan, as the Japanese government aims at a cashless economy. Previous studies show that the demand for specific payment methods depends not only on the motivations of the kind of transactions, such as day-to-day transactions or hoarding, but also on payment contexts, such as bill payments or online payments. However, a few studies have investigated the demand for payment methods by payment context in Japan. We fill this gap by examining Japanese family and single-person household data on the choice of cash and noncash payment methods for regular payments, including bill payments. We found a decreasing popularity of choices involving automatic withdrawals and an increasing popularity of choices involving credit cards in both data sets and that of choosing exclusively cash in the single-person households’ data. We also found that these changes are associated with a decreasing demand for cash in family households and, conversely, an increasing demand in single-person households, assuming that the current pace of gradual adoption of noncash payment methods continues. In promoting a cashless society, the Japanese government should pay attention to the finding that a more frequent use of credit cards for regular payments is not always associated with a decrease in the demand for cash.

JEL-codes: D14 E41 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s42973-020-00049-5

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