How do we choose to pay using evolving retail payment technologies? Evidence from Japan

Comparative Analysis of the Changes in Cash Demand in Hungary

“…Compared to other areas of cash use, transactional cash demand and the changes therein are relatively easy to estimate, either using commercial data services such as the Hungarian online cash register database, or representative retail surveys (that typically also contain payment diaries). Such surveys and research are regularly published by the European Central Bank (Esselink -Hernández 2017) and the Fed (Greene -Stavins 2018), as well as by other central banks, such as Switzerland (Schweizerische Nationalbank 2018), Germany (Deutsche Bundesbank 2018), the Netherlands (Jonker et al 2018), Canada (Fung et al 2015), Japan (Fujiki -Tanaka 2018) and Australia (Doyle et al 2017); recent analyses based on Hungarian data are also available (Végső et al 2018 andIlyés -Varga 2015).…”

“…One common element of the referenced studies is that -although the popularity of cash as a means of payment is considered permanent in many places, including Hungary -they typically report a relative decrease in transactional cash usage which, however, in the specific countries is not accompanied by a drop in overall demand for cash. According to the estimates of Fujiki -Tanaka (2018), during 2017 in Japan the value of transactional cash demand replaced by electronic payments represented merely 0.4 per cent of total currency in circulation. There is general consensus among economists with regard to the fact that demand for cash is now primarily defined by the need for savings (Assenmacher et al 2019;Bech et al 2018;Flannigan -Parsons 2018;Jobst -Stix 2017).…”

Cash Usage Trends in Japan: Evidence Using Aggregate and Household Survey Data

“…One may ask precisely why the Japanese tend to use cash for daily transactions. Specifically, Fujiki (2019) extended the analysis of Fujiki and Tanaka (2018b), which examined the substitution between cash and credit cards for day-to-day transactions using family household data (they did not obtain consistent results using the single-person household data) by adding analysis on the substitution between cash and electronic money, increasing the length of the sample periods, and modifying several explanatory variables to increase the sample size. In this paper, we begin our analysis by examining the major choice of payment methods for day-to-day transactions, and then reporting whether the users of credit cards or electronic money would have lower average cash holding than the cash only users based on Fujiki (2019).…”

“…In particular, we test whether the income, semi-log, and log-log interest rate elasticity of aggregate cash demand changed consistently with the acceleration in cash demand. Fourth, after identifying data sources that provide breakdowns of cash holdings by individuals and firms in Japan, we provide estimates of the decrease in cash holdings for day-to-day one-off payments arising from the substitution of cash with credit cards and electronic money using the household survey data from Fujiki (2019), which is based on Fujiki andTanaka (2018a, 2018b).…”

“…Before moving on to the details of our analysis, let us briefly touch on the Japanese demand for cash literature. Empirical studies on the demand for cash as financial technologies evolve include Fujiki and Tanaka (2018a, 2018b and Fujiki (2019), who used the Survey of Household Finance to examine the substitution of cash for electronic money and credit cards, while Nakata (2012) employed a panel data set and found that electronic money users held as much cash as nonusers. Other studies employed Japanese aggregate time-series cash data, such as Kitamura et al (2009) and Nanba and Watanabe (2011).…”