Alternative payment methods
Mobile
Localization
Direct carrier billing drives digital payments in Japan
November 18, 2024
Japan is known for being on the cutting edge of technology. As the 3rd largest video game market, it is no surprise that Japan also has the 4th largest e-ccomerce market worldwide. In a previous article, we covered Japan's growing mobile and PC gaming scene and the need for game developers to fully understand the culture and regulations to tap into and thrive in its market. Taking it a step further, we’ll look at its current push to incorporate more alternative payment methods into everyday life. For decades, the country has been churning out digital payment technologies since the first mobile wallet, NFC, and QR codes.
For game developers currently in Japan or looking to enter the Japanese gaming market, understanding the overall gaming and payment landscape and preferred payment methods is critical for earning revenue. The rest of this article will prepare game studios of any size with the knowledge necessary to be successful.
The expansion of a cashless Japan is great news for game developers in and out of the country. As more alternative payment methods grow, so do the possibilities for developers to monetize more aspects of their games and gamers to purchase in-game content. Japan has seen exponential growth, specifically in direct carrier billing.
The rise of direct carrier billing can largely be attributed to the country’s high smartphone penetration and preference for in-app spending. Over 85% of the population uses smartphones, with projections showing mobile adoption to cover nearly 94% by 2027. In addition, as a country, Japan is investing heavily in technology around smartphones. With a focus on expanding 5G networks, major players in Japan are investing in Open RAN technology to improve network efficiency and flexibility.
When it comes to digital payments, Softbank, Rakuten, au (by KDDI) and Docomo have emerged as heavy hitters in Japan. These corporations also offer some of the most popular direct carrier billing options. Rakuten provides a low-cost SIM card-based phone that can be used to make purchases in addition to the phone plan, despite being newer to the scene. Softbank leverages its telecommunication base to provide users with benefits for shopping and travel purchases, holding a strong position in consistent quality and video experience. And finally, Docomo leads in overall coverage, winning the Opensignal award in 2024 for 5G coverage experience and availability.
If you are a Japanese game developer or publisher looking for new monetization solutions and to level up your business, Xsolla is the trusted partner you need. Contact our team today to explore Xsolla’s range of tools and solutions and see how we can help expand your presence in Japan and worldwide.
Japan’s payment landscape
While Japan is still a cash-first society, government support through campaigns, incentives, and rewards has shifted the financial culture. Japan’s introduction of the Cashless Point Rebate Program and the growth of over 7 million prepaid e-money terminals in 2022 are just two examples of this push to boost the country’s cashless payment ratio to 40% by 2025. And it’s working. While cash still accounts for 50% of all transactions, alternative payment methods are rising, with market share expected to grow to 66.9 million by 2028. The variety of digital payments in Japan is vast, with credit cards, digital wallets, QR-code payments, mobile wallets, and Konbini payments, to name a few. Credit card payments account for the largest percentage of the market share, with about 40%, while digital wallets take the second largest share, at 23%. While the list below does not include all the alternative payment methods available in Japan, it consists of each category's most popular brand.- Credit Cards. Credit cards are Japan's next most popular way to pay, after cash. They're convenient for more significant purchases and online shopping. JCB, Japan's own credit card company, is a top choice for most people.
- Mobile Billing Payments. Mobile billing, or direct carrier billing, allows consumers to pay for items via their mobile phone bill or deduction with prepaid mobile cards. Major brands include NTT Docomo, KDDI Corporation, SoftBank Corp. and Rakuten Mobile.
- Digital Wallets. Digital wallets, like phone versions of your wallet, are growing in Japan. They're handy for everyday purchases, and some even handle bills. PayPay is set to dominate the Japanese QR payments market. The recent merger of LINE Pay into PayPay and the rise of competitors like Rakuten Pay intensify competition in the sector.
- Konbini. Convenience store payments allow consumers to purchase at over 56,000 participating stores for bill payments, online purchases, and other cash-based transactions. 7-Eleven, Lawson, and FamilyMart are the most popular.
- Transit Cards: Issued by some of the larger transportation companies in Japan, transit cards are rechargeable smart cards for vending, convenience, and restaurants. Popular cards used by consumers include Suica, PASMO, and ICOCA
The expansion of a cashless Japan is great news for game developers in and out of the country. As more alternative payment methods grow, so do the possibilities for developers to monetize more aspects of their games and gamers to purchase in-game content. Japan has seen exponential growth, specifically in direct carrier billing.
The rise of direct carrier billing can largely be attributed to the country’s high smartphone penetration and preference for in-app spending. Over 85% of the population uses smartphones, with projections showing mobile adoption to cover nearly 94% by 2027. In addition, as a country, Japan is investing heavily in technology around smartphones. With a focus on expanding 5G networks, major players in Japan are investing in Open RAN technology to improve network efficiency and flexibility.
When it comes to digital payments, Softbank, Rakuten, au (by KDDI) and Docomo have emerged as heavy hitters in Japan. These corporations also offer some of the most popular direct carrier billing options. Rakuten provides a low-cost SIM card-based phone that can be used to make purchases in addition to the phone plan, despite being newer to the scene. Softbank leverages its telecommunication base to provide users with benefits for shopping and travel purchases, holding a strong position in consistent quality and video experience. And finally, Docomo leads in overall coverage, winning the Opensignal award in 2024 for 5G coverage experience and availability.
Xsolla Payments
To take advantage of the popularity of these alternative payment methods, Xsolla Payments has partnered with some of the top companies that offer these services, including Docomo, Y!Mobile, Softbank, and au (by KDDI). Easy to integrate and customize, Xsolla Payments creates a checkout experience for your players that adapts to their purchasing needs worldwide. As a global entity, Xsolla can cover local payment needs at scale, making it easier for game developers to accept more payment methods, expand their audience, and boost revenue. Xsolla Payments goes beyond just making alternative payment methods available and handles the details, too, with tax compliance as an official merchant of record.
If you are a Japanese game developer or publisher looking for new monetization solutions and to level up your business, Xsolla is the trusted partner you need. Contact our team today to explore Xsolla’s range of tools and solutions and see how we can help expand your presence in Japan and worldwide.
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