It was late one night in Tokyo when I stepped into an alleyway to a small ramen shop with a 4.8-star rating on Google Maps. It was the kind of place you'd see in a Japanese drama, where you buy a meal ticket from a vending machine at the entrance. I added extra chashu pork to my steaming hot ramen and ordered a cold nama-biru (draft beer)—the perfect end to my day, I thought. Patting my full stomach, I walked up to the counter, holding just my smartphone as if I were a local out for a stroll, and casually presented my card, asking, "Do you... take cards?"
The owner responded with an awkward smile and an 'X' sign made with his hands. My mind went blank. I opened my wallet to find I had spent almost all the cash I'd withdrawn that morning, with only a few thousand yen left. A cold sweat started to form. Luckily, I had just enough to pay for the ramen, but what if I had been with someone? I might have had to wander the unfamiliar alleys searching for an ATM. In Korea, it's normal to use a card for even a pack of gum at a convenience store, so this experience in the heart of Tokyo, Japan's capital, was embarrassing enough to make my face flush.
Actually, it wasn't just that ramen shop. I had similar experiences several times throughout my trip. Shops selling cute trinkets, local bakeries filled with the smell of freshly baked bread, and even some ticket booths at tourist attractions frequently displayed 'CASH ONLY' signs. There were a few times I walked in assuming they'd take cards, only to walk out awkwardly.
That's when I realized there's a bigger gap than I thought between the high-tech Japan we know and the reality of daily life for Japanese people. Why on earth does Japan, the world's third-largest economy, cling so tightly to cash? The curiosity sparked by this simple question is what ultimately led me to write this article.
Still a 'Cash Society'? The Real Story Behind Japan
To put it bluntly, yes, cash is still king.
Of course, in major cities like Tokyo and Osaka, you can freely use your card at department stores, hotels, and chain stores. But the situation changes completely once you venture into smaller alleyways or travel to smaller regional cities. Cash-only establishments are everywhere. And it's not just because they're sticking to 'the old ways.' There are some pretty complex reasons behind it.
First, Japan is known for being one of the safest countries in the world. People feel less worried about pickpockets even when carrying a lot of cash, so there's a general feeling that using cards isn't a necessity. Another reason is the high credit card transaction fees for merchants. For small business owners, a fee of several percent can be a significant burden. On top of that, as an aging society, a generation less familiar with digital payments still plays a major role in the economy. According to data from Japan's Ministry of Economy, Trade and Industry (METI), the country's cashless payment ratio was 36.0% in 2022, a stark contrast to South Korea's rate of over 90%. (Source: KOTRA Overseas Market News) This means that 6 or 7 out of every 10 payments are still made with cash.
Why the Japanese Prefer Cash
Thanks to low crime rates, there's less risk of loss. Cash also provides a sense of security, as it can be used even when communication networks are down during disasters like earthquakes. There are also no concerns about personal data leaks.
Why Shop Owners Dislike Cards
The main reason is the high transaction fees, which average 3-5%. Cash also has the advantage of immediate and simple settlement.
But the Winds of Change Are Blowing
Despite Japan's seemingly unshakable 'love for cash' for the reasons mentioned, major cracks have begun to appear in recent years. When I first visited Japan, I was hesitant to even offer a credit card, but the atmosphere is completely different now. The decisive turning point was, of course, the COVID-19 pandemic. The demand for non-face-to-face and contactless payments exploded, prompting the Japanese government to step in, setting a goal to increase the cashless payment ratio to 40% by 2025 and rolling out various support measures.
The most noticeable change is undoubtedly the popularization of QR code payments. From convenience store counters to the doors of small neighborhood restaurants, you'll see colorful logos for services like PayPay, LINE Pay, and Rakuten Pay everywhere, making you think, 'The competition here is fierce.' Of course, most of these are domestic services that require a Japanese phone number for verification, making them difficult for Korean travelers to use. But the important thing is that this trend has played a huge role in changing the mindset of shop owners who once insisted on 'cash only.' Once they installed a QR payment terminal, many naturally started supporting credit card payments as well.
Thanks to this, things have gotten much easier for travelers. Now, in big cities like Tokyo, Osaka, and Fukuoka, you can freely use your credit card not only at convenience stores, drugstores, department stores, and chain restaurants, but also for purchasing most transportation passes and admission tickets. In particular, the contactless (tap-to-pay) feature on Visa and Mastercard—the same way you'd tap a transit card in Korea—is spreading rapidly. Paying in one second with a simple 'beep' without fumbling for change is incredibly convenient. You can now frequently find card terminals in independent shops and old restaurants where it would have been unimaginable before.
However, it's important to remember that these changes haven't been applied evenly across all of Japan. As soon as you step a little outside the city center, or visit long-established family-run businesses (shinise), or small independent shops, you're still very likely to encounter a sign that says 'Cash Only (現金のみ).' It's truly a transitional period. That's why the best payment strategy for traveling in Japan right now isn't 'one card is enough' or 'cash only,' but a flexible 'hybrid' approach that uses both depending on the situation.
Conclusion: Acknowledging the Difference and Being Prepared
What I learned from experiencing Japan's payment culture is that it's not about which way is 'better,' but simply that it's 'different.' For me, accustomed to the Korean system where a single card solves everything, counting cash and handling coins was an inconvenience at first. But whether it was inserting a 1,000 yen bill into a vending machine at a tiny ramen shop and receiving change in coins, or tossing a 5-yen coin to make a wish at a shrine, that unfamiliarity soon became a memorable part of my trip. The weight of the jingling coin purse felt like tangible proof that I was truly 'traveling.'
Perhaps travel is ultimately a process of encountering these small differences firsthand and learning to navigate them. Once you develop the habit of scanning for Visa or Mastercard stickers on the door before entering a shop, and start getting a 'feeling' that a place might be cash-only, you've already become an intermediate Japan traveler. Instead of anxiously wondering if they take cards, you gain the composure to think, 'Judging by the vibe of this place, it's probably good manners to have cash ready.' Isn't that what travel experience is all about?
That's why a traveler's wallet in Japan today naturally has two hearts: the 'main heart'—your credit card for smooth payments at department stores, hotels, and drugstores—and the 'auxiliary heart'—your cash for small teahouses in alleyways and snacks at local markets. Insisting on only one will inevitably lead to inconvenient moments. The flexibility to have both ready and use them according to the situation is the smartest way to enjoy Japan's payment culture.
There are social and historical contexts for why Japan sticks to cash. As travelers, all we need to do is respect that culture and prepare smartly. With just a little preparation, the anxiety of 'What if my payment is declined?' can turn into the small joy of 'Which payment method should I use this time?' Now, it's time to explore some practical tips to fill your 'hybrid wallet.'
Practical Tips for Travelers
Let's get specific about filling that 'hybrid wallet' I mentioned in the last chapter. Based on my experience and advice from seasoned travelers, here's a realistic guideline. First, for cash, plan on a minimum of 10,000 yen per person, per day. You might think, 'That seems like a lot,' but this is the baseline for peace of mind. With 10,000 yen, you can have a bowl of ramen (about 1,000 yen), a cup of coffee (500 yen), take the train 2-3 times (600 yen), and still have money left for dinner or a small souvenir. It's wise to prepare even more if you plan to visit cash-only local eateries, pay for admission and omikuji (fortunes) at shrines and temples, or buy snacks at traditional markets. It's best to exchange your currency in Korea beforehand, preferably through your primary bank's app. Exchange counters at airports or in cities in Japan often have much higher fees.
Credit cards are for your larger expenses. They are widely accepted at hotels, department stores, drugstores, large shopping malls, and most chain restaurants. A card with a Visa or Mastercard logo that's enabled for overseas transactions will be sufficient. While some places offer discounts for JCB cards, Visa/Mastercard are far more universally accepted. Here's a pro tip: If the payment terminal asks whether you want to pay in JPY (Japanese Yen) or KRW (Korean Won), always choose JPY (the local currency). Paying in KRW will result in extra fees due to double currency conversion. It's also a good idea to activate the 'DCC (Dynamic Currency Conversion) blocking service' in your credit card app beforehand.
There are two items that will dramatically improve your 'quality of life' while traveling in Japan: a coin purse and a transit card (IC card). In Japan, coins go up to 500 yen, so your pockets can get heavy and jingly after just a few transactions. A small, compartmentalized coin purse, instead of a flat wallet, will save you a lot of stress. And for moments when even pulling out coins feels like a hassle, an IC card like Suica or Pasmo is the solution.
- Purchasing and Topping Up: Due to a semiconductor shortage, the issuance of physical cards is currently suspended in many places. Instead, you can buy a short-term tourist card (like the Welcome Suica) at the airport, or if you're an iPhone user, I highly recommend getting a mobile Suica directly from the Wallet app. Remember that you can usually only top up the card with cash at machines in subway stations.
- Where to Use: It covers trains and buses, of course, but you can also use it with a simple 'beep' at convenience stores, vending machines, coin lockers, and even most chain restaurants and cafes. It's the perfect partner for keeping your travels moving smoothly without the hassle of counting cash and receiving change.
Ultimately, the answer is simple. Ample cash, an international credit card, and a topped-up IC card. If you have this 'holy trinity' and use them according to the situation, you'll rarely find yourself in an awkward or inconvenient payment situation. Your wallet has now become a master key that can handle any scenario.