The government of Japan announced that it plans to provide additional funding to the CASHLESS rebate program. The program turned out to be very popular even in a cash-driven Japan and the initial budget will not suffice. Let us take a closer look at how the CASHLESS program unrolled so far.
What is the CASHLESS program?
Last month, the tax hike took place in Japan rising the tax rates from 8% to 10% and bringing mayhem in tax calculations for consumers in addition to general frustration with the increased financial burden. To make the transition less painful for consumers, Japan has introduced a CASHLESS rebate program, where buyers get reimbursed from 2% to 5% of their paycheck when shopping in stores that are part of the program.
The average number of rewards per day rose from JPY 1 billion at the launch to JPY 1.2 billion as we speak.
The reimbursement is made in several forms. It can come as an instant deduction from the total sum of your purchases at the cashier, or the total amount of reimbursements can be deducted from your credit card obligations on a monthly basis, or you can get your rebates in points for various payment systems.
To get in-depth information about how the program works and how to start collecting rebates, please visit our dedicated article.
Why the CASHLESS program needs more funding?
Because it turned out to be extremely successful and popular, despite Japan being very fond of cash and having a bad experience with cashless systems before. The average number of rewards in the program per day rose from JPY 1 billion at the launch to JPY 1.2 billion as we speak. This number will probably continue to grow as the year-end and the New Year shopping season is getting nearer.
Moreover, the number of participating stores is also growing. When the program started, there were 500,000 stores providing rebates on cashless purchases. Nevertheless, by December 1, the program expects to have 860,000 stores being part of the program and aims to reach 2 million stores in total.
Technically speaking, the government covers up the expenses of credit card firms and other cashless service companies who participate in the program providing rebates in cashless purchases in all of the above-mentioned stores. The initial budget sum for the fiscal year of 2019 was JPY 280 billion where about JPY 180 billion were meant to cover up the reward points.
Currently, the government plans to add more than JPY 100 billion (about USD 930 million) in the supplementary budget to keep up with the popularity of the CASHLESS program. The budget draft of the fiscal year that in Japan ends in March will be made late next month and should include additional funding for the program.
In the wake of both Olympics and Paralympics that will be visited by many foreigners, Japan is trying to make cashless payments more widespread within the country. On Friday, during the news conference, minister Hiroshi Kajiyama announced that this plan is viable and it is possible to provide more funding to the CASHLESS program. The funding of the remaining part of the program (from the start of the fiscal year 2020, which is April 2020, until June 30, 2020) will be included in the main budget of 2020.
"Otsumami" - a bite size snack:
Will the CASHLESS program indeed turn the tide and make Japan less of a cash-oriented country?