63% of Japan's online transactions used payment cards in 2023

Credit and charge cards also held a 60.8% share.

Payment cards dominated Japan's e-commerce market in 2023, accounting for nearly 63% of online transactions, according to GlobalData. 

The report also said credit and charge cards held a 60.8% share, driven by rewards, cashback, discounts, and installment payment options. Additionally, banks are also promoting virtual credit cards for added security.

Alternative payment methods are also gaining traction, making up 28% of online transactions. PayPay is the most preferred alternative payment option, followed by international brands such as PayPal and Amazon Pay.

The sector grew by 9.1%, reaching $177.3b (JPY24.8t), fueled by a tech-savvy population, high internet penetration, and secure payment options.

“With a preference for online shopping due to its ease and time-saving benefits, Japanese consumers are embracing digital platforms, making e-commerce an integral part of their shopping experience,” said Kartik Challa, senior banking and payments analyst at GlobalData.

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Key shopping events like Black Friday and Cyber Monday, along with secure payment options such as Mastercard ID Check and PayPal Checkout, have boosted online shopping.

About 87.2% of Japanese consumers shopped online in the past six months, with only 5.7% reporting they never shopped online.

Challa said Japan's e-commerce market is expected to reach $249.1b (JPY34.9t) by 2028, growing at a compound annual rate of 6.7% from 2024 to 2028, driven by increasing online shopping and enhanced security measures.”