The issue of commission for cashless payments faced by small and medium-sized stores

Thanks to government initiatives, cashless payments have become indispensable in the modern restaurant industry, but at the same time, many restaurant managers face a major challenge: the burden of commission. This issue has been pointed out since cashless payments were first introduced.

Although it varies depending on the service, payment service providers generally charge about 3% of the transaction amount as a commission. In other words, the store's sales go to the card company first, and the commission is deducted before the payment is made, so the higher the monthly sales, the higher the total amount of the commission.

For example, if a store has monthly sales of 5 million yen, the commission will be 150,000 yen, or 1.8 million yen per year. For restaurants with low profit margins, this will definitely be a burden.

Some analysts point out that as the price of goods increases due to the recent weak yen, the proportion of credit card customers will increase, which will put pressure on profits, and this is probably true in reality.

In the case of PayPay, which did not charge anything when it was first introduced, it now charges a commission of nearly 2%. Some restaurants, wanting to be free from the curse of these fees, have stopped using cashless payment after having introduced it.

Why is this happening? One of the reasons has been that commission in Japan have long been higher than those in Europe, the US, and Australia. It has also been pointed out that there is an unclear aspect in that payment fees vary depending on the industry, business type, and size. These points are certainly the key to the fee issue.

However, before we get into these points, we must understand why cashless payment commission is incurred in the first place in order to solve the problem.

According to IT journalist Hiroshi Mikami, the reason why fees are charged for cashless payment is because multiple businesses are involved. For example, payment agents who install payment terminals and connect the lines. Next, there are charge fees, bank fees, credit card fees, and other fees. He points out that it is unavoidable that expenses are incurred because there are multiple businesses involved in this alone.

The government's policy is to continue to encourage cashless payment, but it is a very serious situation that the burden of this has led to a situation where it is not surprising that some stores will go out of business due to commission issues.

POINT①

The cashless payment ratio in 2023 will be 39.3%

According to the Ministry of Economy, Trade and Industry and the Japan Credit Association, which are working to promote cashless payments to achieve the government's goal of increasing cashless payments to about 40% by 2025, the ratio of cashless payments in 2023 is expected to steadily increase to 39.3% (126.7 trillion yen). The breakdown is 83.5% (105.7 trillion yen) for credit cards, 2.9% (3.7 trillion yen) for debit cards, 5.1% (6.4 trillion yen) for electronic money, and 8.6% (10.9 trillion yen) for code payments.

POINT②

Market fees for cashless payments by type

The main commission for cashless payments is 2.7-3.25% for credit cards, 1.6-2.5% for general-purpose QR codes, and 2-3% for electronic money. In addition, fees for proprietary Pay (house electronic money) are said to be lower than for general-purpose electronic money.

According to statistics released by the Japan Credit Association on March 29, 2024, the ratio of cashless payments to total consumption is expected to reach a record high of 39.3% in 2023, so there is no doubt that the trend toward cashless payments will continue to rise.

However, this fact means that for stores that operate with a profit margin of 1-2%, if they do not change their prices, they may incur a loss due to the increased commission.

If the number of business owners who are put under pressure by the government-led introduction of cashless payments increases, surely the government needs to take the lead in correcting fees, etc.

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