Japan spearheads biometric payment system to spur inbound tourism

Japan will soon start to test biometric payments for travellers when they shop and check into hotels, as the country readies itself for the 2020 Tokyo Olympic Games.

From this July, overseas visitors to Japan will first have to register their personal details – including fingerprints and credit card information – in airports or other convenient public locations in order to use the country’s first government-funded biometrics payments system, reports the Telegraph. It will have an initial test phase in 300 souvenir shops, restaurants, hotels in Tokyo and tourist hotspots such as the hot spring resort of Hakone and the coastal town of Kamukura. Visitors will also be able to take advantage of the biometric fingerprint system as a more convenient alternative to using their passports when checking into hotels.

The new biometric payment scheme will allow registered overseas shoppers to use their fingerprints to purchase items, with taxes automatically deducted. The system will also enable the government to analyse the spending habits of foreign visitors, with ‘anonymous’ data to be managed by a ‘government-led consultative body’, according to the Yomiuri Japanese newspaper.

Japan wants to increase its tourism intake year-on-year, with an aim of doubling it to 40 million visitors by 2020, in time for the Tokyo Olympic Games. The country has a further goal of 60 million visitors by 2030, according to a statement by the Japanese Tourism Office in March.

According to our March data, Japan ranked fourth among our top five globe shopping destinations, registering sales-in-store growth of +10% year-on-year (YoY), driven mainly by Chinese globe shoppers. 

The reasons for this are threefold. The central banking easing that has stemmed from the Abenomics scheme has proved helpful, given the 30% rise in inbound tourism in 2014 compared with 2013, finds the Economist. As a direct consequence, Japan became excellent value for overseas shoppers, due to a stronger US dollar and Chinese yuan. The Chinese are now Japan’s leading inbound travellers, recording a dramatic 107.3% growth in numbers from 2014 to 2015. They also boast impressive purchasing power: according to the Japanese National Tourism Organization, Chinese tourists’ total spending amounted to 1.41 trillion yen (11.33bn euro) in 2015. Lastly, visitors are attracted to Japan by more relaxed visa policies and by tax-free shopping, which the Japanese government hopes will persuade even more people to visit.

With the introduction of a new biometric payment system that firmly targets high-spending Chinese tourists, Japan is leveraging both its own technological expertise and the tech-savvy nature of its luxury-loving visitors.

Both the rise of China’s ‘Moonlight Generation’ – middle-class millennials who have higher disposable incomes and a taste for credit cards – combined with this group’s overriding preference for mobile transactions indicate that Japan is making a bold move catering to this new spending behaviour.

However, biometrics payments are like to raise privacy and security concerns. While some researchers have pointed out that smartphones can be hacked, others are highlighting the fact that the data collected could be used for commercial purposes.

To counter these concerns, eventually retailers in Japan could adopt a more secure approach via a two-step authentication, which requires both a fingerprint and a password.


Global Blue takeouts:

• Japan’s biometric payment system will make Tax Free Shopping easier, and allow faster hotel check-ins for visitors, with an eye to Tokyo’s 2020 Olympic Games.

• Chinese-targeted duty-free stores implementing fingerprint payment are being opened in Ginza and Shinjuku, two of Japan’s top shopping districts.

• Biometric payment systems are a global trend: MasterCard will use fingerprints and selfies in the UK, while Apple and Samsung are already using biometrics via Apple Pay and Samsung Pay.

• While paying with cash may become a thing of the past in Japan, biometric payments raise security and privacy concerns.