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Why Japan’s Merchants Are Innovating Checkouts

Japan’s evolving retail landscape reflects a dynamic blend of traditional preferences and modern innovations. As consumers embrace new technologies and behaviours, merchants are adapting their POS systems to meet their diverse demands, ensuring seamless, personalized shopping experiences.

In a world increasingly dominated by digital transactions, it might come as a surprise that Japan’s 126 million consumers, still heavily favour physical stores for everyday purchases like clothing, cosmetics and food.

Surveys indicate that over 59% of Japanese shoppers prefer brick-and-mortar stores because they can physically examine or try products before making a purchase.

Moreover, Japan’s retail economy is flourishing, with retail sales rising 2.3% in January from a year earlier, marking the 23rd consecutive month of increase. Retail trade and wholesale sectors consistently contribute over 10% to the country’s gross domestic product (GDP).

Shopper demographics

Japan stands out for its dense population, with 92% residing in urban areas. Tokyo, Kanagawa, Osaka, Aichi, and Saitama account for a significant 37.4% of the population.

The country also boasts the world’s oldest (and among its healthiest) population, with a median age of 49 and 29% of residents aged over 65.

They are among the best educated too, 61.5% of 25–34-year-olds hold tertiary degrees, surpassing the OECD average of 45.5%.

Generation Y are embracing discount culture

Japan has always been regarded as a prime market for luxury goods. The Japanese traditionally value quality over quantity and have resisted rapid consumerisation. However, economic slowdown is changing that with shoppers increasingly drawn to lower-priced products. A survey conducted in 2023 revealed that over 58% of Japanese consumers prioritize low prices when making purchases, reflecting a growing discount culture.

This is especially true for the country’s Yutori (Millennial) generation. Nearly half of people under the age of 25 work part-time and earn around $100–500 a month. They are more likely to visit malls and specialty stores especially if they offer entertaining shopping experiences. Discount stores and own-label products, which once struggled to break into the Japanese market are gaining traction with this generation.

How attitudes impact sales points

Given Japan’s urban concentration and diverse demographics, merchants’ point-of-sale (POS) systems face unique demands:

  • Speed and Convenience: Urban retailers require fast and convenient checkouts to manage high throughput. Hence, Japan’s fascination with kiosks and vending machines, offering everything from beverages to fresh produce.
  • User-Friendly Interfaces: POS systems need to cater to a wide demographic range, incorporating large screens and multimedia displays for enhanced user experiences across age groups.
  • Payment Flexibility: Educated consumers are more likely to adopt mobile payments and demand multiple payment options at checkout.
  • Deeper insight: POS devices that deliver rich data and analytical services offer insights for businesses to attract and retain customers, without solely relying on price reductions that restrict margins.

Evolving checkout behaviours

How Japanese consumers like to pay is evolving as new payment methods and shopping behaviours emerge:

  • Cash vs. Cashless: While cash remains prevalent, contactless payments, including IC cards, have gained popularity, particularly among younger, urban consumers seeking convenience. And it’s not just bank and credit cards, Japan’s Suica and Pasmo smart cards, which can be utilized for transportation, unattended vending machines, and in-store purchases are now widely used.
  • Government Initiatives: Initiatives like the “Cashless Vision” aim to increase cashless transactions to 40% by 2025 and 80% in the long run, and are supporting biometrics infrastructure and NFC Pay contactless payments.
  • Mobile Payments: With 85% of Japanese people now owning smartphones, mobile payments, facilitated by apps like Apple Pay, Google Pay, PayPay, LINE Pay, and Rakuten Pay, are becoming mainstream.
  • COVID-19 Impact: As in other countries, the pandemic accelerated the shift away from cash payments, prompting increased adoption of contactless payment and hybrid services like curbside pickup.

Changing role of POS devices

Partnerships between companies like ACI Worldwide and CARDNET are modernizing digital payments in Japan, introducing sophisticated solutions and services. POS terminals now integrate CRM, inventory management, and other back-office systems, emphasizing the importance of customer experience and operational efficiency.

Moreover, a new generation of Android POS terminals – including Castles Technology’s ultra-small S1 MINI, experience-boosting S1P, services-rich S2L and unattended S1U2 – are delivering smarter, more secure, and future-ready payment acceptance.

They offer user-friendliness, flexibility, and faster transactions, that meet the needs of the most demanding but cost-sensitive merchants. Importantly, they also support diverse payment methods and provide features like invoice and inventory management, essential across industries like retail and hospitality.

A rising power in Japan

Castles Technology is well placed to help Japanese merchants build better experience for all their customers, domestic and international, young and old. Our Android and Linux POS devices are already used by leading retailers including Uniqlo and muji.

Also available in Japan, our SaaS solution, CasHUB is opening the door to new cloud-based services including remote estate management and control and over-the air updates.

Additionally, our new SoftPOS solution is making it even easier for Japan’s small merchants to accept all types of payments using their existing smart devices – keeping costs low for their business and experiences even better for their customers.

Discover more about POS innovation at RetailTech Japan, 12-15 March at Tokyo Big Sight.
Find Castles Technology on booth #RT2206.
To book a meeting: [email protected]





Linux 終端機

The U1F robust design is built to last and its superior contrast screen makes reading comfortable regardless of lighting conditions.



Android 終端機

S1U2 offers multifunctional capabilities for your unattended payment needs such as self-service solutions.



Android 終端機

The newly designed retail Android PIN Pad S1P opens the door to endless possibilities.