Fast, secure and frictionless payments can lead to a great travel experience. Conversely, slow, insecure and problematic payment can impact the overall trip severely, such as leading to booking failures, fraud and scams, and so on.
In this two-part article, the authors analysed their own leisure and business travel payment experiences in key markets in East Asia, highlighting the key development and key issues in welcoming international visitors. The first article covers Japan and Taiwan, while the second article focuses on mainland China and Hong Kong SAR China.
Inbound travel payment in Japan
40% of inbound travel payments in Japan were conducted via credit card in 2023
Source: Euromonitor International Travel system
One key hurdle of travelling around Japan before the pandemic was the fragmented pre-paid card, or IC card, landscape across prefectures. For example, this was illustrated by the Suica card and Pasmo card in Greater Tokyo, ICOCA card in the Kansai region, and Kitaca card in the Greater Sapporo region. As internationals travel between regions, this can often cause confusion and inconvenience.
Visa contactless payment has become more visible in Japan’s transportation such as Fukuoka Metro and buses near Mount Fuji, uniting the destination with one payment option for, especially, multiple-city travellers. This smooths the traveller’s journey without acquiring a new pre-paid card in-destination. Major railway companies across prefectures have announced plans to allow seamless contactless credit and debit card payments by 2025 in time for the 2025 World Expo to be held in Osaka.
Four of the top five source markets for Japan in 2019 are in North Asia, namely China, South Korea, Taiwan and Hong Kong
Source: Euromonitor International Consumer Finance system
Japan has adoptedpayment options that are familiar to these source markets in order to provide a seamless journey. As China used to make up one third of Japan’s inbound arrivals before the pandemic, popular Chinese payment options, Alipay and WeChat Pay, have seen ubiquitous presence in the destination from transportation, to shopping, to entertainment. These inclusive travel payment options provide convenient travel payment experiences for one of its most important source markets.
With the depreciation of the yen, Japan maintains traction as a hot destination for visitors from around the world, beyond China, especially in the Asia Pacific region.
SoftBank-backed QR code payment player, PayPay, has integrated nine cashless payment services across Asia Pacific, including Kakao Pay (South Korea) and E.SUN Wallet (Taiwan). In 2024, PayPay plans on extending to eight other services including NAVER Pay (South Korea) and OCBC Digital (Singapore).
PayPay’s integration of nine cashless payment services across Asia Pacific has allowed Japan to provide convenient digital wallet travel payment options to over 70% of inbound visitors to Japan in 2023
Source: Euromonitor International Travel system
Inbound travel payment in Taiwan
10% decline in cash contribution compared to 2019 in inbound travel payments in Taiwan in 2023
Source: Euromonitor International Travel system
The Taiwan travel payment landscape remains reliant on credit cards and pre-paid cards. The continued relevance of pre-paid cards can be showcased through the government subsidy scheme, “Taiwan the Lucky Land”, allowing international visitors to choose between receiving funds through pre-paid cards (EasyCard or iPass) or accommodation vouchers.
Tap-and-go service is available for Taipei’s Taoyuan Metro which transfers international passengers from the airport to Taipei City. The in-city Taipei Metro only accepts contactless tokens purchased with cash or pre-paid cards like EasyCard currently, but enabling more payment options, especially open-loop payments, is on the roadmap. The Taipei Metro plans on including contactless payment and QR code payment options to provide a seamless and convenient traveller experience around 2025.
Digital wallet payment options such as LINE Pay are increasing. Efforts to provide more inclusive travel payment methods to key source markets, including China, Japan, Hong Kong and South Korea, are expected in the coming years as the destination hopes to boost tourism.
Key partnership development in travel payments in East Asia
Key travel markets in East Asia have been enhancing collaboration with both card operators (Visa etc) and techs (Ant Group, Stripe etc) to serve international visitors from key source markets to reduce the burden of returning pre-paid cards and exchanging cash. For example, digital wallet payments are popular in mainland China and Indonesia and are gaining traction in Japan, while card payment penetration is high in Singapore, Hong Kong SAR China, Japan, South Korea, and the US. [2]
Card operators, especially Visa, have been promoting contactless card payments across public transport and retail outlets, especially in Japan and Hong Kong SAR China.
For QR payments, Ant Group and UnionPay have been actively establishing partnerships with banks and digital wallets regionally, powering them for cross-border payments on AliPay+ and UnionPay’s QR network, respectively.
In the next article, inbound travel payment insights in mainland China and Hong Kong SAR China, as well as key opportunities for travel payment development will be discussed.
Furthermore, for more insights in travel finance, please read reports in embedded finance, cross-border transactions, and FinTech’s next phase. For more insights in travel and loyalty, please read content in rewards redefined, elevating engagement, and top travel trends in 2024.
