Japan is staring at an unusual problem -- it is running out of credit card numbers as the country sees a surge in online shopping amid the coronavirus pandemic. Credit card companies in Japan are struggling to come up with original 16-digit numbers as consumers are increasingly opting for cards over cash.
The increase in credit cards also comes on the heels of the government's campaign to encourage cashless transactions. The Shinzo Abe-government introduced a point system after it increased sales tax from 8 per cent to 10 per cent.
Japanese credit card companies issue 16-digit cards so they can partner with international firms such as Visa and Mastercard. The first six digits represent country code, brand and other information. The last 10 digits are issued by the companies. Japanese credit card companies have said that an increase in card issuances will result in a shortage of combination of numbers, as mentioned in the Mainichi Shimbun newspaper.
One of the obvious solutions to this problem is to add an extra digit to the 16-digit numbers. However, the new reform and advanced trials to prevent forgery could cost the industry billions of yen. The industry is also reluctant to pass on the cost to consumers. Moreover, if they decide to add an extra digit, the next question would be whether to update almost 300 million existing cards or to allow them to co-exist.
Credit card usage received a boost this year after people were asked to remain indoors amid the pandemic. Meanwhile, Japan is also attempting to reduce its dependence on cash. However, most older consumers are more comfortable with the usage of cash payments.