Developing a secure payment app in Japan requires more than just adding authentication features to the login screen. The entire payment process needs to be designed securely, encompassing identity verification, protection of payment information, multi-factor authentication, fraud detection, API integration, transaction monitoring, audit logs, and handling of failures.
Cashless payment usage is expanding rapidly in Japan. According to the Ministry of Economy, Trade and Industry (METI), the cashless payment ratio in 2025 was 58.0%, with transaction volume reaching 162.7 trillion yen. METI has set an interim target of 65% by 2030 and aims for 80% in the future. In other words, for companies considering payment services going forward, it will be crucial to create a system that is not only easy to use but also "safe and secure to use." ( METI Cashless Payment Statistics )
When considering the security of a payment app, it's important to think of it not just in terms of the app screen, but as a whole process, from user registration and identity verification to payment, communication with external services, transaction records, notifications, and the management screen.
Why security is important for payment apps in Japan
Payment apps handle different types of information than typical shopping apps or social media platforms.
In addition to the user's name and contact information, we may handle personal information such as identity verification, bank account details, card information, payment history, and device information. Furthermore, actions performed within the app may lead to actual money transfers.
Therefore, even a minor design flaw can lead to a major problem.
For example, suppose a user makes a payment but then the connection is interrupted. While the screen might display an "error," the payment might have actually been successful in the background. If the user then tries to pay again, it could lead to duplicate processing.
Security isn't just about protecting login information.
The correct user performs the correct operation, and the results are recorded correctly.
We need to consider all of those factors when thinking about safety.
Essential features for a secure payment app
Identity verification and KYC
In payment services, a mechanism for verifying the user's identity is crucial.
The necessary checks vary depending on the service and target area, but generally, the following functions are likely to be required.
- Registration of personal information
- Submission of identity verification documents
- Phone number and email address verification
- Display of identity verification status
- Resubmission if verification fails
- Additional verification as needed
The important thing here is not to think of identity verification as simply a registration form.
From the time a user submits information until verification is complete, processes such as integration with external services, review, error handling, and record keeping are involved.
We need to create a workflow that is easy for users to understand and easy for the management team to manage.
Multi-factor authentication
There are limitations to protecting your account with just a password.
Payment apps may combine multiple authentication methods depending on the risk associated with the service.
- SMS authentication
- One-time password
- Authentication app
- Biometric authentication
- Device Authentication
- Additional authentication for critical operations
It's not always the case that the same authentication should be required for every operation.
For example, the required security level may differ between checking your balance and making a large transfer to a registered recipient.
A practical approach is to design the system to require additional confirmation for high-risk operations while maintaining user convenience.
Design secure payment processing.
The process doesn't end the moment the user presses the "pay" button.
A typical payment flow involves multiple processes, including authentication, order confirmation, risk checks, communication with the payment service, receiving the result, recording the transaction history, and notifying the user.
For example, the process would be as follows:
User authentication → Payment information verification → Risk check → Payment processing → Result confirmation → Transaction record → Notification
The system must be designed so that if one part fails, the entire system does not end up in a contradictory state.
The message "Payment successful" is displayed, but the transaction hasn't been processed in the backend.
Conversely, the screen might show a failed transaction, but the payment has actually been completed.
This situation can lead to user anxiety.
In payment apps, it is crucial to ensure that the information displayed on the screen matches the transaction status in the backend .
How to protect card information
When handling card payments, the handling of card information must be carefully designed.
Instead of the app directly storing all card information, there are methods such as utilizing the payment service provider's system or incorporating tokenization.
What we should consider here is,
- Where will the card information be handled?
- Where should we store it?
- Who can access it?
- How do we communicate with external payment services?
- Are you saving unnecessary information?
- How do you manage transaction records?
Those are the points.
According to the Japan Credit Association, the estimated loss from fraudulent credit card use in 2025 was 51.05 billion yen. Although this is a decrease from the previous year's 55.5 billion yen, it remains at a high level. ( Japan Credit Association Fraudulent Use Damage Information )
It's important to think about why fraud occurs, rather than just looking at the numbers.
Protecting card information, preventing account hijacking, and detecting unusual transactions should not be treated as separate issues, but rather designed as a series of risks.
Security measures to check when using Japanese payment services
When creating a service that handles card payments in Japan, it is necessary to check domestic guidelines and industry practices.
Especially with e-commerce and non-face-to-face payments, there are risks that can arise from locations other than the payment screen, such as theft of card information or unauthorized logins.
The Credit Card Security Guidelines published by the Ministry of Economy, Trade and Industry address vulnerability countermeasures for e-commerce merchants, EMV 3D Secure, and measures against fraudulent logins.
The important thing here is not to think that you only need to protect the payment button.
There is a risk throughout the entire process, from when a user opens a website or app, verifies their identity, logs in, selects products or services, and completes the payment.
Therefore, it is important to view security measures not as a part of the process, but as part of the entire transaction flow .
How to detect fraudulent use
In combating fraudulent activity, simply stopping all suspicious transactions is not a realistic approach.
If even legitimate users are unable to complete payments, the service itself becomes difficult to use.
Therefore, a method is used that combines multiple pieces of information to assess risk.
for example,
- A different device than usual
- Repeated payments in a short period of time
- A significantly different amount than usual.
- Unnatural login
- Rapid charge
- Abnormal operation patterns
And so on.
When using AI or machine learning
By using AI, it's possible to create a system that detects unusual patterns from past trading data.
However, it is dangerous to think that "implementing AI will prevent misuse."
There are false positives, and attack methods are constantly changing.
It's more realistic to think of AI not as a replacement for human verification or rule-based detection, but rather as an additional tool for finding anomalous transactions.
API integration with banks and external services
Modern payment apps don't always operate in isolation.
In some cases, the system may integrate with multiple external systems, such as banks, payment processing companies, identity verification services, card networks, and notification services.
When designing API integrations, you need to check not only the functionality but also the security.
for example,
- API Authentication
- Access token management
- API Key Protection
- Access control
- Rate limit
- Encryption of communications
- Log management
- timeout
- Error handling
- Retry process
And so on.
We also want to avoid assuming that external services are functioning correctly.
The API may become temporarily unresponsive.
If the app then determines that the request has "failed" and tries to process it again, it could result in duplicate processing if the initial request was actually successful.
Therefore, to prevent duplicate transactions from being created even if the same request is sent multiple times, a design that takes idempotency into consideration is necessary.
This is something that users can't see, but it's extremely important in payment systems.
Payment apps also need "design for handling abnormal situations."
No matter how much testing is done, it's impossible to completely eliminate external service outages and network failures.
That's why, instead of just thinking about a "system that never fails," we need to think about a system that can restore things to their correct state when a failure occurs .
for example,
What happens if the payment API goes down?
A system is needed to correctly hold the transaction status to prevent users from being mistakenly shown that payment has been completed.
What if there's a delay in communication with the bank?
Instead of immediately resending after a timeout, we need a mechanism to check what happened during the initial processing.
What if I don't receive the payment confirmation?
Instead of arbitrarily deciding whether a transaction is a "success" or "failure," it's also possible to treat it as a pending confirmation.
What if I don't receive a notification?
The system needs to be designed so that even if a notification fails, the payment itself is not treated as a failure.
These meticulous design details make a huge difference in actual service operation.
User-friendly security notifications
Even with security features in place, it's not enough if users can't understand what happened.
for example,
"This transaction was not processed for security reasons."
That alone doesn't tell the user what to do next.
Rather than that,
- I logged in from a new device.
- We are checking your payment.
- Payment completed.
- Payment was rejected.
- Suspicious login activity has been detected.
- Your password has been changed.
It would be easier to understand if you explain specifically what happened.
The important thing is not to increase the number of notifications.
It's about conveying necessary information at the right time .
Phishing prevention measures to consider for Japanese payment apps
For payment services, vulnerabilities in the app itself are not the only risks.
Phishing, which involves luring users to fake websites to steal login IDs, passwords, and other sensitive information, is also a major problem.
The Financial Services Agency (FSA) is warning about scams that use fake websites disguised as internet trading services to steal customer information and lead to unauthorized access and fraudulent transactions. Furthermore, the FSA's 2026 document also addresses strengthening measures against phishing and other forms of fraudulent access and transactions. ( FSA warning )
Possible countermeasures on the app side include:
- Multi-factor authentication
- Device Authentication
- Detection of suspicious logins
- Login history
- Additional authentication for critical operations
- Security Notice
- Monitoring of suspicious transactions
These are some examples.
It is also important to warn users.
One measure that service providers can take is to clearly communicate basic warnings within the app, such as "Official support will never ask for your password" and "Do not open suspicious SMS or email links."
Management screen required for payment apps
You can't run a payment service just by creating an app for users to use.
The platform operators need management functions to verify transactions and users.
for example,
- User Management
- Identity Verification Status
- Payment history
- Fraud alert
- Refund Management
- Transaction status
- API error
- Account suspended
- Security Log
- Audit Log
And so on.
Permission management is especially important.
It is necessary to avoid a situation where all staff members have access to all information.
It is safer to separate the information and operations that can be accessed according to the role of the person, such as administrator, customer support, risk manager, and accounting staff.
When adding wallet functionality to a payment app
When expanding the functionality of a payment app, one option is to integrate a digital wallet.
In the wallet function,
- Balance management
- charge
- Money transfer
- Receipt
- QR payment
- Transaction history
- Billing and Payment
- notification
These are some possibilities.
Furthermore, in addition to consumer-facing aspects, it may also be necessary to handle sales management, payment processing, deposit confirmation, and refunds for merchants.
When consolidating multiple payment functions into a single service, it is crucial to first clarify the target users and payment flow, perhaps by referencing mechanisms such as digital payment and wallet solutions .
We're considering functions not only for individual users but also for businesses.
In payment services, consumers are not the only users.
In some cases, member stores and businesses may also need management functions.
For affiliated stores
- Payment acceptance
- Sales confirmation
- Deposit management
- refund
- Claim
- Report
- Store-specific management
For financial institutions and corporations
- Payment Management
- API integration
- Supports multiple currencies
- Fraud detection
- Access control
- Audit Log
In other words, considering payment apps solely as "user-facing smartphone apps" is insufficient.
Designing a system from three perspectives— Consumer, Merchant, and Admin— makes it easier to organize the necessary functions.
If you want to add AI to your payment app, where should you start?
Just because you can use AI doesn't mean you need to incorporate it into every single function.
When it comes to payment services, it's best to start by considering a clear purpose.
Detection of fraudulent use
AI can be used to identify unusual trading patterns.
spending analysis
You can categorize user transactions and clearly display monthly spending trends.
Personalized notifications
You can also organize notifications based on the user's usage patterns.
Customer Support
Another possibility is a FinTech chatbot that answers questions based on authorized information such as balances and transaction history.
Classification of transaction data
You can also categorize large amounts of transaction data and use it for management and analysis.
For example, an AI-powered household finance management platform can combine features such as spending analysis, budget management, synchronization of multiple accounts, smart alerts, and fraud detection.
AI is convenient, but when dealing with financial data, it's necessary to design everything from which data to pass to the AI, where to process it, and how to verify the output.
Common security mistakes in payment apps
Just make sure you're logged in and that's it.
Even if login is secure, risks remain if there are problems with the API or payment processing.
Delaying API security
Communication with external services is a critical part of the system. Therefore, managing authentication information and access tokens must be considered from the outset.
Choosing an external service based solely on price
When considering an API, it's important to check not only the price, but also its uptime, support, data quality, rate limits, and how it handles outages.
Do not design a system for handling abnormal situations.
If you only test normal scenarios, unexpected states may remain after timeouts or communication interruptions.
Do not set detailed permissions for the administration panel.
It is important to avoid situations where internal users have access to more financial information than necessary.
Start security testing just before release.
When a problem is discovered, it becomes difficult to fix if it's already deeply embedded in the architecture.
It's more practical to consider security from the requirements definition and design stages.
Things to check before creating a payment app for the Japanese market
Before starting development, there are a few points that you should decide on.
What payment methods will be offered?
First, you decide on the payment method you want to use, such as card, QR code, bank transfer, or wallet.
Who will use it?
The necessary functions will vary depending on whether the target audience is general consumers, merchants, or financial institutions.
Which financial services will it connect to?
We will identify the necessary external services, such as banking, payment processing, identity verification, cards, and notifications.
Which information should we keep in-house?
It's also important to avoid holding unnecessarily sensitive information within your own company.
Which regulations or guidelines should I check?
The regulations you need to check will vary depending on the type of payment service you provide, your business model, and the region.
What happens if there is a malfunction or misuse?
We design not only how the system works when it's functioning correctly, but also how to handle problems when they occur.
Organizing the overall picture of the service at this stage will reduce the possibility of major specification changes occurring later.
When it comes to payment apps, security should be considered before convenience.
With payment apps, you don't have to choose between ease of use and security.
By combining a user-friendly UI, a short operation flow, proper authentication, clear notifications, and stable payment processing, we can aim to create a service that is easy for users to use and easy for operators to manage.
However, simply adding features one by one is not enough to achieve this.
Identity verification, authentication, payment processing, data protection, fraud prevention, APIs, auditing, and incident response must all be considered as a single, integrated system from the outset.
If you are considering a service that includes financial functions beyond payments, it is important to clarify the target market, financial workflow, necessary external integrations, and security requirements during the FinTech app development phase.
summary
Cashless payments have already become widespread in Japan, and the Ministry of Economy, Trade and Industry aims for further expansion by 2030.
On the other hand, there are also risks such as fraudulent use and phishing.
That's why, when creating a payment app, you need to consider not only "what features to add," but also "how to make those features work securely" from the very beginning.
Identity verification, multi-factor authentication, protection of payment information, fraud detection, API security, transaction monitoring, audit logs, and incident response. These are not options that can be added later, but fundamental mechanisms that support payment services.
Furthermore, when expanding services from payment functions to household budget management, investment, and lending, different requirements exist for each financial workflow. Nyusoft develops FinTech systems that support multiple financial areas, including payments, and can consider the necessary functions and technological configurations according to the purpose of the service and the users.