Japan isn't an underdeveloped country by any means. However, it's still a bit more reliant on cash as a primary source of payment. Vending machines can accept up to 10,000 yen bills, while even most small shops and businesses will have enough change to pay back on this bill. Credit cards are widely accepted at major restaurants and hotels and will probably get you through most of the trip—however, it's still advisable to keep some cash on hand.
It may seem foreign, and even rude, to North American visitors, but there is no tipping in Japan. Always pay the full amount and collect your change. In Japan, no matter how good the service, never leave cash for your server. In all likelihood, they will chase you as you're walking out of the restaurant, assuming that you've forgotten to pick up your change. It's especially important to remember not to tip as, to some, it may come off as insulting. Tipping implies that you think your server must not make enough money and thus must need or want your spare pocket change. If you receive excellent service, simply act graciously towards your server and that will be tip enough.