Taiwan Opens Door to Mobile Payments
February 26, 2013
Taiwan’s financial regulator, the Financial Supervisory Commission, recently announced it had started to accept applications for mobile payments. Five small local banks currently in Taiwan are carrying out mobile-payment pilots. One of these banks has already submitted the application to the commission and is planning to roll out the service in stages.
Taiwan is one of the most highly-penetrated credit card markets in the Asia-Pacific region. Over 34 million credit cards are in circulation on the island, much more than the 23.3 million population. On average, a Taiwanese adult has two credit cards.
And Taiwanese consumers are addicted to credit card payments, sometimes a bit too much and beyond a reasonable level. In the second half of the last decade, a bad card debt crisis hit the market, forcing banks to close card accounts and reduce their risk exposures.
But credit card mobile payments might not cause similar issues as these transactions tend to be smaller. Contactless mobile payments are typically for everyday purchases less than US$50 based on experiences in other markets such as the United States and the United Kingdom. So they are less likely to drive up cardholders’ overall debts to a risky level. Instead, they can hopefully help credit cards to go down market and replace the cash currently used for these types of transactions.