Taiwan’s financial regulator, the FinancialSupervisory Commission, recently announced it had started to acceptapplications for mobile payments. Five small local banks currentlyin Taiwan are carrying out mobile-payment pilots. One of thesebanks has already submitted the application to the commission andis planning to roll out the service in stages.
Taiwan is one of the most highly-penetrated credit card markets inthe Asia-Pacific region. Over 34 million credit cards are incirculation on the island, much more than the 23.3 millionpopulation. On average, a Taiwanese adult has two creditcards.
And Taiwanese consumers are addicted to credit card payments,sometimes a bit too much and beyond a reasonable level. In thesecond half of the last decade, a bad card debt crisis hit themarket, forcing banks to close card accounts and reduce their riskexposures.
But credit card mobile payments might not cause similar issues asthese transactions tend to be smaller. Contactless mobile paymentsare typically for everyday purchases less than US$50 based onexperiences in other markets such as the United States and theUnited Kingdom. So they are less likely to drive up cardholders’overall debts to a risky level. Instead, they can hopefully helpcredit cards to go down market and replace the cash currently usedfor these types of transactions.