Although the penetration rate of credit cards in the Taiwanese market has seen slower growth since 2001, the ratio of consumer loans to personal consumption expenditure is rising steadily, according to MasterCard International's latest report.
During the first nine months of last year, Taiwanese spent NT$1.05 trillion (US$35 billion) on credit-card payments, accounting for 21.73 percent of overall consumption expenditures, said Tina Chiang (江威娜), vice president and business manager of MasterCard International, citing the Financial Supervisory Commission's statistics.
Compared with the full-year ratio of 16.36 percent in 2002 and 19.12 percent in 2003, Chiang said credit card usage has become widely accepted and the ratio can be pushed higher if suitable promotions and incentives are offered.
In contrast, the number of credit cards issued is rising at a slower pace. As of October last year, more than 42.95 million credit cards were in circulation, showing an annual growth rate of 13.5 percent -- a steep drop from the full-year figures of 31 percent in 2002 and 22 percent in 2003.
"Since each adult has more than four credit cards, on average, financial institutions have met with greater obstacles and higher operation costs in launching new cards," she said.
Although the market has been flooded with a wide array of multi-functional cards, Chiang remains optimistic about the possibilities of luring people to use credit cards rather than cash.
A popular marketing strategy adopted last year by various retailers is to offer zero-interest installment programs, which have successfully stimulated consumption, Chiang said.
From a long-term point of view, however, Taiwan's changing population structure is expected to play a major role in shaping new consumer behavior, she noted.
"As more and more women have the final say over household finances, businesses will have to tailor-make marketing activities to create consumer demand," Chiang said.