The number of electronic payment users in Taiwan surpassed 10 million in August last year, and reached 11.4 million at the end of November — an increase of about 75 percent from a year earlier. The sharp increase reflects e-payment service providers’ aggressive promotion of non-cash payment methods, and shows that more people are using contactless payment amid the COVID-19 pandemic, the Financial Supervisory Commission has said.
Non-cash payment methods comprise credit and debit cards, electronic stored-value cards, electronic payments and mobile payments. While non-cash payment is becoming more popular, its penetration rate last year missed the government’s target of 52 percent, a goal it set in 2015 — when the Act Governing Electronic Payment Institutions (電子支付機構管理條例) took effect — aiming to double the rate in five years.
Taiwan’s total credit card spending of NT$259.5 billion (US$9.14 billion) in November still dwarfed electronic payments, which totaled NT$6.73 billion, showing there is still room for growth and hinting at challenges for the creation of a cashless society.
The commission in December said cash remained king in Taiwan, as the penetration rate of non-cash payments reached only 39.7 percent by the end of the third quarter. It attributed the failure to double the penetration rate from 26 percent five years ago to a slowdown in consumer spending due to the pandemic.
However, a change might be slowly taking shape, as a survey released last month by Visa Taiwan Co suggests that more people prefer credit and debit cards to cash. The survey, which was conducted in August, found that about 80 percent of respondents used credit cards daily, while about 77 percent used cash and 58 percent used stored-value cards, such as EasyCards and iPass cards.
It also found that 65 percent of respondents preferred non-cash payments, compared with 35 percent who said they favored cash as their main payment method.
However, it remains to be seen whether the survey points to an actual sea change in spending habits, as its sample size was small at 800 participants, it reflects consumers’ preferences instead of actual transactions, and lacks feedback from vendors and merchants.
However, amendments to the act passed in December might be a watershed, as it could create a new landscape for the electronic payment industry.
The amendments merge the Act Governing Issuance of Electronic Stored Value Cards (電子票證發行管理條例) with the Act Governing Electronic Payment Institutions to expand the scope of the electronic payment industry, open up cross-platform money transfers and settlements, and improve user experience and convenience.
The amendments aim to allow the electronic payment industry to grow and support the nation’s financial technology development.
However, there are many challenges. First, people are still slow to adopt non-cash payment methods — this could explain why an overwhelming number of people last year opted for physical Triple Stimulus Vouchers instead of the digital version.
Second, automated teller machines (ATM) remain prevalent in Taiwan, even though the number of bank branches has continued to decline. As the nation has one of the highest density of ATMs in the world, people are less motivated to use non-cash payments.
Third, some vendors strongly resist non-cash payment methods due to business concerns, making any short-term shift from cash unlikely.
It would be interesting to see how the electronic payment industry innovates its products and upgrades its services to attract consumers, and whether the convenience offered by the amendments would motivate more people to embrace electronic payments.
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