While it is no stranger to cashless payments, Taiwan is perhaps the most cash-friendly market in East Asia with the exception of Japan. In Taiwan, it is common to find restaurants, food stalls and small retailers who only accept cash. In the capital of Taipei, many taxis only accept cash. Some that nominally accept cashless payments such as stored-value and credit cards actively discourage customers from paying that way because the drivers don’t want to pay a merchant fee or wait to be paid the fare.
Yet with Taiwan struggling to contain the virus, businesses will be forced to adapt. Larger firms will lead the way. As an example, on May 22, McDonald’s announced that its online delivery service would temporarily stop accepting cash payments for deliveries due to the coronavirus outbreak in Taiwan. Customers must pay for deliveries with credit cards until May 28 (although that date will likely be extended unless Taiwan swiftly brings the outbreak under control) McDonald’s said in a statement, adding that the policy will minimize contact between food deliverers and customers by eliminating the exchange of cash.
Even cash-loving small retailers are shifting gears. Line Pay, one of Taiwan's largest e-wallets, said in a May 25 statement that interest in its e-payment services has jumped 40% since Taiwan implemented Level 3 restrictions earlier in May, largely driven by SMEs.
Banks are evolving too. Local lender Bank SinoPac just launched an online service where stores can apply for its QR code-based payment tool without visiting a bank branch.
These changes would have been unlikely to occur so quickly without the current Covid outbreak, even though mobile payments have been gaining in popularity over the past few years. In 2020, mobile payments in Taiwan more than doubled to NT$240.7 billion (US$8.54 billion) from NT$118.2 billion in 2019.
Two main factors are driving their adoption in Taiwan: high smartphone penetration and abundant subsidies. As Kapronasia noted in a recent newsletter, Taiwan’s top e-wallets boast large transaction volume but they are still losing money because they need to constantly subsidize customer purchases, and until recently (with the launch of Line Bank) none has been able to expand into more profitable segments of online finance.
In March, Banking Bureau Deputy Director-General Lin Chih-chi told The Taipei Times that Taiwanese still tend to use credit cards for online shopping but use mobile payments at certain physical stores – usually for the purchase of snacks, beverages or certain consumer goods – because of their convenience and to earn rewards points. Teenagers, who cannot apply for credit cards, face no such limitations with mobile wallets and that has helped boost their usage in Taiwan.
Looking ahead, cashless payments are likely to be adopted at an accelerated pace in Taiwan, even if the current Covid outbreak is brought under control fairly soon. Once a society takes concrete steps to reduce cash use, and new infrastructure is put in place to support that transition, there is no going back.