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Taiwan's underground economy proportionally larger than China's

TAIPEI, Taiwan -- Visa Inc. on Monday said that the black market's part of gross domestic product (GDP) in Taiwan is 28.1 percent, compared to the mainland's 14 percent, suggesting that local authorities promote payment cards to bring this percentage down.

Visa Inc.'s Macro Ma (麻少華), country manager of Visa Taiwan, and Vice President of National Cheng Kung University (成功大學) Ho Chih-chin (何志欽), published the research results yesterday at a seminar sponsored by Visa Inc.

The report stated that Taiwan's underground economy to GDP ratio of 28.1 percent is at a moderate level compared to countries like Russia and the Philippines, which stand at around 40 percent, but is high when compared to 10 percent like in the United States.

Cash takes time to get at, is riskier to carry, and, by most estimates, costs society as much as 5-7 percent of GDP. Meanwhile, cash payments can impose significant processing costs at the banking and retail levels, Ma said.

Citing data from the Euromonitor Merchant Segment Study, Visa Taiwan said cash remains the primary method of payment in Taiwan despite the introduction of payment cards over 20 years ago.

The Central News Agency (CNA) cited a report by Visa Taiwan which said that electronic payments represent only 25.8 percent of personal consumption expenditures in Taiwan, far below other Asian markets such as Hong Kong (64.5 percent), mainland China (55.9 percent), South Korea (54.8 percent) and Singapore (53.0 percent), the statistics showed.

Taiwan Presents Tremendous Opportunity

The relatively low personal consumption expenditure from payment cards in Taiwan presents “a tremendous opportunity” to convert cash to safer, more reliable and convenient forms of payment, Ma said.

“In order to advocate the use of electronic payments, we are committed to continue educating the public on the benefits of electronic payment,” Ma told CNA.

While credit cards have become popular in Taiwan, many local retail stores will not accept credit cards because they do not want the tax authorities to know about their financial situations, Ma said.

Other forms of electronic payments such as making payments with an EasyCard — which is widely used on public transportation in Taipei — remain in an early stage of development in Taiwan, leading to the country's low rate of personal consumption expenditures through payment cards, Ma explained.

“Visa will continue to extend the scope of its work in electronic payments to more people and businesses in Taiwan, making it easier for consumers and merchants to pay and be paid around the globe,” he added.

July 1, 2014    giancarlo2@
Yeah at 19% APR. How can you be promoting credit cards as the leader of a country? How much did they donate to your party?
July 1, 2014    curtisakbar@
The fact that debit cards are like gold dust in Taiwan doesn't help either. Credit cards have many restrictions but a debit card only allows you to spend your own money so obtaining one is relatively easy, if you can find a bank that issues them. I got my debit card with Cathay if anyone is interested in getting one.
July 2, 2014    joeblow@
Debit cards suck because you can't build up a credit history here with that if you want to buy a car, scooter, or house on payments later. But it is a good alternative if you are having trouble getting a real credit card and you are only going to be in Taiwan for a year or two and need a way to spend your money.

And to giancarlo, President Ma was not advocating credit cards, but the head of Visa, also called Mr. Ma.
July 4, 2014    curtisakbar@
I know what you mean about credit history etc. But i prefer to use my debit card over my credit card any day of the week. I only use the credit card to maintain the minimum spending limit so I don't incur any fines, but you could call the interest I have to pay a fine!
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