Taiwan's underground economy proportionally larger than China's
The China Post news staff with CNA
July 1, 2014, 12:01 am TWN
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.