Taiwan: An Introduction – Contactless Payment

Samuel is an Indonesian graduate from National Taiwan University, studying economics. Fluent in Chinese, Japanese and Indonesian. His previous experience was in securities and banking for local financial institutions, but he has kept pace with current technology news and startup scene throughout the ASEAN region.

One of the hottest battleground in the technology sector currently is the battle between various types of contactless payments. Much like Japan, big companies and startups in Taiwan are also trying to grab a slice of the pie in question through both stored-value cards and QR payments.

Stored-value Cards

Contactless payment has been quite entrenched in Taiwan for some time already. According to the latest statistics, the largest stored-value card in Taiwan is Easycard, established in 2000 by the Taipei City government. 

While they were originally used for payment in Taipei MRT, it quickly grew as the capital city Taipei is essentially the center of Taiwan’s economy. It also became the payment system of choice for buses in Taipei, gradually expanding to the nearby cities of Keelung and Hsinchu. Meanwhile, intercity trains have also adopted Easycard, benefiting commuters from satellite towns.

After initial government regulations in 2009, the use case of Easycard expanded significantly as they entered retail stores including: convenience stores, supermarkets, restaurants, bookshops, movie theaters. It was also the initial payment method for Taipei’s public bike-sharing service Youbike, also launched in 2009. In more recent years, it has also become an accepted form of payment for even taxis.

Thus, Easycard gradually became ubiquitous in Taiwan, as they expanded their coverage to include Kaohsiung’s MRT, while working with local city governments in Taoyuan and other cities to implement their payment chips in the IDs of local residents. This enables local governments to give direct benefits to seniors and students through their Easycard balance. Easycard has also embedded their chips into company ID cards and student cards as well as regular consumer debit/credit cards, further diversifying their user base. 

These early developments have resulted in the dominance of Easycard in Taiwan while leading to other competitors in the space.

Although Easycard is by far the largest company in this space, its dominance is not as big as the Octopus Card in Hong Kong. According to Tofugear and Wirecard, the rate of adoption of Octopus is over 99% in Hong Kong’s working age population.

Similar to Easycard, Octopus started out in 1997 as a payment solution for Hong Kong’s MTR, eventually expanding to all public transportation in the city (including buses). It was rapidly adopted as roughly 4.5 million cards were issued after just one year, despite the presence of a competitor called Mondex (led by HSBC and Mastercard) and VisaCash. Mondex and VisaCash floundered, and Mondex was eventually terminated in 2002.

Octopus was so successful that the Hong Kong Monetary Authority decided to give a deposit-taking license, no longer limiting Octopus to only be used as digital payments for transit. Thereafter, expansion to the retail sector was swift, as Hong Kong conglomerates start to adopt Octopus, bringing it into convenience stores, supermarkets, and even photocopy machines.

However, Octopus became so commonplace that consumers find it hard to adopt a new payment system, stifling innovation and competition in this space.

The competition in Taiwan leads to more choices for consumers, and added competition from mobile payments (e.g. Apple Pay, Samsung Pay) has led some companies to try and secure partnerships to drive growth.

For example, iPass was originally founded in 2014 by the Kaohsiung City government. In 2017, LINE became a major shareholder (30%) after buying new shares. Since then, they have tied up LINE Pay cards with iPass value cards, allowing users to access their iPass balance directly from the LINE app.

They also have tie-ups with credit card issuers, especially with CTBC and Union Bank (who is also a significant shareholder in iPass and LINE Taiwan’s virtual bank).

icash is established in 2013 as a subsidiary of the President Chain Store Corp., which runs 5,505 branches of 7-11 in the country (as of June 2019) and hold the domestic licenses for Starbucks, Cold Stone Creamery, and the Japanese donut chain Mister Donut. Similar to iPass, they also create tie-ups with local credit card issuers to enter the market.

All three have their own point systems which are fairly easy to exchange with store vouchers, a short summary can be found below:

Year Established200020142013
Main ShareholderTaipei City governmentLINE President Chain Store (7-11 Taiwan)

Mobile Payments

Taiwan’s banking regulations have been rather strict in comparison to other countries, owing to the regulators’ focus on minimizing risks since Taiwan is unable to call upon the IMF or World Bank to help bail its financial system. The proliferation of banking services have also led to overbanking on the island, and interest margins are very low. Under this backdrop, the government has been trying to promote innovation and healthy competition in the industry by encouraging banks to merge or by relaxing banking regulations, such as when they relaxed regulations pertaining to mobile payments in 2015. The Financial Supervisory Commission has also released a white paper on the domestic fintech development in 2016, hoping to spark a digital renaissance in the sector.

The Taiwan government announced in late 2017 that they aim to digitalize the economy, including its aim to increase the penetration of mobile payments to 90% in the country by 2025. Digital payments include both mobile and non-mobile cashless payments such as debit/credit cards, whereas mobile payments refer to those that are done by mobile payments. 

The latest government update in September 2019 forecasts Taiwan’s transaction value in digital payments to break USD 3.2B. The penetration of mobile payment in Taiwan has surged from 24% in 2016 to 50% in 2018, making the initial goal seem achievable.

One of the major reasons for this bump in penetration is the mobile payment war that has been brewing in the country, much like the war in Japan. Everyone from banks, convenience stores and IT companies want to grab a share of this pie.

Translated and edited from: Source

The most popular payment methods in 2018 are LINE Pay, Apple Pay and JKo Pay (the company with the red logo), with the 3 of them conquering 62% of the total digital payment market in Taiwan. Young people have readily adopted mobile payments as more than 75% of consumers aged 26 – 35 have used them.

Perhaps similar to dynamics elsewhere in the region, the payment providers heavily invest in marketing to subsidize consumers to use their payment method, making it a short-term boon for consumers.

Comparing the above to Japan’s mobile payment market really shows the extent of the competition in Taiwan’s market, especially as Japan’s population is about 5.5 times bigger than Taiwan.

For some background as to why everyone seem so keen on the payment gold rush, one can look at Stripe and Square to gauge how profitable it can be. Furthermore, a company can lock in the user even more tightly in its ecosystem, and build a customer profile by tracking their transactions and gain new insights through the application of AI. Being dominant in a service that everyone uses makes it easier for companies to try and monetize their user base in other ways. One can look to China for a real-life study case, having as much as $270B assets under management at one point. India’s Paytm is following the trend, as they launched Paytm Money.

According to Taiwan’s statistical bureau, in 2016, there are approximately USD 2.2T that are quite liquid which can be diverted into mutual funds, as the table below suggests. Assuming a very conservative market share and management fee of 0.1% and 1%, a company might earn USD 2.1M, which is a sizable amount for a startup. 

Type2016 Amount0.1% Market Share1% Management Fee
Cash & Demand Deposits452,270,967,742452,270,968452,271
Time Deposits525,400,000,000525,400,000525,400
Portfolio (Equity, Debt, Fund, etc)1,144,783,870,9681,144,783,8711,144,784
Total (USD)2,122,454,838,7102,122,454,8392,122,455

Of course, the above is just a hypothetical market for ONLY the asset management part, since a payment gateway company would also have their main revenue stream coming from payment handling fees.

Given the size of Taiwan’s digital retail market, the potential value for digital payments is very high compared to the population size. The amount of each person’s share of wallet is quite high compared to developing markets such as Vietnam or Indonesia. Although the market won’t be as big as China or India, but the winner of this small market will have many opportunities to monetize further.

Taiwan: An Introduction to: Digital Life

Samuel is an Indonesian graduate from National Taiwan University, studying economics. Fluent in Chinese, Japanese and Indonesian. His previous experience was in securities and banking for local financial institutions, but he has kept pace with current technology news and startup scene throughout the ASEAN region.

As mentioned in last month’s article, Taiwan has a mature digital market dating back to the late 90s. According to tefficient and Taiwan Internet Report, Taiwan has one of the highest rates of internet penetration in Asia and the world, and data consumption per capita is the highest in Asia, just second to Finland worldwide.

Taiwan has 3 big telecom companies, 2 smaller telecom companies and many other MVNOs, serving a population of 23 million people.

Internet usage in Taiwan is ubiquitous, and Taiwan’s digital life is relatively developed. However, the digital ecosystem in Taiwan is not the same as the ecosystem in the Southeast Asian region. In this article, we are going to take a look into some apps of choice for Taiwanese consumers in the realm of social media, online transportation, and food delivery service.

Social Media

Internet users in Taiwan generally use Facebook as their main social media, with a growing number of users shifting their private profiles over to Instagram. 

For forum-based discussion, the platform is fragmented depending on the topic at hand. For example, for discussion about electronic goods, mobile01 is the main place to go. Gamers flock to Bahamut to discuss everything about games and related topics. 

However, PTT, a telnet BBS launched in 1995, is still one of the largest communities in Taiwan covering any topic, similar to Japan’s 2ch or the global 4chan in BBS form. Its impact is huge, generating many of the contents and topics currently in circulation in the Taiwanese parts of FB and Instagram, to the point that a Taiwanese movie was based on the board.

Above is an example of a login screen, and below is the current list of most popular boards:

Moving on to other media, Taiwanese users generally use Youtube as their primary video source, similar to the US. However, more and more people are opting to use the video feature on Facebook. Similar to the current trend in the world, we see the internet moving to a more mobile environment with a more video-focused approach.

Lately, we have seen an uptick in the number of people trying to use Facebook Live to directly sell to consumers, similar to TV marketing but with added interactiveness with the audience. A potential customer would follow the link given by the broadcaster, or chat directly to buy the products. There have been a growing number of startups in Taiwan that are trying to support this part of e-commerce, working together with influencers and small merchants.

The above shows a new trend in the making, as the worlds of video, social, and e-commerce collide. However, traditional B2C e-commerce are still very strong with solid revenue numbers. Just counting the revenue of 3 public e-commerce companies (PCHome, momo and Kuo Brothers), all 3 add up to almost USD 3B.

Similar to Southeast Asia, there are also many merchants who are trying to make it through low-cost channels, mainly through social media (Facebook, Instagram) and chat-based applications. Some even sell on PTT or Facebook Marketplace, and do the transaction directly by bank transfer or through Shopee (for added security).

The first-choice messaging application in Taiwan is LINE. Out of 23 million people, LINE has about 21 million users in Taiwan, which approximately covers 91% of the country. As such, LINE has become a necessity of life in Taiwan, embedding itself into the fabric of everyday life. There are many theories about how LINE became successful in Taiwan, but a part of its early boom can be attributed to the attractiveness of stickers as a means to communicate, as it made chatting a bit less stiff. LINE increased its stickiness when they started releasing their own inhouse games in the same era where Facebook games were all the rage. 

As of today, LINE has become a major force in the digital ecosystem in Taiwan, including branching out to offering daily news, in-app e-commerce platform, on-demand audio and video content, mobile internet and even an in-app online travel booking platform. They also provide corporate accounts through their Line@ service.

Besides their services, LINE has vigorously marketed its virtual point system, exchangeable as vouchers and products, or even cash in many merchants. A user can get LINE Points by using their payment services (LINE Pay), and they have made efforts to reach the population by working together with local banks to issue co-branded credit cards (CTBC Line Pay, Union Bank of Taiwan Line Points). LINE is also moving into the financial services sector after it was granted a virtual bank license in Taiwan, joining forces with local banks (including CTBC and Standard Chartered).

It is quite possible to think of LINE as a super-app for Taiwan, similar as to how Kakao and Naver are super-apps in Korea. As part of Naver, LINE can implement proven business models from its regions (including Japan, Thailand) and try to localize. LINE has already redesigned its UI in order to provide users with easier access to their services.


LINE has also expanded in Southeast Asia, notably Thailand. but in other Southeast Asian countries, LINE is losing ground to Whatsapp and Facebook Messenger. That is in contrast with Taiwan, where LINE is unquestionably the messenger application of choice, to the point that work communication as well as customer service are being done on the platform.

The Taiwanese internet market has a few quirks that are different with Southeast Asia, and startups that are considering Taiwanese consumers as a target market should be mindful of the different local consumer preferences compared to Southeast Asia.

Online Transportation

Ride-hailing apps such as Uber has had a rocky history in Taiwan, as they play cat-and-mouse games with the regulator, as the regulator first rejected their claim to be a purely tech company and required them to register as a transportation company. After a few back and forth, the government finally issued an ultimatum to register as a taxi company or pull out of Taiwan. As of October 1 this year, they operate as a taxi company in Taiwan.

One of the reasons Uber has been relatively successful in Taiwan is that besides pioneering the ability to call taxis from an app, the cars are usually cleaner, and that the drivers are usually more professional compared to a random taxi you hail on the streets.

The entrance of Uber into the market meant that the traditional heavyweight in the taxi industry, Taiwan Taxi (台灣大車隊), has had to adopt and provide a call-on-demand function on their application.

Another upstart, TaxiGo, started out as a chatbot on Messenger and LINE to call taxis. It originally worked with existing taxi drivers, but gradually developed into its own taxi company.

Food Delivery

Taiwan has a culture of eating out, and many apartments in Taipei don’t include a kitchen at all. In the last few years, food delivery has been a very big battleground between new startups in Taiwan, starting from the now bankrupt Honestbee, Foodpanda, Uber Eats, as well as the newest competitor in town, Deliveroo. Besides international competitors, small local upstarts are also trying to make it in this crowded space, such as Yowoo. So far, Uber Eats, Foodpanda and Deliveroo has been the current leaders so far.

Compared to Grab and Gojek being the two giants in both transportation and food delivery in Southeast Asia, the transportation and food delivery part is largely fragmented. Different players exist in both areas, with the exception of Uber.

In general, there are still a couple of spaces left for international startups to exploit, as can be seen from the proliferation of LINE and overseas food delivery companies, but the key thing is for startups to localize into Taiwan. Another key thing is to think of Taiwan’s digital ecosystem as completely separate from China, as consumer preferences and habits differ in both countries. In this case, one can lump Taiwan in as another one of ASEAN’s many countries with different cultures and languages. As long as localization is done right and the services benefit consumers, Taiwanese consumers are also open to new solutions, and Taiwan can really be a nice cash cow for a startup who is willing to localize.

Taiwan – An Introduction to: E-Commerce

Samuel is an Indonesian graduate from National Taiwan University, studying economics. Fluent in Chinese, Japanese and Indonesian. His previous experience was in securities and banking for local financial institutions, but he has kept pace with current technology news and startup scene throughout the ASEAN region.

A General Introduction to Taiwan’s Digital Economy

Taiwan, to many young Southeast Asians, will seem like a place that is the birthplace of bubble tea and fried chicken a-la Hot Star. To an older generation, a place where F4 and Jay Chou is from. Apart from the Chinese-speaking populace in Southeast Asia, the layperson in the region perhaps do not know much about Taiwan.

Despite the cultural pull that Taiwan has, tech startups in the ASEAN region do not really think of Taiwan as a possible market to expand to, mostly because they are simply not acquainted with Taiwan as a market.

To people who are a bit more well-versed about Taiwan economically, they might point out that it is a developed country but lagging in growth compared to South Korea, as recent GDP data shows Taiwan only growing 2~3% yearly.

Behind the facade, there are actually many more things to be more optimistic about in Taiwan, there is still a very significant market to be exploited, especially in the digital space. Although the world has known Taiwan to be a country with strategic importance in the global high-tech sector, Taiwan is mainly but a hardware manufacturing hub. Given the global slowdown in the hardware market, many are looking into the software and services space to expand to, but traditional Taiwanese companies have found the execution is not so simple.

Understanding the overall market in Taiwan and moving into the space with great urgency can serve overseas startups well, as we can see from the example of SEA Group. 

SEA Group started out as Garena, and they entered the Taiwanese market early in 2009 as the publisher of League of Legends. Through their operations in Taiwan, they probably realized Taiwan’s potential early on, despite having only 23 million people. When they launched Shopee in 2015, they quickly latched on to Taiwan as a decisive market.

In the last 3 years, Taiwan has become a major revenue source for SEA Group as Garena and Shopee has been doing very well in the market, and they intend to expand further in the long-run.

SEA Group 2018

The digital population is relatively high, at 92.8% of the population (around 21.5 million people), and the GDP per capita of USD 24,971 is roughly similar to Portugal, at least twice of Malaysia, and about 2.5x China’s GDP per capita. 

So there are still huge areas of growth sitting in Taiwan. The significant spending power of its residents, as well as the shift to the digital landscape makes the digital market extremely attractive to the right company. Knowledge is power, and this is an information asymmetry that SEA Group has discovered since the last decade and have been continuing to profit off even after its IPO in 2017.

As SEA Group emphasizes in its prospectus and reports, Taiwan is deemed to be part of the GSEA (Greater Southeast Asia) region, and the current Taiwanese president under Tsai Ying-wen has enacted the New Southbound Policy that reorients Taiwan’s businesses to build a closer relationship with ASEAN countries.


Despite the sluggish overall GDP growth in Taiwan, there are areas where growth can perhaps rival ASEAN economies, growing at least 10%.

Taiwan’s population has a relatively long history of e-commerce adoption, owing to the early technological advancement and the relatively internet-savvy consumers. Market Intelligence & Consulting Institute, a local government research institute, estimates that 70% of Taiwan’s internet population used e-commerce in 2018, which computes to around 15 million people. 

In 2016, sales made over the internet have ballooned to make up 5.4% of the total retail activity, which computes to around USD 7B in total, and growing even further every year. In 2017, retail sales over the internet grew 13.6%, and some subsections such as logistics for internet-based B2B sales grew a crazy 75%.

As a comparison, growth in overall retail (both online and offline) only grew about 1.2%, implying that Taiwan’s retail economy is slowly moving over to the digital space. Indeed, we are seeing online e-commerce sites eating a larger portion of the pie every year. Most e-commerce players have enjoyed this trend, with public e-commerce companies such as PCHome and Momo (Fubon Media) enjoying a bumper year in their topline numbers.

Revenue of Taiwan's selected public e-commerce firms

The digitalization of retail activity has also prompted many to enter the market and ride on this wave, including Shopee who set up shop in 2015 and promptly gained a huge market share on the back of its mobile-first strategy and social media-oriented marketing. Although Taiwan’s e-commerce scene is quite mature, it has not evolved to keep pace with the mobile evolution in the past few years.

PCHome is still the leader in the overall B2C market, but Shopee and Momo are ahead in the mobile app space, and the growth of orders done through mobile devices are also increasing, and the industry will have to adjust further to the ever-evolving consumer preference.

Adding to the competition in the B2C market, Shopify-style e-commerce platforms have also been blooming in Taiwan. Local player 91APP raised $9M in series A, whose backers include AppWorks and PCHome’s chairman. Foreign competition is also present, as Hong Kong’s Shopline has made a landing in Taiwan, backed by Alibaba Entrepreneurs Fund.

As a whole, the e-commerce industry in Taiwan is supported by the robust digital infrastructure in place, the government’s push for more retail digitalization, the ubiquity of credit/debit cards, the rise of cashless payments (LINE Pay, JKo Pay, Pi Wallet) driven by the government, the developed logistics network, as well as the relative spending power and preference of the internet-savvy population. 

There is still a lot of value to unlock in this space, despite the intense competition in the domestic e-commerce space. B2B logistics for e-commerce is an area where the right firm can dominate, and digital financial products grew a significant 31% in 2017, which is an area that will experience more growth, as the supportive regulator has recently issued licenses for virtual banks.

Being a developed country, Taiwan has a solid structure in intellectual property rights, and Taiwan frequently ranks highly in the Ease of Doing Business index. However, expanding into Taiwan will be a tough task nonetheless due to the need for localization as well as the need to navigate through the tangled web of bureaucracy.

We at Cornerstone Ventures can be a suitable local partner for startups who are thinking of Taiwan as a potential market for expansion. We focus on new internet ventures, especially in the AI and data space. We are backed by both Chunghwa Telecom and PCHome, and we can also rope in other resources both from the government as well as the private sector. If you are truly interested in building a business together in Taiwan and you believe there is space for us to partner up, please do contact us through contact@cornerstonevc.tw and send us relevant information, we look forward to knowing you.