aiwan’s top financial regulator Financial Supervisory Commission (FSC) is scheduled to gather opinions about Apple Pay’s planned entry into Taiwan from all sides and submit the information to the Executive Yuan before May 20, when the new administration will be inaugurated.
The FSC recently met with representatives from the Ministry of Finance, the Central Bank, the bankers’ association, the National Credit Card Center, the Financial Information Services Co., major credit card companies, local mobile payment operators, as well as Apple, HTC and Samsung to discuss potential Apply Pay entry into Taiwan. Much of the discussion surrounded the token service provider (TSP) that will work with Apple Pay. The FSC said all opinions will be submitted to the Cabinet, which will make the final decision.
The meeting also discussed potential issues that can arise with an overseas TSP. TSP is a service that generates a temporary alternate personal account number during credit card mobile payment. The service can increase transaction security because the alternate account number would have been useless after the transaction even if somehow obtained by a third party.
Lu Hui-rong, deputy director-general of the FSC’s Banking Bureau, said opinions were divided at the meeting. Lu said one group of the representatives favored a domestic TSP, while the major credit card issuing banks believed it should be decided by market mechanism, in which a mobile payment provider will choose its own TSP.
Representatives from Apple said the company is open to both ideas, but added that in consideration of the company’s resource allocation and timetable, using a domestic TSP may delay Apple Pay’s entry into the country.
Individuals at the meeting in favor of a domestic TSP expressed their concern about possible leakage of personal information and improper use of personal data. A TSP based overseas may affect or delay transaction and handling of controversies in the event of disconnection or system malfunction in the overseas locations, they added. These individuals also warned of a larger effect that other brands may follow in Apple’s footsteps — assuming Apple worked with an overseas TSP — and choose to work with foreign TSP, which will eventually hurt the local industry.
Local TSP operators contended that since over 90 percent of the transactions made with cards issue domestically take place in the country, Apple Pay should work with a local TSP. They also added that doing so may help domestic industries develop more advanced mobile payment technology.
However, major credit card issuing companies suggested returning it to the market mechanism. Currently, most countries allow mobile payment providers to choose TSP based on data security, transaction stability, operational cost and efficiency.
Representatives from the banking industry were also in favor of overseas TSP, saying that major issuing firms like Visa have all used the services of foreign TSP. These representatives said that using a local TSP may delay the process because the TSP operator will first have to obtain certification from EMVCo.
Meanwhile, in response to the Central Bank’s previous concern that a local TSP may make it earlier for the government for the purposes of regulation and tax audit. The Ministry of Finance said after the meeting that tax audit and collection will not be affected by where the TSP is based.
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