A restrictive regulatory framework continues to hamper access to the domestic market for fintech disruptors.

For international neobanks — digital-first banks — and payment platforms, Taiwan’s market entry barriers have proven insurmountable.

Companies such as Revolut, a British-based multinational online bank, and Wise, a well-known global money transfer service also from the UK, have all but given up on expanding operations to Taiwan, according to several experts close to the matter.

Customers of Revolut and Wise can use their cards for payments at many Taiwanese retailers and withdraw cash from most ATMs. The platforms also allow money transfers that bypass the fees typically charged by traditional banks. Unlike standard bank transactions, recipients are not required to explain the source and purpose of each transfer — a requirement under Taiwan’s banking laws.

But the services fall short in one crucial respect: neither supports the New Taiwan dollar. Funds cannot be stored or converted into TWD, preventing customers from taking advantage of favorable currency conversion rates. As a result, Taiwanese businesses have little reason to adopt the systems, and local users see few of the benefits enjoyed by their overseas counterparts.

A major stumbling block is the disconnect between official policy and implementation, an incoherence that often appears to boil down to arbitrary “interpretations” of the law.

“While I wouldn’t say the regulations are great, one might at least call them fair,” says Matteo Serone, director of the credit card program at Currenxie, a Hong Kong-based payment and currency exchange platform. “The issue is the application and regulatory overview.” Serone adds that the Financial Supervisory Commission (FSC) “has a very narrow view of their duties under the current regulations.”

Serone says that in conversations with FSC representatives, including attempts to facilitate his own company’s market entry, the prevalent attitude was that addressing such obstacles through potential reform was beyond the authorities’ remit. Yet he argues that such actions are entirely consistent with the Organic Act Governing the Establishment of the Financial Supervisory Commission, first implemented in 2004.

“The financial regulatory framework of Taiwan is composed of several statutes, and the Organic Act is one of the most important,” says Serone, who is also a cofounder and treasurer of the Italian Chamber of Commerce in Taipei. “Stimulating the development of the financial system is listed as one of the duties.”

A significant related issue, as Serone sees it, is the “appalling fragmentation” of regulatory oversight in Taiwan, with the FSC being just one of three bodies tasked with supervising the financial sector. The others are the Central Bank of the Republic of China, which is responsible for foreign currency and the issuance of Taiwan dollars, and the Ministry of Justice, which handles anti-money laundering (AML) and counter-terrorist financing measures.  

“These people rarely talk to each other,” he says. The result, he adds, is a game of buck-passing that leaves businesses without a clear, objective statement of the rules.

Currenxie, after what it described as a lengthy approval process with the boards of two international banks in Taiwan, seemed to have cleared a hurdle when the legal department of one bank concluded there was no legal barrier to its operating in the market. However, after a year of negotiations, hopes of a breakthrough were nixed by the FSC’s Banking Bureau. “First, they said they weren’t sure it was under their purview,” says Serone. “And then they argued that, while what we said was technically the law, they interpreted it in another way.”

Serone, an Employment Gold Card holder who has lived in Taiwan for nearly four years, can work remotely and is not directly affected by the restrictions. Still, there is irony in his role at a fintech barred from operating in Taiwan. “I moved to Taiwan to be with my fiancée, who is now my wife, and I’m happy here,” he says. “But, if not for that [ability to work remotely], in my sector — banking and finance — it would have been a real struggle.”

Startup roadblocks

For Bruce Chen, the conservative attitude of Taiwan’s banks and their lack of communication with the FSC have been particularly frustrating. As CEO and founder of INSTO, a person-to-person mobile point-of-sales app, Chen had received assistance from FinTechSpace, a government incubator overseen by the FSC, and investment from Taiwan’s National Development Fund.

Founded in Kansas City in 2013 and partnered with U.S. Bank in the United States, INSTO seemed poised for success in Taiwan after teaming up with Fubon Bank and launching its INSTO Tap mobile payment app in 2021. The company posted what founder Chen describes as “tremendous growth,” but amendments to AML laws in 2024 forced it to suspend operations this May.

“We’ve proven there’s zero fraud or money laundering since launch,” says Chen. “Fubon’s concerns aren’t about the service but the company itself. They required us to be net asset positive (maintain positive net assets), but no successful tech company can achieve that during the startup and growth stage.”

The insistence on proof of financial stability demonstrates an outmoded mindset based on traditional small and medium-sized enterprises, says Chen. Startups like INSTO, “have to burn cash for a good few years to achieve the product market fit,” he says — a reality the banks fail to grasp. He managed to rally investors to raise the required funds, only to see INSTO shut down for 30 days amid what he described as a dispute between the bank and the government.

Just as it seemed the company was on the verge of reactivating, Fubon’s head of credit card payments — Chen’s original point of contact — departed, and his replacement decided the case required “a higher level of credit authorization.” Months of bureaucratic back and forth ensued, culminating in a high-level meeting at which Fubon’s top brass agreed that INSTO was “an important national asset.”

However, further stipulations were presented. These included the submission of an NT$2.5 million (US$82,000) cash deposit into the company, evidence of continuous positive net assets, support from a reputable investor, and — at the request of a government-backed investment firm — the signing of a partnership with a European bank as a prerequisite to enter its investment committee.

INSTO is halfway through closing a first investment round with a government-backed investment firm and is considering offers from three banks in Europe at the time of writing. Chen remains optimistic, but he cannot hide his exasperation at the labyrinthine process that he has endured thus far.

“I’m really fed up,” he says. “After years working there, I have a Silicon Valley mentality. If they continue to do things like this in Taiwan, those levels of success will never happen here.”

New moves, old mindsets

On August 28, National Chengchi University (NCCU) hosted the Regulatory Pathway for a Sustainable Financial Ecosystem Workshop, organized with Monash University under the Australia-Taiwan ATLAS Finance initiative. The event drew academics, industry leaders, and government officials from both countries. Co-organizers included NCCU’s Financial Innovation and Technological Evolution Center (FINTEC)and the Taiwan Sustainable Finance and Impact Investing Academy. Speakers from Taiwan featured Lin Wen-fan, an assistant director-general at the FSC, and Wu Chin-wen, director of FINTEC.

The workshop focused on the evolving regulatory framework for sustainable finance, but also underscored the growing role of technology and innovation in achieving ESG goals. International bodies such as the World Economic Forum have highlighted fintech’s potential to drive sustainable development, while scholars and universities increasingly link fintech to the United Nations’ Sustainable Development Goals.

Still, Taiwan’s credentials as a global tech hub and events like August’s workshop have yet to translate into meaningful market access. The financial sector remains widely viewed as conservative and protective of its crowded banking market, with critics faulting a lack of vision. The optimism generated by international gatherings often collides with the reality of narrow thinking at home.

“Back in 2016 or 2017, we saw a lot of foreign service providers like Revolut or TransferWise (now Wise), as it then was, proactively joining FinTech fairs in Taipei,” says Tsai Kun-chou, founder and managing partner at Enlighten Law Group, which specializes in navigating regulatory barriers to fintech. “But these days, the attendees are more and more limited to the domestic banks and financial institutions.”

Foreign fintech firms once saw Taiwan as a promising hub, but many grew disillusioned with its bureaucracy and the slow pace of reform. The country’s regulatory sandbox — created under the 2017 Financial Technology Development and Innovative Experimentation Act — has approved few foreign products, illustrating the barriers to entry.

Though domestic institutions’ protective stance contributes, official resistance to change appears to be the most decisive factor. “If they have to open up Taiwan’s financial market, they probably will need to revise the regulations, build something new, or even have a different regulatory system to harmonize domestic and foreign service providers,” says Tsai. He sees such reform as unlikely, at least in the short term.

“Those standards, those differences in standard or mindset — I don’t see that our financial authority is going to fix that any time soon.”