In order to strengthen the supervision of credit card
business and to protect consumers' interests, the financial
regulator, Financial Supervisory Commission (FSC), amended the
Regulations Governing Institutions Engaging in Credit Card
A new Article 48II of the Regulations provides that the
charge of liquidated damages for the failure to pay minimum
amount payable shall abide by the rules promulgated by the FSC.
The FSA later issued two guidance letters, which are now
replaced by a set of much more detailed rules made by the FSC
on February 9 2011 for the charge of liquidated damages by
credit card issuers (Rules).
In accordance with the Rules, the charge of liquidated
damages by credit card issuers for the card holder's failure to
pay the minimum amount payable shall be subject to the
(i) The liquidated damages should be at fixed amount, and
should comply with the principle of equity. The maximum
consecutive number of times for liquidated damages payments may
not exceed 3.
(ii) The fixed amount of liquidated damages may not base on
the amount of the non-payment, but, subject to reasonable
reflection of cost increase, could base on the number of times
(iii) If the minimum amount payable is less than TWD1,000
($34.10), no liquidated damages may be charged by the credit
card issuer for the failure to pay such amount.
(iv) If the minimum amount payable exceeds TWD1,000, maximum
liquidated damages for the first, second and third times of
non-payment may not be more than TWD300, TWD400, and TWD500,
(v) When deciding the amount of liquidated damages, the
credit card issuer should reasonably reflect the handling cost
incurred from the breach, provided that such cost should be
limited to variable costing only.
(vi) The credit card issuers should enhance the payment
notice or reminder mechanism.
The Rules also require that if there is any inconsistency
between the credit card issuer's practice and the Rules,
rectification should be made by the credit card issuer before
March 31 this year.