The currency of Taiwan is the New Taiwan Dollar (NT$, sometimes written as TWD), with one unit known locally as NT, yuan (圓) when written in Chinese or colloquially in Mandarin as kuai (塊). One unit is known colloquially as the kho in the Taiwanese dialect. All $ prices in this guide are in New Taiwan Dollars.
As of late 2011, the exchange rate for US$1 is around NT$30, or EU$41. Coins come in denominations of NT$0.50 (it's rarely used), NT$1, NT$5, NT$10, NT$20 and NT$50. Banknotes come in denominations of NT$100, NT$200, NT$500, NT$1000 and NT$2000. The NT$200 and NT$2000 banknotes are rarely seen.
Taiwanese currency is fully convertible and there are no restrictions on taking currency into or out of the island. Currency exchange is possible overseas, but you'll get a much better rate if you wait until you arrive at the airport in Taiwan. Most banks in the big cities can exchange US$, euros, Japanese yen, Hong Kong and Singaporean dollars.
Should you bring US currency, please be sure to bring newer bills as the banks and exchange-centers (such as in department stores) will only accept the newer bills (bills from 1996 and 2003 are not accepted at most places, due to a high proportion of forgeries bearing these years). Bills which are torn or damaged will probably not be changed, and old-style small-bust bills are not accepted. Taiwan National Bank will take older bank notes and bank notes that are wrinkled or torn for exchange. Department stores will not exchange bills older than 1997. Don't forget to show your passport!
If you've forgotten to bring any money at all, but have your credit or debit card handy, there's no need to fret. Taiwan's banking system is light-years ahead of most other countries, with the ability to use any of the abundant 24-hour ATMs to withdraw cash from anywhere in the world using the Plus or Cirrus systems. Certain banks' ATMs will even tell you your available balance in your own currency or in NT$. There is a per transaction limit of NT$20,000 for ATM cash withdrawals (HSBC Global Access customers may withdraw NT$30,000 from HSBC ATMs). Visa debit cards are not accepted in many places, but can be used at ATMs in Chinatrust banks (but not those in 7-Elevens).
Most hotels and department stores accept credit cards, generally Visa and Master Card as well as JCB. Diners Club or American Express cards are seldom accepted. Most restaurants and small stores do not accept cards, and cash is the main form of payment. Because street crime is rare, it is common for people in Taiwan to carry large amounts of cash with them.
Taiwan is fairly expensive by Asian standards, though significantly cheaper than Japan. Outside Taipei, you'll find costs (except for accommodation) very reasonable. For a budget traveler on a bare bones budget, NT$1000 will get you by for a day, but you'll probably want to double that for comfort. A meal at a street stall may cost NT$50, a meal at a Western fast food restaurant will run you about NT$150 and at the fanciest restaurants, you can expect a bill in excess NT$1000. Hotel rooms at a swanky hotel might cost NT$5000 or more.
Tipping is generally not practised in Taiwan, with the possible exception of bellhops in high end hotels. Full service restaurants typically impose a service charge and that is usually considered to be sufficient. Tipping is also not expected in taxis and drivers usually return your change to the last dollar.
As in many Asian countries, night markets are a staple of Taiwanese entertainment, shopping and eating. Night markets are open-air markets, usually on a street or alleyway, with vendors selling all sorts of wares on every side. Many bargains can be had, and wherever prices are not displayed, haggling is expected. In the larger cities you will have a night market every night and in the same place. In smaller cities, they are only open certain nights of the week, and may move to different streets depending on the day of the week.
Every city has at least one night market; larger cities like Taipei may have a dozen or more. Night markets are crowded, so remember to watch out for your wallet! Shops selling the same items tend to congregate in the same part of the city. If you want to buy something, ask someone to take you to one shop and there will probably be shops selling similar things nearby.
For those who do not like the concept of haggling and fake goods, there are many shopping centres in Taipei where prices are usually fixed and goods are genuine. Otherwise, shopping streets in larger cities like Kaohsiung and Taichung can also easily get you what you want. And of course, there is the trendy Ximending in Taipei, where you can pretty much find anything associated with the youths, also at fixed prices.
Bargaining is OK and expected in night markets and small stores. Computer chain shops and department stores normally have fixed prices, but at least in department stores you may get a "registered member discount" if you're shopping a lot. Anyway it's always worth a try!
When bargaining at small stores, please note that the agreed prices are normally cash prices. If you like to use a credit card, the seller normally wants to add anything up to 8% to the price as a "card fee" etc. The fee consists actually of the credit company's commission and also the local sales tax (VAT). Even if you pay cash, you normally don't get an official receipt, as then the seller would have to report & pay their taxes in full. If you ask for a receipt (fa-piao), you will get it but you may need to pay 3-5% more.