Our Analytics 3 august — 11:45

Put an end to cash binge! (Following President's speech)

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BY ELDAR ALIYEV, ECONOMICS SECTION

Accidents often happen in life that we call coincidence. Sometimes it pleases, but it happens otherwise too. So, in the media, almost simultaneously, two conflicting information pieces passed. On the one hand, President Ilham Aliyev considers it necessary to increase the number of non-cash operations in Azerbaijan. On the other hand, the Central Bank made a statement about the multiple growth of these non-cash operations. Such an approach to the same fact did not pass our attention.

Ilham Aliyev calls for non-cash transactions

Let us consider everything in order. At a meeting on social and economic issues, President Ilham Aliyev openly called for an increase in the number of cashless transactions in the country. 'According to the information I have, non-cash payments in Azerbaijan are at a low level. Serious steps must be taken in this direction. We should try to increase the volume of non-cash operations and the number of POS terminals, the number of which is not growing,' the head of state noted. He stressed that the low level of non-cash payments 'feeds' the shadow economy, the struggle against which is one of the main tasks.

The president was led to such criticism by the data voiced at the meeting about serious steps to combat the shadow economy that are being held in the country. It is enough to note that in just a short period more than 100 thousand labour contracts were concluded with persons who had previously worked illegally. For the scale of Azerbaijan, this is indeed a high achievement. It is hard to even imagine that hundreds of thousands of workers are brought out of the shadows with all the circumstances that follow. But against this background, the head of state stressed that the low level of non-cash operations is unacceptable. And he ordered to analyse this issue and take serious steps in this direction.

The Central Bank reported that in the first half of the year the number of bank cards exceeded 7 million, which is 14.7% more than in the same period of 2018. Including the number of contactless cards increased 2.4 times, making 998 thousand pieces, and the number of operations on contactless cards increased 4.6 times. But the point is not only in the growth of the number of bank cards, the volume of transactions with payment cards has also increased, which nationwide amounted to 9 billion 532 million manats. And this is 24% more than in the corresponding period last year. The weight of non-cash payments in transactions with payment cards was 20%, in the same period last year, this figure was 16%.

One remembers that earlier, the head of the Central Bank, Elman Rustamov, only dreamed of a figure of 20% - the proportion of non-cash payments in the country was so low. It would seem that the desired level has been achieved, which can only be very satisfying. But in parallel, the criticism voiced by the president of the country gives reason to seriously think about the essence of such reports of the Central Bank. After all, the head of state is better than anyone else, informed about the level of non-cash payments. Calling for an increase in this indicator each time, Ilham Aliyev makes it clear that he is keeping this issue in the spotlight.

Elman Rustamov reports

Indeed, Azerbaijan is significantly inferior in this indicator to many countries, and not only developed ones, about which we have written more than once. By the way, it is precisely on this issue that we have had discussions with the Central Bank more than once, where they considered that they still have certain achievements. Many reasons were cited here, most of which are not related to the Central Bank at all. This is the mentality of the population, and the reluctance of private banks to expand the network and the efficiency of ATMs. And also the reluctance of objects of trade and other enterprises to intensify their work in this direction. They cited specific cases of non-operating ATMs of various banks and non-use of POS-terminals by entrepreneurs.

Still a shortage of POS terminals

By the way, these shortcomings are observed today. The number of ATMs installed by banks in the country as of July 1, 2019 is 2 571 units, which is 2.7% more than at the end of 2018. At the same time, 1 373 ATMs were installed in Baku (an increase of 3.3%), and 1 198 ATMs in the regions (an increase of 2.1%). But if there is some growth at ATMs, then you can't say the same about POS-terminals. As of July 1, 2019, the number of POS terminals installed at trade and service facilities in the republic amounts to 63 396 units, which is 4.1% less than at the end of 2018.

Of course, by and large this fault is not only and not so much of the Central Bank. It is even difficult to say who is more guilty in this situation - sellers, buyers, the Ministry of Taxes, the police, the media, the public at large. But the fact remains that it is high time to put an end to the rampant cash payments. And if one of these organs cannot cope with this, then it would be possible to combine efforts. Maybe it really is time for a united front to launch an attack on cash, as the head of state calls for?

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