AZE.US
A new decision tied to card payments in Azerbaijan may end up affecting one of the main incentives for consumers to pay without cash: cashback.
Under the current payment system, when a customer pays by card, a service fee is applied in settlements between the bank that issued the card and the bank that accepts the payment. That cost is borne by merchants.
Starting June 1, the upper ceiling for that fee will be lowered in several categories under a Central Bank decision. The cap will be set at 1.25% for pharmacies and grocery stores, 0.75% for fuel purchases, and 1.5% in the general category.
Economist Rashad Hasanov said the revenue generated from these service charges is also one of the sources used by banks to fund cashback on non-cash transactions. In that sense, a reduction in the fee may also have consequences for cashback programs.
He said the trend is already visible in the market, with cashback offers becoming less attractive than they were in earlier periods and financial institutions showing less willingness to compete aggressively through such incentives.
That means the latest decision may not trigger an immediate sharp cut, but it could still add further pressure to cashback rates or to the broader appeal of such programs.
The Central Bank, for its part, says the goal of lowering the fee is to reduce the cost burden on businesses accepting non-cash payments and to improve access to payment services.
In practical terms, the measure is designed to make card acceptance cheaper for merchants and support wider use of cashless payments. But for consumers, the outcome may be less generous cashback offers as banks adjust to thinner margins.
AZE.US