AZE.US
New restrictions on card-to-card transfers could backfire by encouraging people in Azerbaijan to withdraw their money and return to cash payments, economist and REAL party leader Natig Jafarli has warned.
Writing on Facebook, Jafarli said many people previously kept their money in bank accounts because they could transfer it to other cards without difficulty. The new limits may now encourage them to withdraw the funds from ATMs and carry cash instead.
“People will switch to cash. Instead of keeping money on a card, they will withdraw it from an ATM and put it in their pocket. In other words, we will return to the old situation,” Jafarli wrote.
He argued that restrictions almost always create alternative ways to conduct the same transactions.
If the government expects the measures to reduce illegal financial activity and tax evasion, the policy could produce the opposite result by moving more transactions outside the banking system, he said.
“You do not cut off someone’s head because they have dandruff. You find the cause and treat it,” Jafarli wrote, using an Azerbaijani expression to criticize what he described as an excessively restrictive approach.
The new rules took effect on Aug. 1. Cardholders may make no more than five transfers to other people and receive no more than five such payments per day. Total card-to-card transfers are limited to 20,000 manats, or approximately $11,765, per month.
Transfers between accounts and cards belonging to the same customer are exempt from the restrictions.
The measures have officially been presented as an effort to increase financial transparency, reduce fraud, combat illegal betting and prevent tax evasion.
Azerbaijan has also stepped up scrutiny of businesses that ask customers to transfer money to a personal card instead of paying through a point-of-sale terminal.
Such payments often leave customers without a fiscal receipt, make refunds and consumer complaints more difficult and prevent buyers from receiving VAT cashback. Businesses that are legally required to use POS terminals may face fines for refusing card payments through the authorized system.
Banking expert Akram Hasanov previously raised similar concerns. He argued that the transfer limits would not solve Azerbaijan’s shadow economy problem because people seeking to conceal transactions could use relatives’ cards or shift entirely to cash.
Both experts say the government should focus on identifying the source and purpose of suspicious funds instead of imposing broad limits that also affect legitimate personal transfers.
AZE.US