Central Bank Proposes Ban on Cash Transactions in Several Sectors: New Draft

The Central Bank (CB) has submitted a draft for discussion, proposing to ban cash transactions in several sectors. Through this initiative, the Central Bank aims to cultivate a culture of cashless payments in Armenia.

The CB particularly suggests making the installation of payment card acceptance devices mandatory in shops and other service locations. According to the CB, customers have complained about the absence of such devices in the service sector, stating that it complicates cashless payment processing. “A citizen is forced to waste time and endure various inconveniences to convert card funds to cash and make a payment for certain products (services), whereas they could easily be served using a payment card in shops and other service locations,” the bank stated.

The Central Bank believes that cashless transactions will strengthen tax administration and enable the fight against the shadow economy. “When conducting cashless transactions, it is difficult (almost impossible) to evade tax and customs legislation requirements,” the bank has reported.

Under this draft, pensions will be paid out cashlessly, except in cases where the pensioner is of the first or second disability group, or has reached the age of 75. However, in such cases, the pension may still be paid in cash at the choice of the pensioner.

The Central Bank proposes to transition to a cashless pension system in phases: starting from January 1, 2020, in the city of Yerevan, from January 1, 2021, in administrative centers of the regions, and from January 1, 2022, in other residential areas.

Cash payments will only be made for unpaid pension amounts due upon the pensioner’s death (except when such amounts are paid to a minor child of the deceased aged 14 and above), for pension amounts unpaid after the pensioner’s entitlement to receive a pension has ceased, and for burial benefits, regardless of the place of residence.

The draft aims to reduce cash circulation by limiting the possibility of conducting large transactions in cash. The bank has indicated that from July 1, payments and receipts for the sale of goods (property) exceeding 2 million drams, the use of goods, the performance of works, and the provision of services between citizens will be conducted in a cashless manner.

Ultimately, according to the CB, this will lead to an increase in financial intermediation within the banking system, which, in turn, will contribute to the overall development of the financial system.