A puppet polling organization in Uzbekistan has revealed that 98.9 percent of the population are positively disposed toward the introduction of bank cards.
The figure defies belief considering the intensely cash-based nature of the national economy.
Local media cited slavishly government-loyal polling company Izhtimoy Fikr as stating that cards are increasingly giving way to cash in retail transactions.
“Cards are very convenient, safe and reliable means of payment,” website Nuz.uz quotes 98.9 percent of people as thinking, according to the Izhtimoy Fikr research.
Banks cards were made available to local customers in Uzbekistan in 2004 as a means of reducing the public’s reliance on cash. The payment system was first introduced in the retail and catering sectors, since these are areas of the economy where the grey economy is strongest. Authorities made it mandatory for retail outlets to install payment terminals, which were imported in large quantities from abroad.
Outlets refusing to accept payment by card were subject to substantial fines, which could be as high as the equivalent of 200 times the minimum wage. Advertisements on television and radio stations publicized telephone numbers that members of the public could call to complain about retailers’ failure to accept card payments.
The drive has been largely successful in the capital, Tashkent. But paying by card is hardly convenient, as the Izhtimoy Fikr poll claims.
Tashkent’s largest home appliance retailer, Malik, charges a 20-30 percent premium on card transactions. Wholesale markets in the city decline non-cash payments and do not even have card terminals installed. Fresh produce and meat vendors in the markets often have terminals, but rarely agree to take cards. The state-run public transportation system is also alien to non-cash payments.
Cards should have an obvious appeal in Uzbekistan, where even relatively modest sums in foreign currency terms can translate into impractical bricks of low-value banknotes when exchanged.
But the main barrier toward the popularization bank cards are banks themselves. Account-holders are more often than not unable to withdraw their money from banks, who will invent any manner of excuse to avoid parting with their cash reserves.
In theory, banks are obliged by law to issue at least a portion of the money kept on card accounts. In practice, the whole process is hostage to exploitation by the banks. Only if customers are willing to pay a 20 percent commission can they be assured of getting their cash. Withdrawing 500,000 Uzbek sum from the bank means only getting 400,000 sum in hand.
Muhabbat, a trader from the Surkhandarya region, on the border with Afghanistan, travels regularly to Tashkent to buy fabric for her sewing factory, where she makes children’s clothes, bedlinen and mattresses. The bank cards are of little use to her though, even in the capital.
“I have money on the plastic cards, but I cannot buy goods with them. At the wholesale markets they demand cash. When I go to the bank, they cash me out in return for 18-20 percent commission,” she told EurasiaNet.org. “[Without cash] my business will grind to a halt. I lose my hard-earned money, while the banks get richer.”
Muhabbat said the cost of the banking commissions is inevitably passed on the ultimate buyers, who themselves are required to pay in cash so she can be assured of having ready liquid money available.
The most recent unpopular decision related to bank cards saw the government begin to use them to pay pensions and benefits. With the hidden costs implicit in owning bank cards, the decision translated in effect to a cut in payments.
According to Central Bank of Uzbekistan figures, there are around 17.1 million bank cards in circulation inside the country and 190,000 or so installed payment terminals.
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