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Cash or Card? Retail Payments in Armenia

Author

Listed:
  • Kristina V. Shvandar

    (Financial Research Institute, Moscow 127006, Russia)

  • Vsevolod Y. Cherkasov

    (Financial Research Institute, Moscow 127006, Russia)

Abstract

The article discusses the problem of penetration of non-cash payment instruments into the retail market. Settlements without cash facilitate transparency of transactions. Limitation of the allowable amount of cash payment for retail purchases, which has examples in the world, can facilitate counteraction to transactions that hide criminal activity and tax evasion. However, the grounds for large cash payments limitation are convincing when non-cash instruments have penetrated deeply into the small transactions market. Payment cards compete with cash in transactional costs, and their competitiveness depends on the size of interchange fee. The authors assume, that restricting the allowable amount of cash payments would be a rational step for Armenia to restrain shadow economic activity, but non-cash payment instruments should penetrate deeper into the retail market at first. Efficient solutions could be facilitated by a study of costs in the payment system.

Suggested Citation

  • Kristina V. Shvandar & Vsevolod Y. Cherkasov, 2018. "Cash or Card? Retail Payments in Armenia," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 109-119, December.
    • Handle: RePEc:fru:finjrn:180609:p:109-119
    DOI: 10.31107/2075-1990-2018-6-109-119
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    References listed on IDEAS

    as
    1. Schmiedel, Heiko & Kostova, Gergana & Ruttenberg, Wiebe, 2012. "The social and private costs of retail payment instruments: a European perspective," Occasional Paper Series 137, European Central Bank.
    2. Schmiedel, Heiko & Kostova, Gergana & Ruttenberg, Wiebe, 2012. "The social and private costs of retail payment instruments: a European perspective," Occasional Paper Series 137, European Central Bank.
    3. Fumiko Hayashi & William R. Keeton, 2012. "Measuring the costs of retail payment methods," Economic Review, Federal Reserve Bank of Kansas City, vol. 97(Q II).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    non-cash payments; restrictions on cash payments; costs; interchange fee; Armenia;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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