POS-TERMINALIZATION

It's no secret that the numerous attempts made in recent years to promote non-cash payments in Azerbaijan have not been entirely successful. Despite the fact that today most of the population, both young and old, has credit cards, their degree of "turnover" is very low. The reasons are well known and there have been lots of talks about this: the reluctance of shops and other facilities to install POS-terminals or accept cards for goods or services and the population's low level of awareness about the convenience of non-cash payments. Although on many occasions, the second reason is the outcome of the first one, after seeing refusals to accept plastic cards,  consumers stopped trusting them, choosing cash over cards.

This year, serious measures have been taken to eliminate the existing problems. Today on the facade of almost all shops and service facilities, you can see notifications that you can pay with Visa and Master cards.

From boutiques to taxis

So, the Tax Ministry significantly increased efforts to expand the market of non-cash payments this year. Literally on 23 April, the Tax Ministry held a regular meeting of the special headquarters set up to oversee the installation and use of POS-terminals and cash registers. According to the tax minister's advisor on audit and operational control areas and chief adviser of the Tax Service, Ilqar Ahmadov, a map of processes in the city of Baku has been prepared, the capital's 11 districts have been divided into 60 sections, two employees have been allocated for each of them and they are undergoing appropriate training.

He noted that today, POS-terminals are being installed throughout the country, particularly in Baku and hotels operating at tourist centres, public catering facilities, retail and entertainment facilities, taxis, gas stations, facilities that provide medical services and are engaged in the sale of pharmaceutical products, as well as in other areas. For the speedy implementation of the entire scope of work, additional assets are being used and the procedure for the registration of terminals has been simplified. The country's banks are especially active in this process. The International Bank of Azerbaijan (IBA) is a leader among them for the number of POS-terminals installed - 4,167 terminals with an annual growth of 27.6 per cent. According to the staff of leading banks, the pace of "POS-terminalization" has now almost doubled.

Of course, POS-terminals are installed even in city taxis. For example, the Baku Taxi Company is completing the installation in 500 cabs of VeriFone Vx 680 POS-terminals provided by the Bank of Azerbaijan. Taxis are equipped with POS-terminals free of charge.

Labels with Master Card and Visa logos can be found in almost all locations in the city centre today. Both gas stations and vehicles of the State Traffic Police are equipped with POS-terminals. As the saying goes, the rules are the same for all facilities regardless of their activities.

Speaking of the labels. Despite the fact that POS-terminals have been used in Baku for several years, these labels are still rare, although, according to the rules of Master Card and Visa Electron, they must be present if a facility accepts their cards. It seems that the process of "POS-terminalization" has resolved the problem: even though there are no official directives to this effect, apparently, controlling agencies have been able to convince the owners of facilities of the necessity and usefulness of the labels.

Experts and ordinary people explain the rapid installation of POS-terminals by the impending influx of foreign visitors to Baku, who prefer non-cash payments. That is why shops and service facilities are interested in having POS-terminals today, but in private conversation, some owners of such facilities admit that they are unlikely to use them after the contest.

This suggests that entrepreneurs and people still have misconceptions about the benefits of non-cash payments, are reluctant to use them, and this means that problems have not been resolved completely.

Before and after

Problems in the voluntary use of non-cash payments can be divided into two categories. Objective problems - commercial disadvantages, which include a high fee for the use of POS-terminals that are installed by banks, and subjective, or we can say, unjustified problems - the reluctance of entrepreneurs to legalize the actual amount of the turnover of the enterprise, that is, their desire to evade taxes. And if the latter should be prevented by administrative means, the government can adopt a number of incentives to resolve the former.

However, we already know that the package of proposals for changes and additions to the tax legislation for the current year includes measures to promote non-cash payments in the country. For example, in Azerbaijan, it is possible to partially exempt the turnover of businesses conducted in non-cash form from taxation. It is also proposed to impose restrictions on buying and selling operations within a single transaction or for a certain period of time. For example, if within one month or within the same transaction the amount exceeds 5000 manats, the transaction for the portion that exceeds this amount should be carried out only in non-cash form.

At present, the amount of restrictions is subject to debate, since most of the country is not ready to work with POS-terminals. Accordingly, the restrictions may affect the population to some extent. For example, if a shop runs out of the monthly limit of 5000 manats, it may even refuse to sell bread so as not to overstep the limit and avoid paying taxes. Therefore, such an approach is considered more conservative. The best way is to introduce coercive-restrictive measures in respect of shops and service areas, and incentives for the public to increase its interest in non-cash payments.

By the way, there is a precedent when banks announced stimulating lotteries for customers who pay with bank cards. In addition, it would be desirable to promote social advertisements and brochures explaining in detail why plastic cards are better than "real" money.

Yes, today the Tax Ministry and other relevant agencies are monitoring the installation and use of POS-terminals in Baku, warn offenders and explain the rules. But there will be a real dramatic shift in this process if the whole package of solutions to the problems in this area can be combined into one complex.

In essence, this entire hype around POS-terminals ahead of the song contest could ultimately play into the hands of the government in its effort to promote non-cash payments in the country. The main thing is to hold the wheel afterwards.