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Government proposes phasing out cash, but BCE says: “You can't do that”
19 June 2020 @ 00:42

SPAIN'S socialist MPs – who make up the bulk of the country's coalition government – want to gradually axe cash from circulation and have tabled a motion to that effect.

But the Central European Bank (BCE) has told them they cannot do that.

Until a few years ago, card payments in most of Spain outside big cities, restaurants and major chain stores were the exception rather than the norm, with many retailers setting a lower limit of €25 to €30 and others not accepting anything but cash at all.

This has changed dramatically in recent times, especially since it became law that cards must be accepted for payments of at least €30, and that any cash payment of €2,000 or more had to be accounted for – both in a bid to make life easier for the consumer and to combat money-laundering, which had been an historic problem in Spain for decades.

And with the Covid-19 pandemic, all businesses permitted to open during the most restrictive period of lockdown – newsagencies, tobacconists', chemists', petrol stations and supermarkets – were required to accept cards or mobile phone payments for even the smallest amount to prevent the virus being transmitted through touching coins and notes.

Now that lockdown is all but over and practically all businesses have reopened, card payments continue to be the preferred choice, with even local bars now allowing customers to use their debit or credit cards to pay for just one coffee.

Also, lower limits for PIN-free contactless transactions have been mostly lifted in Spain – previously, anything over €20 required a PIN to be entered, but at present, anything less than around €50 does not.

Pre-pandemic, BCE figures showed that an average of eight in 10 payments in the common-currency nations were made in cash, although this depended largely on the amount spent: Two-thirds of transactions were for €15 or under, and 88% of these were made with notes and coins, but between 92% and 98% of payments for €50 or €100 or over were made by card or electronic means.

Any study carried out post-pandemic may, however, show that non-cash payments are now in the majority, or at least, considerably more frequent than before.

And axing cash would only be possible where a country's banks charged little or nothing to traders for card payments, and also allowed free bank transfers below a set figure so that, if someone owed a friend a few euros, they could pop it into their account without paying commission.

But in any case, the BCE says Spain cannot phase out cash – all it can do is make non-cash payments as easy, widely-available and cheap as possible to encourage these in preference.

Otherwise, Spain would be in breach of the EU Treaty, which establishes that notes and coins in euros are legal tender.



Like 0


Baggywrinkles said:
20 June 2020 @ 10:23

and to stop 'cash in hand' control of every ones b/a

jamiemalone said:
20 June 2020 @ 15:36

Another crazy idea from this crazy government who are trying to bring spain more in line with Russia,china,north korea etc.

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