Why is Albania so dependent on physical money? Measures to be taken by 2030. From POSs to the limit on cash payments
At a time when many countries are close to fully implementing electronic payments, the situation in Albania is different. Albanians continue to be closely linked to physical money, which is widely used for making payments. The latest data from the Bank of Albania shows that the majority of final consumption transactions are carried out in cash.
The Albanian government has stated that by 2030, it aims to completely remove physical money from circulation. But how can Albania become a “cashless” economy?
Concrete efforts to achieve this have begun in 2024.
Last year, the Ministry of Finance drafted the Medium-Term Revenue Strategy 2024 - 2027, one of whose objectives was the reduction of cash transactions. This objective will be achieved through the implementation of several fiscal administration measures.
By the end of 2026, it is anticipated that a limit will be set for cash payments between individuals, cash payments between businesses will be further reduced from the current 150,000 lek, and risk rules will be created that identify taxpayers who fragment invoices in order not to exceed the limit set by law, taxpayers who have an abnormal level of cash invoicing compared to their peers.
Also, by the end of this year, POS terminal usage fees between second-tier banks and businesses are expected to be reduced. This will be done after the creation of a working group between the Ministry of Finance, the Bank of Albania and the Association of Banks.
From May 1, the implementation of the American company Mastercard's program to provide 4,750 free POS terminals began in Albania.
On the other hand, the Bank of Albania is making some changes to the regulation for the functioning of the small value payment clearing system, where lower commissions will be applied for payments at counters, but especially for those with e-banking. For example, for payments up to 1 million lek with e-banking, the commission should not be more than 50 lek.
Our culture of making payments in cash, not very favorable interest rates on deposits, failure to install POS terminals at all retail points of sale due to high commissions applied by banks, the level of the informal economy, money from illegal sources, are just some of the factors that contribute to this large amount of physical money found outside the banking system.
Meanwhile, low trust in the banking system, preference for cash, low level of financial education, or resistance to change are also considered other driving elements.
How much money is circulating outside banks?
About 434 billion lek. Money outside banks has set a new record at the end of the five-month period, increasing by 1.1% or 4.9 billion lek compared to April
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