Rise in Card Payments Sparks Economic Debate: Economist Highlights Perils and Benefits

Economy 21:05 23.05.2024

The surge in card payments across Azerbaijan has triggered a debate among economists, questioning whether this trend fosters financial discipline or encourages reckless spending habits. According to recent data, the circulation of payment cards in the country escalated by 22.2% compared to the previous year, reflecting a growing preference for cashless transactions among consumers, both locally and internationally.

In an exclusive interview with Ednews, economist Gunay Huseynova shed light on the multifaceted impacts of this shift towards card payments on the economy. Huseynova emphasized that while the adoption of card payments offers numerous advantages to consumers, it also raises concerns regarding fiscal responsibility and cybersecurity.

"Financial literacy plays a pivotal role in driving the inclination towards card payments, particularly among the younger and middle-aged demographics," stated Huseynova. "Factors such as higher VAT rates on card transactions, cashback incentives, and the burgeoning e-commerce landscape have contributed to the proliferation of card usage."

Huseynova underscored the enhanced security features associated with card payments, along with the convenience of tracking monthly expenditures. However, she cautioned against the potential risks associated with excessive reliance on cards, including the exacerbation of cybercrime and the proliferation of a shadow economy.

"While card payments offer convenience and transparency, they also necessitate robust measures to combat cyber threats," warned Huseynova. "The onus lies on both individuals and authorities to ensure the integrity of card transactions."

Addressing concerns about the propensity for increased spending with card usage, Huseynova acknowledged the correlation but stressed the importance of financial literacy in mitigating such risks. She contended that individuals with sound economic awareness can effectively manage their budgets, irrespective of the payment method.

"Increasing card usage undoubtedly influences spending behavior, yet individuals with financial literacy can exercise prudence in their financial management," remarked Huseynova. "Nevertheless, it is imperative for authorities to uphold stringent cybersecurity measures and promote responsible card usage to safeguard consumers' financial well-being."

As the debate surrounding card payments intensifies, economists and policymakers grapple with the delicate balance between promoting financial inclusion and mitigating the associated risks, underscoring the need for comprehensive strategies to navigate the evolving landscape of digital transactions.

 

 

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