IS THIS THE BEGINNING OF THE END OF CASH IN SPAIN?

2020/06/15 10:02:00 Written by Canarian Weekly Business

The PSOE asks Congress to eliminate cash gradually, and the Treasury intends to reduce the maximum cash payment allowed from 2,500 to 1,000 euros.

The end of cash in our society could be closer and closer. The Covid-19 pandemic has instantly changed our ingrained spending habits, including that of paying in cash.
During this period of confinement, cards have been widely used, as they are considered a safer method to avoid contagions.

Taking advantage of this situation of change, the PSOE intends to eliminate cash payments gradually, albeit with a long-term horizon. This is reflected in a non-law proposal on the orientation of the tax system in the face of the crisis caused by Covid-19, that the socialist parliamentary group registered on April 24th in Congress for debate in plenary.

However, this project is in a very initial phase but it makes clear the Governments intention to accelerate the end of 'cash', although the ultimate objective is to reduce tax and social security fraud.

They are proposing that cash payments will go down from 2,500 to 1,000 euros in the case of operations between businesses, however, the limit of 2,500 euros will be maintained for payments made by individuals, to avoid the impact of the modification on domestic economies.
In addition, the cash payment limit will be decreased from 15,000 to 10,000 euros in the case of individuals with tax domicile outside of Spain.
These measures seek to "tighten the regime to restrict these operations, which, being in cash, are more difficult to trace and can facilitate fraudulent behaviour," according to the Treasury.

Use of cards rises sharply:
This is the first crisis in which we have turned our backs on cash. The withdrawal of money fell 68% during the month of March and in the first days of April the collapse reached 80%.
"This crisis, and the world and the economy that will result from it, will accelerate the increasingly irrelevant role that cash will have in the future," predicts Juan Carlos Gázquez-Abad, collaborating professor at the Open University of Catalonia (UOC).

He points out that the consumer resulting from this world crisis situation, "will use cards and mobile payments much more as a means of payment, since the perception of security and comfort is going to increase significantly".

In addition, he considers that after confinement, card payment, the main means of acquiring products and services online, will be more important. If you add to this the decreasing predisposition to carry money to avoid theft, "the result will be a progressively more residual use of cash," he says.

The situation is no different in the rest of the world, and there are other countries that are close to leaving notes and coins behind, such as Sweden, Norway or Canada.
The idea of ​​a cashless economy is taking shape through different payment systems, and the Covid-19 crisis is accelerating the process.
However, experts do not dare to set a date for the final end.