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Debit Cards Costly, At Least For Some Uzbeks

Debit cards have placed banks, like this one in Tashkent, between the people and their money.
Debit cards have placed banks, like this one in Tashkent, between the people and their money.
A months-old experiment by Uzbek authorities with other folks' cash has some people seeing red.

Uzbekistan recently launched a campaign to push the use of debit cards as a convenient method for conducting transactions, with the stated aim of bringing everyday transactions into the digital age.

But the move has alarmed some Uzbeks, including public-sector workers, who say electronic banking has come at a steep price.

Detractors complain that since the state began paying salaries to the debit-card accounts several months ago, they've been denied access to their hard-earned cash and saddled with new pressures on their household budgets.

The scheme allows users to make many purchases using their new plastic purses.

Citizens are also supposed to be able to conduct traditional bank transactions, technically speaking. But users claim that banks are refusing to dole out banknotes when they try to withdraw their funds.

"When we go to banks, they won't give us any money because they say they don't have cash," says Gulbahor, a teacher from the eastern town of Syrdarya who did not want to give her full name. "And there is another problem: Many shops don't accept cards and tell us, 'We trade only with cash.'"

We're Not Buying It

Debits cards were introduced in Uzbekistan in the 1990s, but they were adopted mainly by the elite or among wealthy citizens who travel abroad frequently.

More recently, Uzbek authorities have promoted debit cards as a convenient and safe tool for daily financial transactions.

All supermarkets, restaurants, hotels, and gas stations were ordered last year to install the electronic terminals necessary for debit card transactions. Airline- and train-ticket offices have also gotten the order, and people can now pay their utility bills with debit cards.

But the devices remain largely absent from the bazaars and markets where citizens are most likely to conduct their day-to-day business. The government has set up programs that allow retailers to purchase debit-card terminals in monthly installments, but the estimated $1,000 price tag is too high for many merchants.

The situation has left some public-sector workers in particular complaining that they have no choice but to shop at supermarkets, where using a debit card can punish them financially.

Shoppers report being offered the same goods for less money if they're willing to forego the plastic. The price tag on a sack of flour is around 23,000 soms ($15) if you're willing to pay cash, but jumps to 28,000 soms if it's on a card, according to one account provided to RFE/RL. A kilogram of sugar runs about 2,400 soms if it's a debit-card purchase versus just 2,000 soms for cash, the same source said.

It's akin to the casual discounts that countless small establishments around the world offer customers who pay in cash, whether to avoid credit-card fees or to keep their own transactions off the books.

But tell that to teacher Gulbahor, who earns about $80 a month.

"It's a big difference," she laments, highlighting a serious obstacle for authorities trying to convince a wary public to buy into an age of plastic.

Trust Me!

Some of the skeptics cite squeamishness among Uzbeks unaccustomed to handing over their savings or monthly salaries to financial institutions -- at least not if they can avoid it.

But it's not just your stereotypical holdouts who see problems.

Odil Rajabov, a private entrepreneur in the eastern town of Kokand, says that "people, businessmen, and banks are simply not ready yet" for such radical change.

"If people trusted banks, everybody would keep their money in banks," Rajabov says. "But there is no such trust in banks. [Now] if you keep your money in banks, getting your money back would be a problem."

This officially orchestrated debit dilemma has been seized on by some people, although they don't appear to be part of the authorities' plan.

Gulbahor says that the only way she can get her hands on banknotes is through money changers who have equipped themselves with debit-card terminals.

"Recently, I needed 200,000 soms to purchase groceries for our family gathering and I went to one of those people," Gulbahor says. "He made a transaction of 250,000 soms from my debit card, and gave me 200,000 in cash. The rest was his fee."

RFE/RL's Uzbek Service contributed to this report
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    Farangis Najibullah

    Farangis Najibullah is a senior correspondent for RFE/RL who has reported on a wide range of topics from Central Asia, including the impact of Russia’s invasion of Ukraine on the region. She has extensively covered efforts by Central Asian states to repatriate and reintegrate their citizens who joined Islamic State in Syria and Iraq.

RFE/RL has been declared an "undesirable organization" by the Russian government.

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