Actualidad Colombia

Measures to discourage the use of cash

Bill stimulates the use of non-cash payment systems

The Colombian parliament is considering a series of measures to reduce the use of cash in the country. These include:

  • Creation of a para-fiscal contribution which taxes cash transactions for sums over the threshold set by law by requiring a declaration as to the source of the funds (cash transactions for over COP 10 billion or USD 5,000 or their equivalent in other currencies).
  • Partial rebate of VAT and Sales Tax when electronic payment systems are used.
  • Mandatory use of electronic payment for transactions with the State.

Nevertheless, we should point out that the initiative penalises the use of cash in any kind of transaction, including depositing money in financial institutions, which could have the effect of slowing down the drive by the financial community and the Colombian state to bring more people into the banking system.

In addition, the productive units of people using microfinance products tend to be in the informal economy and their main source of revenue is in cash, with the result that they always use cash when paying their own bills. For these reasons it is essential that the financial watchdog, the Superintendencia Financiera, come up with a careful definition of the threshold above which cash transactions will be charged, in order to avoid indirectly making microcredit and other microfinance products more expensive.