Cash transactions must be curtailed

Feb 16, 2010 Editorial

Yesterday, Scotia Bank launched a menu of measures designed to aid small businesses as opposed to micro-businesses. These measures included credit cards for businesses, chequing accounts for the business, overdraft management and electronic banking and withdrawal.
The issue here is that for a number of years people were asking that Guyana reduce the massive dependence on cash transactions. Over the years, people had grown accustomed to moving about with large sums of cash on their person.
The business community also encouraged this because they declined to accept other forms of payment. Indeed, in the absence of a credit bureau or something to assess the credit worthiness of people or businesses one would have been taking a chance in accepting cheques from potential customers.
At a forum two years ago there was a plaintive cry by sections of the business community for the commercial banks to institute measures that would negate the use of cash in business transactions. One of the suggestions was for the banks to collaborate and create a situation where business houses would have a single terminal installed on their premises.
With a single terminal, the business houses would be able to swipe credit and debit cards issued by any of the commercial banks. At present, terminals are issued by individual banks. This would mean that someone with a credit card or a debit card issued by any one of the banks would have been useless unless the business house had the appropriate terminal.
This is still to be a reality but there are moves on other fronts. The programme being instituted by Scotia Bank would cater for customers of that bank and it is the same with the others. Individually, they have also established automated banking machines for small cash withdrawals.
But on the larger scale much more has to be done and needs to be done. For example, business houses still need to send someone to the banks for payrolls and this is fraught with danger. Finance Minister Dr Ashni Singh said that this is double jeopardy.
He said that the crime should not have occurred in the first instance. In the second instance, this is a cost to the business. The commercial banks are now offering electronic banking services. These can be operated from the confines of the office. There is now no need for businesses to move large sums of money, be it for payroll or any other transaction.
It is clear that the businesses prefer cash because it allows them to hide their transactions and so avoid certain taxes. But the harsh reality is that whenever there is a robbery as was the case over the weekend on Vlissengen Road. The amount of money taken from the business place was more than the entity would have paid in taxes for that day. Older people have been known not to trust banks and hid their money under mattresses and in containers in their yard—a most dangerous practice.
But in this day and age the less paper to move around, the less the risk. For example, four or so years ago, Guyana was not a good place for visitors who were using credit cards in keeping with their custom. Business houses were not equipped to deal with this. The hosting of Cricket World Cup 2007 changed all that. Just about every major business place accepts the major credit cards.
Guyana is about to establish a Credit Bureau. It is also moving to enact legislation to make the Commercial Court more effective. These things are a prelude to the money laundering legislation.
In other countries the use of large sums of cash to conduct transactions would attract unwanted government intervention. In Guyana if there is to be an effective money laundering legislation then there must be a reduction in the use of cash and the banks are beginning to create conditions for this.
Robberies would also decline drastically with the disappearance of cash from the market place.

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Cash transactions must be curtailed

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