The Digital Money Initiative in Argentina (IDDA) was proposed Wednesday by ADEBA, which brings together banks with national capital. As explained by its owner, Javier Boolzico, it seeks to advance in the replacement of cash with digital money. “This initiative is open to public and private actors who make up the ecosystem of payment methods in Argentina. This includes national, provincial and municipal authorities, banks and other payment system providers, administrators of various financial operations, users and companies as a whole, ”she explained.

Despite advances in the digitization of payments and banking transactions, Argentina continues to have a very high use of cash. The reason for widespread use is multi-causal, responding to informality, distortions due to central bank fiscal policies and regulations, and a lack of strategy, they said.

Among other proposals, including a reduction in perceptions of Gross Income, VAT and Earnings for credit or debit card payments, and a reduction in the credit and debit fee on any transaction less than $ 1 million.

According to the bank’s estimates, in March 2022 $ 1.5 trillion in cash was withdrawn by the banks ($ 900 billion from ATMs and $ 600 billion from ATM withdrawals).

“During 2020, expenses in materials for monetary issuance alone amounted to US $ 118 million. To this must be added the costs of storing, transporting and destroying cash, while the carbon footprint caused by the use of cash in Argentina per year is equivalent to having 20,000,000 lamps lit per day or a car making 1,000 returns to land, “said Adeba.

Like this, proposals to reduce the use of cash include the implementation of tax changes, limits on cash transactionsimprovements in payment systems, promotion of the use of digital currency in transactions and reduction of cash management costs, among other issues.

One of these aims to reduce the tax on debts and credits (“check tax”) from 0.6% to 0.3% on transfers that do not involve cash and do not exceed one million pesos, since, currently, the same fee is paid if the debit is by wire transfer as if it were a cash withdrawal.

This is a measure that, according to Adeba, it would be “a minimal direct tax impact, as the universe affected by the decline, in terms of volume, is low”, as well as “the indirect effect on funding would be positive, due to greater formalization of economic activity”.

They also proposed to reduce to 0.1% the perceptions and withholdings of Gross Income, VAT and Earnings that are made on transactions paid for with debit and credit cards.

This would allow the nominee in charge to pay a withholding tax of 2.5% on the volume sold instead of 8.49%, in the case of purchases made by credit card, and 1.3% instead of 4, 41% for debit card payments. “The tax impact of this measure would be neutral, as it does not entail a reduction in the rates or tax to be determined. The traceability of the operations is maintained, because the retention is reduced, but persists, with which the treasuries continue to receive information ”, reads the proposal prepared by Adeba, the body that represents the national capital banks.

For consumers, the banks’ proposal is to extend the VAT refund to all debit card payments, up to $ 1,000,000 per month, which is currently limited to retirees and retirees who collect the minimum amount but , until the government of Mauricio Macri, applied for all transactions through an automatic refund of 5%.

“Extending this measure to the entire Argentine population would generate a clear economic incentive for the use of electronic money and discourage the use of cash.. The tax impact of this measure would be moderate, as it would stimulate the use of debit cards to make payments, which will probably increase the formalization of the economy and thereby compensate part of the refund of this tax “, the document said.

Regarding the orbit of decisions that the BCRA can take, proposed to mimic free cash deposits transactions up to $ 1 million only, which would keep 99% natural and 80% corporate deposits free and limit free cash withdrawals to only trades of up to $ 150,000, which would keep the benefit for about 90% of the people, but fixed 35% of the volume, according to recent estimates.

Other proposals aim at creating a digital fraud prevention center; digitize the payments of people with social assistance; digitize municipal tax payments – currently there are municipalities that accept cash only -; limit cash payments at gas stations and supermarkets to $ 5,000; allow payment of public transport by electronic means – contact-less, QR, etc. – in addition to the SUBE, among other issues.

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