The Central Bank of Uzbekistan has imposed restrictions on the number of cards in the national currency that can be issued to an individual: up to 5 cards at one bank and up to 20 cards across all banks (including virtual and co-branded cards) – aimed at combating fraud.
It was noted that currently, about 97% of individuals (22 million) holding bank cards possess up to 5 cards, 3% (770,000) have between 5 to 20 cards, and 0.03% (7,000 people) own more than 20 cards.
However, questions arise regarding the practicality of these restrictions and how they may affect cardholders and the economy as a whole. Payment expert and former head of the EOPC, Akhror Mahmudov, explained why this regulation needs to be revoked.
Negative Impact on Business, Population, and the Economy
Payment cards play a crucial role in stimulating consumption and ensuring access to financial products. Limiting their issuance may reduce purchasing activity, complicate transactions for citizens, especially in rural areas, and increase the burden on cash infrastructure.
Socially vulnerable groups risk facing barriers to accessing finance, which will slow down the development of financial inclusion. Small and medium-sized enterprises, particularly in the service sector, will lose customers accustomed to cashless payments, leading to decreased revenues and competitiveness. Fintech companies may also lose incentives for investment, hindering innovation development.
Moreover, restrictions on card issuance will negatively affect e-business and online payments, which are vital components of the economy's digitalization.
“This will slow down the growth of the e-commerce sector and reduce the transparency of the financial system, which in turn will increase the shadow economy and the need for additional cash management. Ultimately, card restrictions may be seen as a step backward in digitalization and affect the country’s international image. This could diminish Uzbekistan's attractiveness to foreign investors and partners, weakening economic stability and investment appeal,” - asserts Akhror Mahmudov.
Card Restrictions Are Not a Solution to Fraud Issues
According to the expert, limiting the number of payment cards will not resolve the issue of fraud, as fraudsters will adapt their schemes to the new conditions. Temporary measures may become long-term while remaining largely ineffective.
Instead of imposing artificial restrictions, it is necessary to focus on improving the card issuance and circulation system, as well as enhancing the financial literacy of the population. Conducting mass awareness campaigns aimed at educating citizens about financial risks and protective measures will be an important step in combating fraud.
Additionally, restrictions on card usage will increase the need for cash management, leading to additional expenses for security, insurance, and logistics.
Furthermore, according to the expert, restrictions on the issuance of payment cards may indicate the financial system's unwillingness to effectively monitor citizens' operations. Instead of increasing banks' accountability for clients' actions, a simple yet ineffective method is introduced. Such measures shift risk management onto consumers, undermining transparency and efficiency in financial oversight.
Violation of Citizens' Constitutional Rights
Akhror Mahmudov also pointed out that this measure affects the constitutional rights of citizens. According to Article 21 of the Constitution of Uzbekistan, citizens' rights may only be restricted in accordance with the law and in justified cases. The limitation on the number of cards is perceived as an excessive intervention without sufficient grounds.
Article 66 of the Constitution guarantees the freedom to manage property, including the use of financial instruments. Limiting the number of cards infringes upon this right, creating obstacles to conducting business and managing finances.
The principle of equality in economic activity (Article 65) is also violated, as the restriction unjustly impacts entrepreneurs, freelancers, and citizens who require additional cards for their work.
Moreover, under the International Covenant on Economic, Social and Cultural Rights, the state is obliged to ensure citizens' economic rights without discrimination.
“Since the restriction on card issuance was adopted without considering public opinion, namely that of cardholders, it is necessary to revoke the imposed limitation and reconsider this approach. A payment card is merely a tool for conducting transactions, and imposing limits on their quantity does not address the key issues of the financial system.
On the contrary, such measures may create unnecessary barriers for the population and businesses, hindering the convenience and accessibility of transactions. Instead, the regulator should focus on initiatives that encourage the development of cashless payments, enhance their accessibility, and strengthen public trust in the financial system. Simplifying conditions for using cashless payments and creating a favorable environment for their proliferation will be far more effective in achieving resilience and security in the financial sector,” - concluded Akhror Mahmudov.