Octobank Explains: How Cash Payments Were Restricted in Uzbekistan — and What it Means for the Region

As of April 1, new rules have come into force in Uzbekistan significantly limiting the use of cash for payments across a range of goods and services. This is not a complete elimination of cash, but rather targeted regulation of the most “sensitive” segments — those where informal transactions have traditionally been widespread.

In terms of scale and speed of implementation, this measure has become one of the most significant in the region and has already attracted attention across CIS countries, including Russia, where tools to increase financial transparency are also under discussion.

What Has Changed

According to explanations from tax and financial authorities, mandatory cashless payments now apply to the following categories:

• government services;
• utility payments;
• alcohol and tobacco products;
• gas stations (including fuel and electric vehicle charging);
• goods and services priced above 25 million UZS;
• transactions involving real estate and vehicles (under certain conditions).

In total, the restrictions affect around 28,000 product categories, accounting for roughly 7% of the country’s total goods and services turnover.

The key objective of the reform is to reduce the “unobserved economy.” Authorities estimate it will be reduced by at least 1.3 times, while the share of cashless payments in trade and services is expected to reach 75% or higher.

How it Works in Practice

A key feature of the reform is its technical implementation through payment infrastructure, not just regulatory restrictions.

At the level of cash register systems, the option to pay in cash is disabled for certain categories of goods. If such an item (for example, cigarettes or fuel) appears in the receipt, the “cash” payment button becomes inactive.

Cash payment is only possible if the restricted item is removed from the purchase. As a result, enforcement is automated — through updated cash register software and integration with the tax system.

Escrow for Real Estate and Vehicle Transactions

A separate block of changes concerns high-value transactions.

As of April 1, payments for the purchase of vehicles and real estate (with some exceptions for new developments) must be conducted through escrow accounts, including transactions between individuals.

The mechanism works as follows: the buyer deposits funds into an escrow account, the notary verifies the availability of funds via an online system, and only then is the sale finalized.

This model is expected to reduce fraud risks and eliminate the practice of understating transaction values in contracts.

Where Challenges Arise

Despite the formal readiness of infrastructure, the first days of implementation have revealed a number of practical issues.

Gas Stations

One of the most sensitive segments. In several regions, businesses report:

• lack of customer readiness (up to 70–80% still pay in cash);
• the need to urgently implement new payment solutions;
• increased commission costs (up to 0.65% or higher in some cases);
• gas stations effectively taking on the role of payment agents.

Regional Infrastructure

Issues with connectivity and electricity supply directly affect the ability to process cashless payments.

Behavioral Factor

For part of the population, moving away from cash remains unfamiliar, especially in everyday transactions.

Legal Aspect

Another important issue is the alignment of the reform with existing legislation.

The Civil Code and the law on the Central Bank state that cash and cashless payments are equal forms of settlement. The new restrictions effectively introduce exceptions to this principle.

This may require further regulatory clarification, as the current changes are implemented through subordinate legislation.

What it Means for Business

For businesses, the reform implies accelerated digitalization:

• transition to online cash registers;
• adoption of cashless payment methods;
• integration with banking and payment systems;
• increased transparency of revenues and, consequently, stricter tax control.

At the same time, operational risks associated with cash — from theft to accounting errors — are reduced.

For companies from CIS countries operating in Uzbekistan, this means revisiting payment processes and adapting to new requirements.

Why the CIS and Russia Are Watching

Uzbekistan is effectively testing a model being discussed across the region:

• reducing cash circulation as a tool to combat the shadow economy;
• expanding digital payments in mass segments;
• integrating tax oversight with payment infrastructure.

Particular interest lies in the combination of administrative measures and technological implementation — through cash registers, banks, and payment services.

In addition, given migration flows, these changes may impact cross-border transfers and demand for digital financial tools.

The Role of the Banking System and Octobank’s Experience

The transition to broader use of cashless payments requires banks to maintain stable and scalable infrastructure. Octobank, as one of the participants in Uzbekistan’s financial market, is adapting its services to the new environment. Key areas include the development of payment infrastructure to handle growing transaction volumes, QR and POS acquiring solutions, digital identification and cybersecurity tools, and business products aligned with updated payment requirements.

The experience of such banks illustrates how mid-sized financial institutions can integrate into rapid digitalization processes while maintaining operational stability in everyday payments.

Conclusion

Uzbekistan is not abandoning cash entirely but is significantly restricting its use in key sectors of the economy. Unlike gradual approaches seen in other countries, the country has chosen a faster and more technology-driven path.

The outcomes of this reform — both in terms of efficiency and associated costs — will be relevant not only for Uzbekistan, but for the entire CIS region, where reducing reliance on cash remains a key topic for the coming years.