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Card-to-card transfers: profit or serious financial risks?
Card-to-card transfers: profit or serious financial risks?
The volume of cashless transactions in our country is rapidly increasing, especially due to the expansion of digital payment capabilities. According to the Central Bank's report, the total number of bank cards used by the population has exceeded 20.6 million. Accordingly, the volume of domestic cashless payments made via cards in April 2025 increased 1.5 times compared to the same period last year, reaching 9.301 billion manats. Considering the revival of the tourism season from May onwards, it is expected that these figures will continue to rise. Cashless payments made via POS terminals are a familiar and convenient method for both local and foreign tourists. The existence of this system not only enhances financial transparency in the country but also enables tourists and foreign businesspeople to conduct reliable and transparent financial transactions.
However, some business entities, particularly retail outlets, prefer to accept payments via card-to-card transfers instead of official means. This exposes business owners to additional risks and leads to violations of consumer rights. Given the active tourism season and the scale of international events held in Azerbaijan, the negative effects of card-to-card transfers are apparent. Such behavior contradicts principles of social responsibility and financial discipline. Furthermore, carrying out payments through card-to-card transfers instead of POS terminals can damage the business reputation of these entities and result in the loss of customers. The only way to avoid these risks is to operate strictly within the requirements of the law.
No Receipt, No Excuse: You’ll Pay a Fine
Accepting payments via card-to-card transfers for goods, services, or labor creates serious legal liabilities, as no official receipt or fiscal slip is issued to consumers in such cases. According to tax legislation, business entities discovered doing this during inspections are subject to financial penalties.
Tax expert Khayal Feyzullayev explained that two articles of the Tax Code can be applied as financial sanctions against entities engaging in card-to-card transfers: “In many cases at trade and service establishments, when a card-to-card transfer is requested from customers, the seller does not deposit that amount into the cash register, and therefore does not issue a receipt. This effectively means the taxpayer is concealing income and evading taxes.”
As per Article 58.1 of the Tax Code, if the reported tax amount is less than what it should be, or if tax is avoided by failing to file, the taxpayer (except in cases covered by Article 58.1-1) may face a penalty amounting to 50% of the unpaid tax (except those discovered through desk audits). Feyzullayev notes that this provision applies when such violations are detected during field audits, which result in recalculation of the tax owed and additional sanctions for the violation. “In desk audits, only the unpaid tax is recovered. Furthermore, under Article 58.7, if such violations are found during operative tax control, a fine of 1,000 manats is imposed for the first offense, 3,000 for the second, and 6,000 for the third.”
According to Article 7 of the “Law on Consumer Rights Protection,” for a consumer complaint to be considered, a receipt or slip must be provided. Card-to-card transfers deprive consumers of this documentation, and thus their rights.
Moreover, Article 58.7 of the Tax Code specifies further penalties for using unauthorized receipts or cash registers, failing to install mandatory POS terminals, refusing to accept cashless payments, or issuing receipts for lower-than-paid amounts:
- First violation within a calendar year: 1,000 manats
- Second violation: 3,000 manats
- Three or more violations: 1,200 manats for ordinary taxpayers and 6,000 manats for entities specified in Article 218.1.2
Card-to-Card Transfers Could Implicate You in a Crime
That's not all. Buyers who agree to card-to-card transfers may unknowingly waive important rights. Legal expert Shahriyar Habilov explains that:
1. These payments are not documented with receipts, meaning disputes related to returns, replacements, or exchanges cannot be addressed.
2. Consumers miss out on VAT refunds under the “Return VAT” initiative.
Habilov adds that such payments may also violate cybersecurity rules and potentially involve consumers in criminal activity without their knowledge. Scanning unknown QR codes may lead to theft of card data and financial fraud. Furthermore, since you may not know the recipient of the funds, you could inadvertently support illegal business activity or the financing of terrorism — which may result in additional sanctions.
Consumer Rights Are Defined by Law
As per Article 1 of the “Law on Consumer Rights Protection,” if a purchased item is found defective or counterfeit within the warranty period, consumers are entitled to:
- A replacement with a quality item
- A proportional reduction in price
- Elimination of defects at the seller’s or manufacturer’s expense
- Reimbursement of repair costs incurred by the consumer or third parties
- Replacement with a different model of equivalent value
- Contract termination and compensation for losses
How to Avoid Financial Sanctions and Administrative Penalties
Economist Parviz Heydarov emphasizes that card-to-card transfers pose serious risks for both parties: “Like in many countries, the growth of cashless payments in Azerbaijan facilitates consumers' integration into dynamic civil transactions. However, when cash payments aren’t feasible, some resort to card-to-card transfers. The State Tax Service sees this as a tax violation, but the practice also compromises consumer rights. In places where POS terminals are required, these transfers are often used to hide revenues and customer numbers.”
As a solution, Heydarov suggests applying administrative measures to discourage such practices. He also highlights the need to improve citizens’ legal and economic literacy. “To prevent violations, it is essential to enforce regulations and establish appropriate mechanisms. Consumers must be able to report these violations. Entities that continue this practice should face heavy fines.”
To avoid financial sanctions and penalties, experts urge entrepreneurs to comply with the law in offering payment services to both locals and foreign visitors. In a country where the number of businesses is rapidly increasing, proper payment systems positively impact Azerbaijan’s economy. Legal compliance in payments not only supports economic stability but also strengthens Azerbaijan’s position in the tourism sector. It is more cost-effective to comply with the law than to face potential financial losses — and it also ensures protection of consumer rights.
The volume of cashless transactions in our country is rapidly increasing, especially due to the expansion of digital payment capabilities. According to the Central Bank's report, the total number of bank cards used by the population has exceeded 20.6 million. Accordingly, the volume of domestic cashless payments made via cards in April 2025 increased 1.5 times compared to the same period last year, reaching 9.301 billion manats. Considering the revival of the tourism season from May onwards, it is expected that these figures will continue to rise. Cashless payments made via POS terminals are a familiar and convenient method for both local and foreign tourists. The existence of this system not only enhances financial transparency in the country but also enables tourists and foreign businesspeople to conduct reliable and transparent financial transactions.
However, some business entities, particularly retail outlets, prefer to accept payments via card-to-card transfers instead of official means. This exposes business owners to additional risks and leads to violations of consumer rights. Given the active tourism season and the scale of international events held in Azerbaijan, the negative effects of card-to-card transfers are apparent. Such behavior contradicts principles of social responsibility and financial discipline. Furthermore, carrying out payments through card-to-card transfers instead of POS terminals can damage the business reputation of these entities and result in the loss of customers. The only way to avoid these risks is to operate strictly within the requirements of the law.
No Receipt, No Excuse: You’ll Pay a Fine
Accepting payments via card-to-card transfers for goods, services, or labor creates serious legal liabilities, as no official receipt or fiscal slip is issued to consumers in such cases. According to tax legislation, business entities discovered doing this during inspections are subject to financial penalties.
Tax expert Khayal Feyzullayev explained that two articles of the Tax Code can be applied as financial sanctions against entities engaging in card-to-card transfers: “In many cases at trade and service establishments, when a card-to-card transfer is requested from customers, the seller does not deposit that amount into the cash register, and therefore does not issue a receipt. This effectively means the taxpayer is concealing income and evading taxes.”
As per Article 58.1 of the Tax Code, if the reported tax amount is less than what it should be, or if tax is avoided by failing to file, the taxpayer (except in cases covered by Article 58.1-1) may face a penalty amounting to 50% of the unpaid tax (except those discovered through desk audits). Feyzullayev notes that this provision applies when such violations are detected during field audits, which result in recalculation of the tax owed and additional sanctions for the violation. “In desk audits, only the unpaid tax is recovered. Furthermore, under Article 58.7, if such violations are found during operative tax control, a fine of 1,000 manats is imposed for the first offense, 3,000 for the second, and 6,000 for the third.”
According to Article 7 of the “Law on Consumer Rights Protection,” for a consumer complaint to be considered, a receipt or slip must be provided. Card-to-card transfers deprive consumers of this documentation, and thus their rights.
Moreover, Article 58.7 of the Tax Code specifies further penalties for using unauthorized receipts or cash registers, failing to install mandatory POS terminals, refusing to accept cashless payments, or issuing receipts for lower-than-paid amounts:
- First violation within a calendar year: 1,000 manats
- Second violation: 3,000 manats
- Three or more violations: 1,200 manats for ordinary taxpayers and 6,000 manats for entities specified in Article 218.1.2
Card-to-Card Transfers Could Implicate You in a Crime
That's not all. Buyers who agree to card-to-card transfers may unknowingly waive important rights. Legal expert Shahriyar Habilov explains that:
1. These payments are not documented with receipts, meaning disputes related to returns, replacements, or exchanges cannot be addressed.
2. Consumers miss out on VAT refunds under the “Return VAT” initiative.
Habilov adds that such payments may also violate cybersecurity rules and potentially involve consumers in criminal activity without their knowledge. Scanning unknown QR codes may lead to theft of card data and financial fraud. Furthermore, since you may not know the recipient of the funds, you could inadvertently support illegal business activity or the financing of terrorism — which may result in additional sanctions.
Consumer Rights Are Defined by Law
As per Article 1 of the “Law on Consumer Rights Protection,” if a purchased item is found defective or counterfeit within the warranty period, consumers are entitled to:
- A replacement with a quality item
- A proportional reduction in price
- Elimination of defects at the seller’s or manufacturer’s expense
- Reimbursement of repair costs incurred by the consumer or third parties
- Replacement with a different model of equivalent value
- Contract termination and compensation for losses
How to Avoid Financial Sanctions and Administrative Penalties
Economist Parviz Heydarov emphasizes that card-to-card transfers pose serious risks for both parties: “Like in many countries, the growth of cashless payments in Azerbaijan facilitates consumers' integration into dynamic civil transactions. However, when cash payments aren’t feasible, some resort to card-to-card transfers. The State Tax Service sees this as a tax violation, but the practice also compromises consumer rights. In places where POS terminals are required, these transfers are often used to hide revenues and customer numbers.”
As a solution, Heydarov suggests applying administrative measures to discourage such practices. He also highlights the need to improve citizens’ legal and economic literacy. “To prevent violations, it is essential to enforce regulations and establish appropriate mechanisms. Consumers must be able to report these violations. Entities that continue this practice should face heavy fines.”
To avoid financial sanctions and penalties, experts urge entrepreneurs to comply with the law in offering payment services to both locals and foreign visitors. In a country where the number of businesses is rapidly increasing, proper payment systems positively impact Azerbaijan’s economy. Legal compliance in payments not only supports economic stability but also strengthens Azerbaijan’s position in the tourism sector. It is more cost-effective to comply with the law than to face potential financial losses — and it also ensures protection of consumer rights.