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Tax Engineering

Plastic cards


Question

What is a plastic card and what types of plastic cards can the banks offer us?

Answer

The future of cash is increasingly uncertain and according to some experts it will gradually disappear. Many countries are thinking of abolishing cash and replacing it with plastic cards for fiscal reasons.  Physical money gives many problems to tax agencies, as it is quite easy to convert legal money into black money and vice versa. With plastic cards this problem would disappear because the money deposited in the account can be traced easily. On the one hand there is a physical person who makes the payment for goods or services and on the other there would be the POS virtual, the receiver of the money. Other problem that has cash is that it has a physical location and can be stolen by anyone creating a lot of insecurity. Whatever the case, the solution is plastic cards.  

According to the latest regulations for automatic information exchange, plastic cards are not reported between countries but it is possible to trace the money for any criminal activities investigation. The latest regulations completely exempt from exchanging information the payment entities that offer charging and recharging services for plastic cards. The main reason for that is that these payment entities cannot accept cash and all recharge modes are done via bank transfer or cards. The information exchange regulations do not oblige banks to report information of the card owner but of their bank account. Depending on the account balance, country and bilateral treaties signed the bank will or will not report the account information but never the information related to the card. Plastic cards can be classified into two types: 

Types of plastic cards 

The main types of plastic cards are anonymous cards non-transferrable card. Both types of cards are issued by entities regulated by central banks and authorized by Visa, MasterCard, Amex, Cirrus. The privacy that these cards guarantee to its holders depends on the constitution of the financial institution. If the financial institution is a payment entity, the cardholder can reach the maximum opacity level since it is the same entity that offers the entire process of withdrawal and card recharge. That is, the payment entity will provide its client with some account numbers in the name of the entity so that the client can recharge it by bank transfer. If, on the contrary, the financial institution is a bank, the client will have a bank account number in his name or the name of his company and therefore all incoming transfers will be in the name of the person who has receives the money. In reference to the withdrawal of money by plastic card the privacy process is similar. The cards issued by a payment entity don’t leave the trace of any information related to the cardholder. However, if the client decides to withdraw the money with the card associated with his account number, his name and surnames will appear in the country's ATM, but the bank account number will not be revealed.

Anonymous card

The anonymous card could be defined as plastic card issued by a payment institution and regulated by a central bank. It is opaque, has no name printed on it, the top-up and withdrawal are made in the name of the payment entity and not the cardholder.  

Non-transferrable card 

We can define the non-transferrable card as plastic card that can be issued by a payment institution or a bank and regulated by a central bank. The non-transferrable card can be as opaque as anonymous card if it is issued by a payment entity. If a bank issues the plastic card the card would not be reported but the bank account might be reported depending on the country and the bilateral agreements signed by the country there the bank account is located. In this section the client will learn the basic concepts of what a plastic card is, the types of privacy that the cards currently have and the limits they have.



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