Finance Minister Patrick Chinamasa said plastic money was the use of ATM cards to pay for goods by swiping on point of sale machines but one had to have money in the bank.
The other use of plastic money, which the government is now encouraging because of the shortage of cash in the market, was to use Real Time Gross Settlements to pay for goods or services.
“So, those are the forms which we call plastic money, it does not involve cash. Even in the United States, the amount of deposits, for instance they print US$35 trillion dollars but the only amount which will be circulating in cash will be just about 10% of that. They print the quantum to allow for just circulation and to buy petty things. So, I hope that I have satisfactorily explained what plastic money is,” Chinamasa said.
Q &A:
HON. SEN. NCUBE: Thank you Mr. President. Can the Minister explain what plastic money is because some people do not know what plastic money is? Even myself, I did not know and I think the Minister has to explain because a lot of people do not know if he just says ‘plastic money’. Thank you.
HON. CHINAMASA: Let me use plastic money in its generic sense. In order to pay, you must have money in the bank. When you have got money in the bank, you can apply for an ATM card. So, if you go into TM, Pick and Pay or OK to buy your groceries, they will have point of sale machines in these businesses.
They will swipe that card and if there is no money in the bank, in your account, it will say so and then that is the end of the sale – [Laughter.]- If there is money enough to pay for what you have purchased, then there will be a print out which will show that a sale has been concluded. So, that is what we call plastic money.
However, I want to extend it to one other form of plastic money. You can also transfer through Real Time Gross Settlement (RTGS). You go to your bank; fill a form and the money will be transferred. If you are buying 10 000 bricks from Beta Bricks, you just fill in a form and the money will be transferred to the account of Beta Bricks.
So, those are the forms which we call plastic money, it does not involve cash. Even in the United States, the amount of deposits, for instance they print US$35 trillion dollars but the only amount which will be circulating in cash will be just about 10% of that. They print the quantum to allow for just circulation and to buy petty things. So, I hope that I have satisfactorily explained what plastic money is. Thank you.
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