Cash Volume in Russian Economy Grows Amid Decline in Non-Cash Payments
According to the Central Bank of the Russian Federation and fiscal data operators, the share of cash payments reached 30%. Bankers attribute this to some payments moving into the shadow economy.
Cash Revolution: How Tax Reform and 'White Lists' Brought Russia Back to the 1990s
'The Essence': What Is Really Happening
Formally, the news: the share of cash payments in Russia reached 30% in April 2026, and during the May holidays, the increase in cash in circulation hit a record 210 billion rubles. The official version from the Central Bank: people are simply building a 'safety cushion' in case of internet outages, but there is no sustained trend.
A non-obvious insight that the Central Bank and the government do not publicly acknowledge: the non-cash economy in Russia has stalled for the first time in 15 years, and this is a direct consequence of their own decisions. Sberbank CEO German Gref stated back in February 2026 that the growth of non-cash transactions had been 'halted,' citing 'a number of tax initiatives' as the reason. This refers to the abolition of the VAT exemption for acquiring services from January 1, 2026, as well as the increase in the general VAT rate from 20% to 22%. The state itself created conditions where accepting cards became unprofitable, and then wonders why businesses are switching to cash.
Timeline and Context
To understand the scale, we need to look at the dynamics. From 2010 to 2025, Russia achieved a 'Russian miracle': the share of non-cash payments grew from 20% to 88%. At the end of 2025, this figure stood at 88%. But in January 2026, a break occurred—the share of non-cash payments sharply dropped by 3% compared to December.
Key dates that changed everything:
- January 1, 2026 — the 20-year VAT exemption for acquiring services was abolished. Banks began passing the tax on to businesses in the form of higher fees.
- February 2026 — German Gref publicly stated that the growth of non-cash payments had stalled.
- March 2026 — a VTsIOM poll found that 51% of Russians had encountered requests to pay for purchases in cash.
- April 2026 — a record increase in cash in circulation for the year—607 billion rubles.
- May 1–11, 2026 — the increase in cash amounted to 210 billion rubles, the highest in 15 years of observation.
- May 25, 2026 — the Central Bank published a report in which the share of cash by transaction volume remained at 9%, but data from fiscal data operators already showed 30%.
The gap between Central Bank data (9% by volume) and fiscal data operator data (30% in April) is explained simply: the Central Bank counts all individual transactions, including transfers between accounts, while fiscal data operators count actual retail trade. In trade, cash has returned to levels unseen since the early 2010s.
Who Wins and Who Loses
Losers: banks and the state. For banks, each percentage point shift from non-cash to cash means a loss of fee income. The acquiring fee is typically 1–3% of the transaction amount. If 30% of retail moves to cash, banks lose billions of rubles in fees. For the state, it's even worse: cash is an ideal tool for tax evasion. According to Delovaya Rossiya, the trend carries 'serious risks of slipping into the gray zone.' The Gaidar Institute forecasts that the budget could lose 0.5 trillion rubles in taxes from small businesses in 2026.
Winners: small businesses and sellers in low-margin industries. For a hardware store, auto parts shop, or grocery store, an acquiring fee of 1–3% is critical. With a profit margin of 5–10%, the fee eats up a significant portion of profits. Switching to cash allows either offering a discount to the customer or keeping that 1–3% for themselves. In a survey by Opora Rossii, 69.5% of auto repair shops and 66% of beauty services reported an increase in the shadow sector in their industries.
What the Media Is Not Saying
First: the Central Bank is being disingenuous when it says there is no sustained trend. Alla Bakina, head of a Central Bank department, stated on May 25: 'Based on our figures, we do not see a clear trend.' But those figures are for the first quarter of 2026, i.e., January–March. The real explosion occurred in April–May. Data for the second quarter will only be available in August. By then, the train will have left the station.
Second: the 2026 tax reform created a vicious circle. The Ministry of Finance raised VAT to 22% and abolished exemptions to increase revenue. But businesses, facing higher costs, began moving into the shadows. The more businesses go underground, the lower the revenue—and the greater the pressure on the Ministry of Finance to raise taxes again. This is a classic spiral that is very difficult to escape.
Third, and most non-obvious: 'white lists' and internet shutdowns are a second, less visible but equally important factor. During the May 2026 holidays, Russian authorities in several regions shut down mobile internet as part of drone defense measures. Without the internet, QR codes, payment apps, and many ATMs do not work. People realized that non-cash is not absolutely reliable and began keeping a cash reserve 'just in case.' This factor cannot be attributed to taxes, but it exacerbates the trend.
Forecast: The Next 30 Days and 90 Days
30 days. By the end of June, the Central Bank will release operational data for May, which will likely confirm the share of cash rising to 32–33%. This will trigger a new wave of publications and possibly the first official statements about the need for 'whitening measures.' The Ministry of Finance will likely announce tighter controls on cash transactions—but this will only worsen the situation, as businesses will perceive it as a threat and go even deeper underground.
90 days. By September, the trend will likely stabilize at a 30–35% share of cash in retail. This is the 'new normal.' Banks will begin to adapt: possibly introducing loyalty programs for non-cash payments with higher cashback to win back customers. But the key factor is tax policy. If the government does not reconsider the VAT decision on acquiring, the trend toward cash will continue. My forecast: by the end of 2026, the share of cash will reach 35–40%, and the budget will lose not 0.5 but around 0.8–1 trillion rubles in taxes.
Editorial Forecast
Asset: shares of Russian banks (Sberbank, VTB, T-Bank).
Direction: moderate decline over the next 24–72 hours. The news of cash rising to 30% is a negative signal for the banking sector, as it directly hits fee income from acquiring.
Key levels: for Sberbank common shares—resistance at 290 rubles, support at 275 rubles. A break below 275 likely leads to further decline.
Confidence level: medium (45% for decline, 35% for sideways, 20% for slight growth).
Main risk: a public denial or 'smoothing over' of the news by the Central Bank—if the regulator issues a statement that the fiscal data operator data is 'not representative' or that the trend is temporary, it could cause a short-term bounce in bank stocks.
— Editorial Team
