Italians remain slow adopters of electronic payments, primarily due to a strong inclination towards cash, which accounts for 78.5% of total payment transaction volume in 2019. The country has a comparatively low penetration of payment cards, although it has a robust point of sale (POS) terminal network.
The government is making concerted efforts to promote electronic payments through financial inclusion initiatives and a cap on cash transactions, with the EU-wide cap on interchange fees also playing a role. As a result, a gradual increase in payment card usage was recorded during the period 2015–19.
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Growth in the payment card market has partly been driven by the rise of contactless payments and the emergence of digital wallets. However, digital wallets still need to demonstrate greater benefits and convenience compared to payment cards. The frequency of card payments increased from 30.1 times per card per year in 2015 to 39.4 in 2019, and is anticipated to further rise to reach 45.9 by 2023. The emergence of digital-only banks and strong e-commerce growth are expected to further boost electronic payments over the period 2019 to 2023.
Bancomat dominates the debit card space
Bancomat is the dominant debit card scheme provider in Italy. With 233 Italian partner banks, most of the debit cards issued in Italy bear Bancomat branding. They are usually badged with one of the major international schemes to allow the cards to be used outside Italy.
It also offers Bancomat Pay – a digital wallet available to 37 million PagoBancomat card holders. While Bancomat continues to dominate, international schemes Visa and Mastercard have strengthened their position. As a result, Bancomat’s share of transaction value declined from 82.4% in 2015 to 70.5% in 2019.
Reward programs and installment options drive credit card usage
Credit and charge card penetration in Italy is low, standing at 0.5 cards per individual in 2019. Italians prefer charge cards over credit cards in order to benefit from interest-free credit periods, while avoiding falling into debt.
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By GlobalDataTo drive credit card usage, banks offer a variety of rewards and benefits. Agos Bank offers 10 interest-free installments on its Visa Agospay Zero credit card for all purchases of €500 ($572.77) and above. Meanwhile, Poste Italiane offers the BancoPosta Più credit card, which enables card holders to repay purchases in up to 24 installments.
E-commerce growth will boost the payment card industry
The e-commerce market is growing significantly, rising from $19.0bn in 2015 to $36.0bn in 2019. Increasing improvements in technology and rising online and mobile penetration have resulted in enhanced consumer confidence in online transactions. The Italian e-commerce market is dominated by PayPal, primarily due to the comfort and security it offers.
Credit and debit cards collectively account for nearly 23% of total e-commerce value. With the introduction of alternative payment solutions such as Apple Pay, Google Pay, and Amazon Pay the market is anticipated to register healthy growth in the coming years.
A wide range of prepaid cards are available in Italy to serve a variety of purposes
Italy has one of the largest prepaid card markets in Europe, with 28.7 million prepaid cards in circulation in 2019. Prepaid card numbers in circulation rose by a CAGR of 3.4% between 2015 and 2019. Major banks also offer prepaid cards to serve varied consumer segments such as travelers, the young population, and pensioners.
Targeting students of the University of Milan and other educational institutions affiliated with the bank, Intesa Sanpaolo offers reloadable prepaid cards. The cards can be used for cash withdrawals as well as in-store and online purchases.
The number of POS terminals is growing rapidly in Italy
The number of POS terminals recorded strong growth increasing from 2.0 million in 2015 to 3.7 million in 2019 at a CAGR of 16.5%.
This figure is anticipated to reach 4.9 million in 2023. The growing acceptance of cashless transactions among Italian retailers has led to a rise in the installation of POS terminals throughout the country. Consequently, service providers are launching new products to meet the growing demand for cashless transactions.
In August 2018, Nexi launched SmartPOS – an integrated POS terminal that accepts cash, card, contactless, mobile, voucher, and QR code payments.
