In Italy, digital payments are becoming increasingly popular. According to the Bank of Italy, digital payments are on track to surpass cash in 2020. By 2020, Italy is expected to process 5.2 billion transactions per year, or 33 percent of all payments made nationally. While card payments remain the most popular method of payment, Alternative payment methods such as Paypal, Apple Pay, and Google Pay are growing in popularity. Moreover, tax incentives for businesses are helping to increase their use of digital payment methods. Click here to discover more info.
Card payments are most common
Though cash remains the preferred method of payment for Italians, more people are turning to cashless payment solutions. These nifty tools enable consumers to pay for their goods and services online, and many multinational financial corporations facilitate payments between card-issuing banks and merchants. Millions of users can make purchases using branded credit cards. Though credit card usage is low in Italy, only 21% of the country’s population uses it. However, despite the rise of digital payment solutions, many consumers still prefer cash-on-delivery.
European payments markets have been increasingly integrated for almost two decades, with SEPA now a reality for 500 million citizens. SEPA aims to simplify payment transactions by using uniform credit transfers and direct debits. However, card payments still lack the same degree of market integration and harmonisation of technical standards and business practices. While they have been the most popular payment method in Europe for some time, SEPA for cards hasn’t brought the benefits that users had hoped.
According to a recent study by the Netcomm research institute, card payments are the most common type of digital payment in Italy. However, there have been some recent trends that have shifted consumer behaviour. More than a third of Italian digital users now begin their purchase process online, whereas only 2% of them did so in the past year. The growth in digital payments in Italy is largely due to consumers’ increased usage of these tools.
Alternative payment methods like Paypal, Apple Pay, and Google Pay are also growing in popularity
Ecommerce has shifted the way consumers pay in Italy from bricks and mortar stores to online shops. Nearly 30% of Italians now buy online, and the number of people using these methods is predicted to rise in the coming years. Ecommerce, like mobile payments, is fast catching up with physical stores. Although card payments still dominate the country, the use of alternative payment methods such as Paypal, Apple Pay, and Google Pay are increasing in popularity.
In Europe, Alternative Payment Methods are quickly replacing traditional payment methods like credit cards and cash. While e-wallets have taken the lead, bank transfers are gaining ground. Experts predict that in five years, Alternative Payment Methods will surpass credit cards. This development is positive for both online sellers and consumers. Here are some of the most common payment methods in Europe.
Despite the decline in traditional cash payments, many Italians are switching over to digital wallets such as PayPal and Apple Pay. Some even use cash on delivery. Bank transfers are also predicted to become more popular in the next two years. Moreover, the pandemic in Italy affected cash usage. From 45% to 21% of adults paid cash, reducing the rate to just 21%. The popularity of contactless cards reached 59%.
Tax incentives for digital payments in Italy
The government is providing tax credit to businesses that convert to digital payment systems. The tax credit amounts to 10% of the cost of the transaction. It is available to merchants leasing or using advanced electronic payment instruments by 2022. Businesses should have a payment terminal that supports telematic transmission or electronic storage. The tax credit will be proportionally allocated among beneficiaries. The tax incentive will be beneficial to businesses that generate at least EUR 1M in revenue annually.
The tax incentive had a significant impact on the number of transactions made. It boosted spending by around $6 per user, but the effect did not last long. The change in trend was negative, and the total amount of dollars transacted increased by about 34%. However, the tax incentives do not generate any new businesses. This policy is likely to stifle innovation in the digital payments sector. Further, the tax incentive is likely to lead to higher consumer awareness and adoption.
The tax incentive for digital payments in Italy is different than the one for traditional payment systems. Taxpayers must obtain a specific ruling from the Italian tax authorities. This ruling is required if the qualifying intangible is used directly by the company or is licensed to a related party. However, the ruling does not apply to companies that are licensed to a third party. There are other requirements for companies to meet the requirements for tax incentives.