In a country where credit cards come out rarely, banks have declared a ‘war on cash.' Italians' use of credit cards is less than half the average use elsewhere in the European Union (EU) and, according to the Italian Banking Association (ABI), processing cash payments costs Italian banks up to 10 billion euro a year.
On average, Italians make 26 credit card transactions annually, five times less than in the United Kingdom. By promoting credit and debit card and other forms of electronic payment like wire transfers, ABI hopes to slash expenses.
Italians' cash habit has two sides. In the Euro region, Italians are the consumers with the least debt and most savings, according to 2009 Eurostat data. However, companies deal in cash to evade tax, especially in the south where organized crime is endemic. Untaxed transactions in Italy translate into a loss of about 100 billion euro of revenue annually, or 22 percent of the gross domestic product.
‘Italy urgently needs these changes to catch up with other countries like France, which has allowed non-cash payments for public services for more than two decades,' asserted Rita Camporeale, head of payment systems and services at ABI. As such, the Finance Ministry has agreed to allow public offices to accept electronic payments and install point-of-sale terminals, and may also ban cash salaries.
However, merchants and shop owners remain skeptical, as do taxi drivers, who avoid accepting credit cards since they must pay 3 to 4 percent in taxes on each transaction. ABI was quick to emphasize that for business owners, the difference between cash payment and electronic is illusory, as managing cash carries hidden costs associated with handling, transport and security.