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Digital Payments in Italy: growth and benefits

With the help of the pandemic, digital payments have become increasingly pervasive in Italy, and not only that, even the most sceptical have been forced to recognise the benefits.

As in many other contexts, everything will never be the same again, and from the data and trends recorded so far, it is possible to guess what characteristics the new payments scenario will have and how it will be necessary to get a move on in order to become one of its protagonists.

Digital payments in Italy in 2020

From 24th place in Europe, in terms of card transactions per capita, ahead only of Germany, Romania and Bulgaria, Italy has made some progress in the year of the pandemic: digital payments have increased their penetration compared to cash, covering a third of total consumption and gaining 4 percentage points compared to the previous year, according to data from the dedicated Milan Polytechnic Observatory.

In many cases, this was not a choice of innovation or emancipation but a necessity, linked to the pandemic and the various lockdowns that left many businesses and citizens with no choice but to abandon their reticence and admit that digital payments were a valuable ally.

The increase in the use of electronic payments goes hand in hand with the boom in e-commerce, which has seen a 31% growth in the component linked to the purchase of physical products. However, we should not overlook the increased use of this form of payment, via smartphones, for mobile services, bills and phone top-ups, which has grown by 15%.

2020 was also, and could not have been otherwise, the year of contactless payments through cards (+29%), smartphones and wearables (+80%).

The Covid-19 push was also joined by the Cashless Italy Plan, which aims to increase the spread of digital payments and has caused a stir with the controversial “State Cashback” and the  “Receipt Lottery”.

Digital Payments in Italy: what to expect in the future

A dramatic turning point, 2020 was a year of important achievements and choices. That of digitalisation first and foremost, which also lays the foundations for future evolutions in the world of digital payments. So what shall to be expected in the new normal?

There is no reason not to believe that the inexorable substitution of cash in favour of digital payments will continue, more or less rapidly, depending also on the intensity with which the commitment of the government, whose measures can condition the country’s choices, will continue.

As far as we can see so far, there are good assumptions such as the increase in the limit for contactless payments without a PIN (up to 50 euros, from January 2021, from the previous 25), which will favour “contactless” payments and the complete introduction of payments from smartphones within the perimeter of Cashback.

Digital payments in Italy: advantages

When people talk enthusiastically about digital payments, they don’t do so in a preconceived fashion,  just because they coincide with an innovation in the world of finance, but because there are concrete advantages for anyone who uses them, whether these be private citizens or SMEs or large companies. Here are the main ones that concern everyone.

Safety and security: today, digital payments can be considered a totally convenient and secure method, also because they are completely traceable, thanks to the great strides that have been made in recent years in the field of data protection and transaction security.

Digital innovation: as the use of this form of payment increases, so does the use of digital tools such as smartphones and tablets to access banking services. This opens up new opportunities for consumers to take care of their finances and monitor them, as they can explore a large number of services, especially from the fintech world, aimed at making the management of their bank accounts and savings in general easier and more efficient.

Flexibility and proximity in consumption: once you have learned how to do it, paying online is easy and provides greater freedom of choice, so the spread of these new payment methods has an impact on consumption and also on purchasing dynamics. The level of competition is raised, the scenario of competitors for companies changes and the consumer can only benefit.

Rights and guarantees: while some may be annoyed by the fact that with digital payments everything is more tracked and controlled, it is important to note the advantages that arise. In fact, those who pay online, according to the Italian legislative system, acquire a series of rights that allow them to withdraw from the contract or return the products while remaining protected, something that would be difficult to ensure with cash.

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