Lottery offering Italian’s cash prizes for using card supporting growth of card payments, says GlobalData

Cash-loving Italians are shifting towards the use of digital payments, according to GlobalData, spurred on by government incentives—including a lottery that offers cash prizes to card users and a crackdown on large-cash transactions. The leading data and analytics company notes that such incentives, combined with a recovering economy and an increase in the number of shops accepting digital payments, are contributing towards a robust 8.9% rise in the Italian card market in 2022*.

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “The Italian government is making efforts to encourage the use of electronic payments. The country has been slow to adopt this technology, primarily due to Italians’ strong inclination towards cash. However, with cashless payments now gradually gaining in popularity due to COVID-19, GlobalData expects the value of the Italian card market to rise to €239.2 billion ($292.5 billion) in 2022.”

Capping cash transactions is one method the Italian government has used to encourage the shift to card. Since January 2022, Italians can no longer make purchases larger than €1,000 ($1,222.8) in cash—a 50% drop from the previous €2,000 ($2,445.6) cap.

Sharma continues: “Especially since the pandemic, Italians have already been using card transactions for day-to-day payments, so encouraging the same for larger purchases is a natural pincer movement. Italy’s recent implementation of EU directives on anti-money laundering and fraud via non-cash payments mandating payment companies to enforce an appropriate process to prevent fraudulent activities is likely to further boost consumer confidence for using cards even for large value transactions.”

Another method to encourage card use is the Receipt Lottery program, launched in February 2021. As part of the program, consumers are rewarded with cash prizes for making purchases using electronic payment methods. For this, they need to register on the program by providing the tax code and subsequently a lottery code is generated. Between February 2021 and August 2021, the program had rewarded a total of €15.6 million ($19.1 million). All the winnings from the Receipt Lottery are tax exempt.

Sharma adds: “This lottery program along with government regulation on limit on cash transactions are expected to greatly benefit the Italian economy as these initiatives not just encourage more transactions through electronic channels but also helps cut down on tax evasion.”

In addition to incentives, GlobalData notes that rising consumer awareness of electronic payments during the COVID-19 pandemic, improving payment infrastructure, and a growing preference for contactless payments are also expected to support the card payments market.

Sharma notes: “Awareness and the use of contactless payment cards in Italy is on the rise, with the number of contactless cards increasing from 49.5 million in 2017 to 81.8 million in 2021. This is expected to rise to 98.2 million by 2025. ”

“Italy has been among the worst hit European countries during the pandemic, with a large number of positive cases. The government’s strict lockdown and travel restrictions adversely affected the overall economy and, in turn, the card payments market. As economic recovery and vaccination programs continue, the value of card payments is anticipated to grow. We expect increases at a compound annual growth rate (CAGR) of 7.1% between 2021 and 2025, reaching €288.8 billion ($353.2 billion) in 2025.”

* The card market represents total card payments made using debit, credit and charge cards including both contactless and non-contactless cards.

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