Italy’s Mobile Wallet Use Rises, Despite Government Cash Chaos

PYMNTS’ Q3 2022 ConnectedEconomy Index, “How the World Does Digital,” finds that consumers globally are increasingly incorporating digital tools, transactions and activities into their daily lives. The study, which tracks digital engagement across 11 countries, notes that this jump in usage for routine activities indicates sustainable, steady future growth when it comes to consumers’ digital transformation. We tracked a large variety of daily activities such as telehealth, streaming videos and using wearables; online and in-store mobile wallet use are other digital engagement metrics measured in the report.

Just as digital engagement in many other day-to-day activities registered growth, we found increased mobile wallet use by consumers for brick-and-mortar transactions in seven of the 11 countries tracked by the ConnectedEconomy Index. Italy, Japan and Singapore all experienced the fastest rates of growth in this category compared to the previous quarter.

The share of consumers in Italy using the payment option for their last physical purchases rose by 13% quarter-over-quarter. This far exceeds our sample of 11 countries, which on average, grew about 4%. As a result, approximately one in five consumers paid for their most recent physical purchase with a digital wallet in Italy during Q3 2022.

Mobile wallet use versus cash became the issue of hot debate in Italy late last year. Initially, the country’s new prime minister, Giorgia Meloni, proposed allowing merchants to refuse digital payment methods on transactions under 60 euros. This new rule would have been paired with a broader budget plan increasing the limit on legal cash transactions from 1,000 euros to 5,000 euros. Meloni, head of the far-right Brothers of Italy party, has criticized Italy’s past efforts to encourage digital payments, accusing them of being a “hidden tax” on families and small businesses.

However, opponents dismissed the move as an example of government overreach and an attempt to secure the support of small businesses dealing mostly in cash by increasing opportunities for tax evasion. Italy’s central bank stepped in the next day, agreeing that such a move could increase tax evasion and a rise in black market opportunities such as money laundering.

Perhaps taking the advice to heart, Meloni’s government backtracked by proposing a “solidarity tax” reducing the fees merchants are charged for accepting digital payments. Then, it dropped the fine proposal altogether while increasing the upper limits on cash transactions. After more rounds of negotiations, the final budget allows for the initially proposed increased limit on cash transactions. It also added an amendment promising a deal between banks, payment companies and sellers to reduce fees on electronic transactions worth up to 30 euros.

The compromise is good news for Italy’s consumers, where the ConnectedEconomy Index found that 75% of consumers had participated in at least one digital activity in the 30 days before being surveyed. Meloni backing down on promoting cash came right in time for mobile wallet innovations being introduced to the country, as well. In January, Visa and Fintech District announced a partnership to help expand Italy’s FinTech ecosystem and contribute to sector growth. As previously reported by PYMNTS, many of the country’s FinTechs are focused on payment innovations.

Mobile wallet use for in-store transactions is but one cross-channel example of the daily integration of digital channels in consumers’ daily routines. Whether consumer-driven or government-led, PYMNTS’ research makes it clear that different countries are finding their own paths toward global digital transformation.