Italy’s Prime Minister Wants to Prioritize Cash

In Italian culture, there are some things you don’t mess with, like the simplicity of a cacio e pepe, the cut and polish of Persol sunglasses, the unisex design of a classic Vespa Siluro — or paying in cash.

In a recent draft budget proposal for 2023, Italy’s new far-right Prime Minister Giorgia Meloni proposed granting Italian merchants the right to refuse digital payments for certain transactions — making good on a marquee campaign trail promise while defying directions from Brussels.

Don’t Give ‘em Credit

While most people under the age of 30 may view cash as a cumbersome, inefficient, or perhaps even a downright foreign vehicle for completing transactions, one Italian group in particular wants to keep actual paper money in circulation: small business owners. That’s because digital transactions, like swiping or tapping a credit card, incur small fees from the big banks facilitating them, effectively levying a tax on business owners. And if there’s one thing Italians loathe as much as peas in a carbonara, it’s paying taxes — de facto or otherwise.

The Italian government has long encouraged the shift toward digital payments, in part to tap down on widespread tax evasion — Italy’s shadow economy was estimated at around €183 billion in 2019. While EU leaders in Brussels are pushing for greater use of digital payments to accelerate growth in a post-covid world, Italians are digging in their heels. Meloni’s proposals add some high-proof grappa to the fiery debate:

• On average, the Italian consumer swipes a payment card only 85 times a year, by far the lowest in Europe and below the continent’s 156-digital-transaction average. The act is typically reserved for costlier purchases, with Italian consumers averaging an unusually high digital transaction price of €47.50.
• Big businesses typically pay a fee between 0.5% and 1.5% to banks and payment providers for digital transactions, and small businesses often have to pay even more. Meloni’s proposal would allow businesses to refuse digital payments for any transaction under €60 while raising the cash-purchase limit from €1,000 to €5,000.

La Vita e Bella…with cash: Of course, critics note Meloni’s proposal would create more problems than it solves. “It could be that the fees on [card] payments . . . are a little higher than in other countries, but in that case the solution is to negotiate with the bank system and align [them],” Antonella Trocino, a lecturer in economics at Rome’s Luiss University, told the Financial Times. Sounds like Italy’s going to have to make the banks an offer they can’t refuse.