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Card payment rule could hit Italy’s small firms

Shops in Italy may soon be forced to accept credit and debit card payments for items costing less than €5, a move that struggling small businesses say could be "devastating".

Card payment rule could hit Italy's small firms
Italy is trying to force shopkeepers to accept sub €5 credit card payment. Photo: Department of Agricuture/Flickr

Italy's governing Democratic Party (PD) proposed the new legislation on Monday as an amendment to the wide-ranging fiscal reforms introduced with the so-called 'Stability Law' in June 2014.

“It's a question of freedom, citizens should be able to choose how they want to pay in any given situation,” Sergio Boccadutri, the PD candidate who presented the amendment told La Repubblica.

But struggling small business owners fear the move could have a heavy impact on their running costs and profits. 

Currently, guidelines state that shopkeepers can refuse card payments on any items below €30. But under the new proposals, they would be forced to accept payments via a debit or credit card for all items, or risk fines.

Current EU laws mean that banks can take a commission of 0.3-0.4 percent on each card transaction, on top of costs of around €180 for installing a card reader.

“We don’t accept card payments and I am aware that the government want to make this mandatory,” Maria, a 52-year-old newspaper stand owner in Rome, told The Local.

“This would be devastating for us because it would mean installing a card machine, which is costly in itself. And we don’t sell high cost items so to have to pay a percentage would mean taking away from the little money we do make.”

The same concerns were echoed by Luca Forza, a 47-year-old tobacconist.

“We don’t accept card payments because we don’t have a telephone line, so this would be a huge expense for us,” he said.

“We’d have to pay for the installation [of the line] first of all and then the running costs so it would be extremely costly.”

Certainly, the changes could be an important milestone as Italy – like the rest of the world – moves towards becoming a cashless society.

“I normally have change with me, but I suppose if one day you’re stuck and want milk or bread then it could be useful,” 68-year-old shopper Roberta Gallo said.

But a greater convenience for consumers only paints half the picture. The move also comes as Italy tries to stamp out fiscal evasion, which occurs on a huge scale across the country.

A significant portion of such evasion happens when shops, bars and other retail outlets don't issue receipts for 'insignificant' items such as newspapers, coffee or a haircut.

Paying with a card makes a receipt inevitable and could help the government get back some of the hundreds of billions it loses in unpaid taxes each year.

But the Italian retail association, Confesercenti, warned that the government needs to be careful not to pass the costs onto businesses.

“These changes could be devastating for businesses which rely on a high volume of low cost transactions such as tobacconists, newsagents and petrol stations,” the association said in a statement.

In total, Confesercenti estimates that card payments cost small businesses €1,800 a year.

By Patrick Browne and Ellie Bennett

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ITALIAN POLITICS

Italian government rocked by Five Star party split

Italy’s government was plunged into turmoil on Tuesday as foreign minister Luigi Di Maio announced he was leaving his party to start a breakaway group.

Italian government rocked by Five Star party split

Di Maio said his decision to leave the Five Star Movement (M5S) – the party he once led – was due to its “ambiguity” over Italy’s support of Ukraine following Russia’s invasion.

He accused the party’s current leader, former prime minister Giuseppe Conte, of undermining the coalition government’s efforts to support Ukraine and weakening Italy’s position within the EU.

“Today’s is a difficult decision I never imagined I would have to take … but today I and lots of other colleagues and friends are leaving the Five Star Movement,” Di Maio told a press conference on Tuesday.

“We are leaving what tomorrow will no longer be the first political force in parliament.”

His announcement came after months of tensions within the party, which has lost most of the popular support that propelled it to power in 2018 and risks being wiped out in national elections due next year.

The split threatens to bring instability to Draghi’s multi-party government, formed in February 2021 after a political crisis toppled the previous coalition.

As many as 60 former Five Star lawmakers have already signed up to Di Maio’s new group, “Together for the Future”, media reports said.

Di Maio played a key role in the rise of the once anti-establishment M5S, but as Italy’s chief diplomat he has embraced Draghi’s more pro-European views.

READ ALSO: How the rebel Five Star Movement joined Italy’s establishment

Despite Italy’s long-standing political and economic ties with Russia, Draghi’s government has taken a strongly pro-NATO stance, sending weapons and cash to help Ukraine while supporting EU sanctions against Russia.

Di Maio backed the premier’s strong support for Ukraine following Russia’s invasion, including sending weapons for Kyiv to defend itself.

In this he has clashed with the head of Five Star, former premier Giuseppe Conte, who argues that Italy should focus on a diplomatic solution.

Di Maio attacked his former party without naming Conte, saying: “In these months, the main political force in parliament had the duty to support the diplomacy of the government and avoid ambiguity. But this was not the case,” he said.

Luigi Di Maio (R) applauds after Prime Minister Mario Draghi (L) addresses the Italian Senate on June 21st, 2022. Photo by Filippo MONTEFORTE / AFP

“In this historic moment, support of European and Atlanticist values cannot be a mistake,” he added.

The Five Star Movement, he said, had risked the stability of the government “just to try to regain a few percentage points, without even succeeding”.

But a majority of lawmakers – including from the Five Star Movement – backed Draghi’s approach in March and again in a Senate vote on Tuesday.

Draghi earlier on Tuesday made clear his course was set.

“Italy will continue to work with the European Union and with our G7 partners to support Ukraine, to seek peace, to overcome this crisis,” he told the Senate, with Di Maio at his side.

“This is the mandate the government has received from parliament, from you. This is the guide for our action.”

The Five Star Movement stormed to power in 2018 general elections after winning a third of the vote on an anti-establishment ticket, and stayed in office even after Draghi was parachuted in to lead Italy in February 2021.

But while it once threatened to upend the political order in Italy, defections, policy U-turns and dismal polling have left it struggling for relevance.

“Today ends the story of the Five Star Movement,” tweeted former premier Matteo Renzi, who brought down the last Conte government by withdrawing his support.

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