Italy launches ‘Christmas cashback’ scheme in push for digital payments

A cashback scheme is among Italian government incentives intended to give struggling shops a boost while cracking down on tax evasion.

Italy launches 'Christmas cashback' scheme in push for digital payments
Photo: AFP
Long a country where cash is king, Italy has been prodded towards electronic payments in 2020 by the coronavirus pandemic, while the government is adding further incentives to pay by card.
A new cashback initiative launched this week offers an automatic refund from the state to citizens making in-store purchases with a bank card or
smartphone app, as long as they first register their payment methods on the government's own IO app.
Under “Christmas Cashback”, users will get back 10 percent of each purchase up to a maximum of 150 euros before the end of the year, as long as they make
at least ten digital transactions.
In a sign of the idea's popularity, the systems behind IO were overwhelmed when 7.6 million people downloaded it by the day of the scheme's launch on
The cashback programme “covers purchases made in shops as well as payments to craftsmen, plumbers, electricians, a lawyer or a doctor,” a finance
ministry spokesman told AFP.
Italy's government hopes that by encouraging people to pay digitally, the country can crack down on chronic tax evasion that costs the public purse up
to 100 billion euros ($120 billion) per year according to official estimates.
Its broader “Italia Cashless” plan aims to “widen the tax base” in Italy and “provide an incentive to improve compliance with tax rules”, the spokesman said  – in other words, making sure more people pay the tax they owe.
It is still common for shoppers in Italy to run into refusals when they ask to pay with plastic.
But data show that the country is gradually coming around to the idea.
The percentage of transactions using cash dropping from 68.4 percent in 2016 to 58 percent in 2019, according to a study by Italy's central bank and
the European Central Bank – although even that figure leaves cash payments well above the eurozone average of 48 percent.
Photo: Francois Lo Presti/AFP
The coronavirus pandemic has accelerated the trend in 2020, with more people switching to cards to avoid handling cash and choosing to shop online
during lockdown.
Prime Minister Giuseppe Conte said that by bringing forward the cashback scheme – originally slated to begin on January 1 – he hoped instead to
direct pre-Christmas spending towards brick-and-mortar shops that suffered through lockdown.
The programme excludes internet shopping, where users have no option but to pay by card.
“This is a period in which we have all increased (online purchases), but now we must favour in-person businesses,” Conte said earlier this month.
The government has earmarked 1.75 billion euros for the scheme for 2021, and three billion for the following year.
There were technical glitches on Christmas Cashback launch day on Tuesday, with many people complaining they could not activate the IO app.
Blaming the “huge volume of requests” to use the system, the operators admitted some “inefficiencies” but said they were being addressed.
As part of its “Italia Cashless” plan, the government is also automatically enrolling those who pay by card or app in a lottery, with prizes for both
shoppers and shopkeepers.
In addition, the ceiling for cash payments is due to fall from 2,000 euros to 1,000 euros from January 2022.

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What you need to know about opening a bank account in Italy

There are a few things to know before choosing the right place to put your cash in Italy. Here’s our guide to finding the best bank for you.

What you need to know about opening a bank account in Italy

Money makes the world go round, they say, and even in notoriously cash-friendly Italy, your life will be a lot easier if you have somewhere to put it.

But with daunting paperwork, confusing opening hours and array of diverse offerings, interacting with Italian banks can be challenging.

Here’s our guide to opening a bank account in Italy to get you started.

Step one: Know what’s out there

I come from Canada, where you can count the number of big banks on one hand. That means Italy’s banking sector can be a little dizzying in comparison. At the time of writing, Italy has more than 20 banks with assets of more than €10 billion. 

Among the biggest names in Italy are Dutch-based ING, Germany-based Deutsche Bank, Italy’s own Unicredit, and the Banca Nazionale di Lavoro (now owned by France’s BNP Paribas).

READ ALSO: Which are the best Italian banks for foreigners?

Alongside these big national banks, there are regional providers like the Banca Popolare di Puglia e Basilicata or the Banco di Sardegna, which confusingly operate branches far from their respective homelands. As a result, it’s not uncommon to find a Pugliese bank next to a Venetian one in Lombardy, or encounter a local bank that has just a handful of branches throughout the country.

Consider the fees applied to transactions and cash withdrawals when choosing your Italian bank account. (Photo by ANDREAS SOLARO / AFP)

Disrupting the banking world in recent years has also been the emergence of a whole new crop of online banks, like N26 and HYPE, which offer very low fees by operating no physical branches.

And lastly, there’s the post office: Poste Italiane, in an unholy alliance of paper-based bureaucracy, also operates a consumer bank notorious for slowing down postal lines everywhere.

Knowing the lay of the land will help you pick out the best offering for your life and location. Consider your choice carefully. When we arrived, we chose N26 for its low fees and easy sign-up. But soon, we needed a bigger bank that could offer services like a fideiussione (renter’s guarantee).

Choosing the right bank is about more than knowing if it has a branch in your area — as you settle, a bank’s mortgage offerings, insurance, or high-interest savings accounts may become more important to you.

Step two: Decide what account you need

Technically, if you’re over the age of 18, you’re eligible to open an account in Italy — but most account types are only available to residents, which includes foreign nationals who are here because of a valid job offer or degree program.

The most common account type is a conto corrente or current account (a checking account for American readers). These accounts are designed with daily transactions in mind, meaning there are often opportunities to save on fees by maintaining a minimum deposit or balance.

Ask an expert: Which are the best UK banks for Brits living in Italy?

To earn higher interest, you can place your savings in a conto di risparmio or savings account, which offer fewer transfers and transactions in exchange for higher interest. There is also the conto di deposito, a more restrictive but even higher-interest savings account designed for parking your money just to earn.

Lastly, there are conti correnti esteri, foreign accounts, which can offer deals on wire transfers or allow you to use your home currency and save on exchange fees. These accounts don’t require you to be an Italian resident, making them a good choice for people staying for an indeterminate time.

Step three: Review costs

There’s a reason some of Italy’s nicest buildings belong to banks — this country’s banking fees are among the highest in Europe.

Though comparisons are hard to come by, in 2009 the European Commission found that fees in Italy could be four or five times the amount for the same accounts in the Netherlands, Ireland, or Germany.

But choose the right offer, and they don’t have to be — one analysis found these fees could vary by as much as 10 times between banks.

On average, a typical current account cost nearly €95 per year in 2022, with high-interest savings accounts costing even more. But that average dropped to just €25 for online-only accounts like those offered by N26.

A branch of Unicredit bank in Milan. (Photo by FILIPPO MONTEFORTE / AFP)

In exchange for these fees, banks offer a range of different services — everything from higher interest to lower transaction fees.

Most banks won’t charge a setup fee, but may charge to issue you with your first debit or credit card. Other services, like cheques, wire transfers, or even ATM withdrawals above a monthly limit are likely to be met with other fees.

Il Sole 24 Ore, one of Italy’s leading financial newspapers, has an online tool that will help you compare bank offers, automatically deducting your expenses from your anticipated interest to show you exactly how much your account is likely to cost.

Make sure to read the fine print — some “fee-free” accounts are promotional offers and expire after a year or so, leaving you paying hefty fees. Others look expensive, but are free if you maintain a low minimum balance or make monthly deposits of just a few hundred euro.

Step four: Visit a branch or sign up online

Now that you know the account type and bank you’re looking for, you can dive into the paperwork.

For a variety of reasons, it’s generally best to wait until you are in Italy to open your account — even in the case of online accounts or conti esteri. Banks will want to mail you your card and know a fixed address in Italy, and you will need an Italian tax code (codice fiscale) to get started in any case.

For online accounts like N26 and HYPE, paperwork is often minimal and requires filing out a few online forms and uploading your ID. 

In physical banks, by contrast, it can be quite extensive, involving a lot of fine print in Italian. If your language skills are poor, consider bringing a friend who can help you review your contracts, or select a bank that you know offers counter service in English.

To open an account, you’ll need the following documents:

  • ID or a passport;
  • Codice fiscale;
  • Residency permit (or, if you’re a non-resident, proof of address like a bill or piece of certified mail); and
  • Proof of your employment income (i.e., a contract or tax return).

Businesses will also need to provide the company’s registration certificate, a certificate of good standing, and statements of the financial status of all shareholders with more than a 20 percent stake in the company.

Take these to your local branch to get the process started. Make sure to check your local bank’s opening hours first — Italian banks are notorious for taking long lunches and closing early in the afternoon.

Closing an account

If you’ve decided it’s time to say goodbye to your bank, it’s unfortunately not quite as simple as visiting a branch.

In most cases, you will need to send a registered letter or raccomandata to your local branch before you show up in person, including signatures from everyone on the account.

And as usual, make sure to read your contract carefully — some banks will even charge a fee to close your account.