The so-called cashback initiative, launched on 8 December, offers an automatic refund from the state to citizens making in-store purchases with a A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More card or smartphone app, as long as they first See See-through register. More on the national IO app. 7.6 million people downloaded the app on the day of the scheme’s launch. This resulted in technical glitches, with many people complaining they could not activate the IO app. Blaming the huge volume of requests to access the system, the operators admitted some “inefficiencies” but said they were being addressed.
The A service whereby the customer pays electronically a higher amount to a retailer than the value of the purchase for goods and/or services and receives the difference in cash. It is also a reward system associated with credit card usage, whereby the consumer receives a percentage of the amount spent on the credit card. More programme includes purchases made in shops, bars, restaurants as well as from craftsmen, and professionals.” says the website. Online transactions are excluded. Between 8 and 31 December 2020, with the Christmas Extra Cashback programme, consumers will receive a 10% refund up to a maximum of 150 euros on the condition that they make a minimum of 10 purchases with a payment card. After January 1, the maximum reimbursement will be increased to 300 euros per year.
The government has earmarked 1.75 billion euros for the scheme for 2021, and three billion for the following year. It hopes that encouraging people to pay digitally will reduce the chronic tax evasion that costs the public up to 100 billion euros per year according to official estimates.
The ECB has written to the Italian Minister of Economy and Finance on 14 December, emphasizing it “considers that introducing a cashback program for electronic means of payment is disproportionate in the light of the potentially adverse impact on the Money in physical form such as banknotes and coins. More payment system that such a mechanism could have and because it undermines the objective of having a neutral approach to the different means of payment available.”
The ECB also reminds the Italian government of its “obligation to consult the ECB in the future where applicable.” The ECB letter was signed by Yves Mersch, member of the Executive Board and long-time advocate for cash who on the same day ended his mandate on the ECB’s executive board.
Reuters has reported that the Italian Treasury would press on with the plan adding the ECB opinion was not binding. “The formal remarks made by Mersch do not appear to be justified,” the Treasury said.
This initiative is also likely to raise concern from the European Commission, as it appears to create a distortion within the European internal market. Indeed, a taxpayer in Italy would pay a lower end-price for a product or service than a non-resident. In its 2018 report to the European Parliament and the Council, on restrictions on payments in cash, the Commission wrote : “Another important conclusion is that diverging national provisions on payments in cash distort competition in the internal market, leading to potential relocations of businesses across borders, in particular for some specific sectors relying significantly on cash transactions, such as jewellery or car dealers. These diverging national restrictions also potentially create loopholes allowing the bypassing of national cash payment limits, and therefore decreasing their efficiency.”
The commission concluded then: “Finally, it must be observed that restrictions on cash payments is a sensitive issue for European citizens and that many of them view the possibility to pay in cash as a fundamental freedom, which should not be disproportionally restricted.”