The Italia Cashless initiative offered an automatic 10% 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. It included a lottery mechanism with prizes for shoppers who total the highest number of transactions. The previous government led by Giuseppe Conte had earmarked 1.75 billion euros for the scheme for 2021 and three billion for the following year.
The ECB had been critical of the scheme and argued the Italian government should have consulted it. On his last day in office at the Executive Board of the ECB, Yves Mersch wrote to the Italian Minister of Economy and Finance on 14 December, emphasizing that “Against this background, the ECB considers that introducing a 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 program for electronic means of payment is disproportionate in the light of the potentially adverse impact on the cash 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 reminded the Italian government of its “obligation to consult the ECB in the future where applicable.”
The Italian Treasury pressed on nonetheless 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 according to Reuters.
The Government of Mario Draghi has scrapped the initiative from the 30th of June, arguing that the policy was poorly designed and favoured richer households with less propensity to spend, reports Reuters. The programme was initially scheduled to last until June 2022.
Furthermore, while the measure was initially aimed at reducing tax evasion, critics have reported that it has encouraged users to divide a single purchase into multiple payments to inflate the number of transactions and reach the threshold for reimbursement. This had forced the government to exclude micro-transactions from the programme.
According to The Local, some 7.85 million people have signed up for the scheme, and 5.89 million have qualified for cashback of up to €150, i.e., less than 10% of the population.
Scrapping the Cashless Italia campaign should certainly be viewed as a positive signal towards a fair and inclusive payments ecosystem. However, Italy – and many other countries – continue to impose limits on cash payments, and the thresholds have been lowered over time. On 1 July 2020, the limit was reduced from €3,000 to €2,000 and is due to be lowered to €1,000 from 1 January 2022. It is high time these limits be dropped as well.
Mario Draghi’s signature is present on billions of The name of the European single currency adopted by the European Council at the meeting held in Madrid on 15-16 December 1995. See ECU. More banknotes as former President of the European Central Bank.