Digital payments are growing in Italy: in 2019 the number of transactions rose to 270 billions from 243 billions in 2018 (+ 11%). Use is increasingly linked to daily purchases as evidenced by the growth in per capita transactions (83 in 2019 compared to 71 in the previous year, + 17%) and the drop in the average value of each transaction, around 53.7 euros (about 3 euros less than in 2018). Moreover, 99.7% of the Italian internet population owns at least one card, of which 62% are debit cards and 53% prepaid cards. Moreover, 99.7% of the Italian internet population owns at least one payment card, of which 62% are debit cards and 53% prepaid cards. These are the main results of the 11th edition of the Innovative Payments Observatory of the Milan Polythecnic University (see here the press release). In fact, it is no coincidence that digital payments is one of the most interesting sectors for private equity and venture capital investors (see here a previous article by BeBeez).
Contactless payments also rose: from 40.5 to 63 billion in 2019 (+ 56%), with an average receipt of 42 euros. The contactless now represents 30% of card payments, also thanks to its diffusion of stores, with a penetration of over 50%. Mobile commerce (ie purchases via mobile phone) increased from 9 to 12 billion euros (+ 33%), and now represents 40% of the total e-commerce of 2019. Boom for payments with smartphones in the store: + 244% year on year, driven by the increase in users (from 1 to 3 million people) and by the growth in transactions per person (from 500 to 600 euros).
zAs for mobile payments, they grew from 900 million euros to 1.24 billions (+ 29%). Mobile payment is used in particular to pay for top-ups (41%), bills and bulletins (19%). Like it because it saves time (44%) and comfort (29%). Non-users are held back by habit (36%) and preference for other tools they consider more comfortable (30%). An interesting business opportunity can be seen in the fact that 63% of smart object owners would like them to also make payments: in particular, 30% of them would like to pay for fuel from the car dashboard and 27% would like to buy digital content through smart tv. 46% of smart speaker users used them to shop and 1 in 4 is likely to do so in the future. Companies are starting to move in this direction.
Another good news for digital payments lies in the fact that in the world banks are starting to collaborate with BigTechs, as Ivano Azaro, director of the Innovative Payments Observatory recalled: for example, Google launched Google Cache, i.e. bank accounts managed in collaboration with Citi Group, while Uber offers current accounts for its drivers in collaboration with JP Morgan. The main pushes for collaboration come from: legislation (PSD2 is leading to sharing data and APIs); new players on the market (64% of companies in the sector are new entrants); new enabling technologies (blockchain, AI, instant payment technology); new payment tools (smart objects).
Alessandro Bragatti, head of Ubi Banca’s payment systems, said: “Italy starts from the bottom in digital payments, that its growth rates must not excite us. We need to change pace, culture and habits”. Valeria Portale, mobile manager of the Mobile Payment and Commerce Observatory, stressed in this sense that Italy is still lagging behind in innovative payments compared to other European countries, especially Denmark, Finland and Sweden.
Moreover, Italian banks are still reluctant to exploit the potential of open banking. According to an analysis conducted by the Innovative Payments Observatory with Kantar, most Italian banks offer only the mandatory APIs provided for by the legislation (just compliant); few lenders are specializing in a certain area and only a few are more focused on an open banking paradigm (hub). In the future, to better embrace the potential of collaboration, you will need: open-mindedness, adoption of new tools and use of new technologies.
What impact will coronavirus have on the digital payments industry? Umberto Bertelè, president of the Digital Innovation Observatories, thinks that COVID-19 could accelerate innovative payments, thanks to social distancing and the fact that cash is considered one of the main vehicles of contagion. But he warns: “The greater the duration of the crisis, the greater the impact on market concentration, as the bigger operators will be able to grow more and the smaller ones will exit the market”. And Luca Corti, Mastercard vice president of business development, concluded: “In light of the economic crisis triggered by the coronavirus, “in 2020 we will have to focus only on the important things to do, so it will be crucial to choose the few, given the reduced investments, to avoid a setback also in the digital payments sector”.