Name
Global FinTech Guide
Country _ Name
Italy
SectionTitle
Payment services
Body
FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.

For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.

Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.

Introduction

Attitude of the country towards modern payment services

In Italy, payment services are experiencing constant growth in recent times, albeit cash remains the most common payment means. The payment services industry continued to gain momentum especially during the lock-down periods in 2020 and 2021 when the volume of online payment transactions reached unprecedented levels. Also, a set of political measures aimed at incentivising the use of electronic and card payments were enacted by the Italian government throughout 2020 and 2021.

Payment services are subject to prior authorisation and regulated by the Bank of Italy.

Legal affairs

Obligations and requirements to provide payment services or ancillary services described above

Payment services can be provided by payment institutions authorised by the Bank of Italy (Banca d’Italia). The authorisation is subject to the conditions listed under Section 114-novies of the Italian Consolidated Banking Law (Legislative Decree no. 385 of September, 1st 1993 as amended – Testo Unico Bancario – TUB) as specified by the regulatory provisions on payment institutions and electronic money institutions issued by the Bank of Italy. Among others, it is required that payment institutions are incorporated either as joint stock company (società per azioni), limited partnership by shares (società in accomandita per azioni), limited liability company (società a responsabilità limitata) or cooperative (società cooperativa) and that they have their registered offices in the Italian territory. Moreover, payment institutions are required to have a minimum initial capital equal to:

  • EUR 20,000 when the payment institution provides only money remittance services;
  • EUR 50,000 when the payment institution provides only services of execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as an intermediary between the payment service user and the supplier of the goods and services; and
  • EUR 125,000 in case the payment institution provides one or more of the other payment services.
Payment institutions may provide a number of ancillary services without the need to obtain an ad hoc authorisation, including granting of credits related to the provided payment services, provision of related or operative services and management of payment systems. Entities normally performing other kinds of business can provide payment services only if authorised by the Bank of Italy. In this case, they shall comply with some specific requirements, including the maintenance of a dedicated asset in relation to the provision of payment services and ancillary services.

Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area

Payment institutions established in another EU Member State can provide payment services in Italy under the
European passport regime by establishing a branch or under the regime of the freedom to provide services in the EU. In this case, the legislation of the home country shall generally apply. In particular, the establishment of a first branch or the provision of services under the regime of the freedom to provide services in the EU must be preceded by a communication to the Bank of Italy submitted by the competent authority of the Member State where the payment institution is established.

The recently enacted rules implementing the EU Directive 2015/2366 on payment services (PSD2) and Regulation 751/2015 on interchange fees for card-based payment transactions (IFR), brought further innovation into the local legal landscape (see Legislative Decree no. 218 of December 15th, 2017 – PSD2 Act).
The PSD2 Act indeed introduced, among others: rules on open banking, new payment services and relevant providers, and stronger means of customer authentication.

The PSD2 Act also set out new rules on payment oversight, mainly related to regulatory reporting duties (e.g. sales and telephone firms are required to file with the Bank of Italy certain data on the payments executed).

Along with the Competent Regulatory Authorities, notably the Bank of Italy, a key role in the local market for payment services marketing and distribution is played by the Body for Credit Broker and Financial Agents (Organismo Mediatori Creditizi e Agenti in Attività Finanziarie – OAM). 

The OAM is a self-governing body ultimately supervised by the Bank of Italy, that sets out specific regulations on the selling of financial services including payment ones and, most recently, also crypto currency and e-wallet services.

Economic conditions

Market size for payment services and biggest payment service providers

According to publicly available sources, at the beginning of 2021, the main payment means in terms of volume are cash (ca. EUR 330 billion) and Point of Sale, (ca. EUR 280 billion). At the beginning of 2021, there were 40 FinTech firms providing payment services in Italy.

As to extraordinary transactions involving payment services providers, a remarkable and strategic merger took place with effect on 1 January 2022. More specifically, SIA, a payment infrastructure who is the biggest player by transaction volume, providing cutting edge services even to the Bank of Italy, was merged into NEXI (formerly CartaSì), a leading payment institution owned by prominent local banking groups and international private equity funds. This transaction created a local “PayTech” champion with more than EUR 2.9 billion in revenue.

Additional comments regarding the economic situation for payment services or what FinTech’s must be aware of in this business area

Interest by local stock exchanges and, broadly, institutional investors, is growing in relation to payment providers.

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