No sanctions for merchants without POS
Does an Italian retailer without a POS terminal to accept payment cards risk a penalty?
There will be no sanctions for merchants without a POS, as Alessio Villarosa – executive with the Italian Ministry of Economy and Finance – has announced. The rule that mandates penalties for merchants that do not accept payment cards will be blocked from July 2020 until new rules aimed at reducing merchant service charges are set.
The mandatory requirement to accept card payments – which requires a POS terminal – for merchants, artisans and professionals was introduced in Italy with Decree 179 of 2012. Despite the lack of sanctions, POS terminals in Italy increased from 1,584 thousand at the end of 2013 to 2,463 thousand at the end of 2017, an increase of over 55% or more than 9% per year. (Source: Bank of Italy)
Italy: first in Europe for POS terminals
The increase in POS terminals deployed has been significant enough to bring Italy as the country with the highest number of deployed POS terminal in Europe, while in 2013 Italy was behind the UK and France. These figures suggest that regulations that stimulates the adoption of POS terminals are not only sufficient to increase their penetration but also quite effective. There is no evidence of how sanctions may be effective as they have never been mandated; in our opinion sanctions will not be as effective as most would expect.
Obligation to accept electronic payments
We also think that the government’s commitment to mandate acceptance of traceable payments is reasonable, but imposing a specific payment method/instrument is not. Mandating the acceptance of a specific payment method/instrument (i.e. payment cards) does not stimulate competition because the different electronic payment instruments are not treated evenly. Also, stimulating usage of the most popular retail payment method – cards – stimulates further concentration. On the contrary, healthy competition is desirable, and it should be stimulated both by payers – end-customers – who may ask merchants to accept their preferred payment method, and payees that accept payments – merchants – who may tend to prefer to accept payment instruments that require a lower acceptance charge or perceived with more associated benefits including ease of reconciliation, settlement time or integration with online sales. We believe that this change in direction of the regulator is an increase in the uncertainty of the Italian regulatory framework.
The CleverAdvice Team