By Andrea Gnetti, CEO at Excellence Payments
On 23 May, the Bank of Italy published the first of the two annual reports entitled “Payment System”, containing data on the use of payment services and instruments by families and businesses, provided by banking entities and non-banks. As already confirmed by the Innovative Payments Observatory of the Polytechnic University of Milan in March, the growth of transactions with payment cards (debit, credit, prepaid or instruments connected to them) continues, albeit at a slower pace. With approximately 122 million payment cards in circulation, these instruments are consolidating their role as the main alternative to cash. In 2023, payment cards exceeded 65% of total payments made using alternative methods to cash, with a growth of 17% compared to 2022.
The continuing decline in the use of cash contributes to this growth. In 2023, there was a further decline in ATM withdrawals from debit cards which decreased in number of operations and volumes by approximately 1% compared to 2022 (-1.28% of operations and -0.70% of withdrawn volumes).
It is interesting to highlight the important percentage growth of instant SCT (SEPA Credit Transfer) transfers, which in 2023 compared to 2022 was 63% in number and 62% in value and on which we expect significant further future growth also following of the entry of the new regulation in this regard.
Despite the significant growth of recent years, Italy, with 223.3 transactions per capita with payment instruments alternative to cash recorded in 2023, is still far from the Euro area average which in 2022 was equal to 370.2.
In-depth analysis of a market driven by debit cards: numbers and characteristics
On an overall level, transaction volumes recorded a slight slowdown in growth, although remaining consistent, going from +28% in 2021 compared to 2020 (a year marked by the numerous changes brought about by the pandemic) to +12% in 2023 compared to 2022 .
Analyzing payment solutions in detail, 2023 confirms the trend of choosing the debit card as the preferred payment instrument for Italians. This tool generates 58% of the amounts transacted with payment cards, with a growth in volumes of 13% compared to 2022, compared to +8% for credit cards and +11% for prepaid cards.
The debit card is in fact one of the payment instruments that has evolved the most over the years, maintaining convenient cost levels for the end consumer, who tends to prefer it when used. Today, a customer with an international debit card can satisfy almost all payment needs: pay in shops, withdraw from ATMs, pay online, pay subscriptions and, in many cases, even pay expenses in installments with BNPL or revolving credit solutions . All this compared to an average annual expense of €6.55 for customers of traditional banks and €0.43 for customers of online banks, according to the Bank of Italy’s survey on the cost of current accounts for 2022 .
Analyzing the main current accounts of the top 10 Italian banks by number of branches, the debit card is included in the fee for all the players in question and enabled for international circuits in 90% of cases (Excellence Payments Research, May 2024).
The evolution of the debit card and its diffusion, starting from the offers for teenagers, is gradually reducing the perception of the need for a credit card among private customers.
This trend is highlighted in data from the Bank of Italy, where active personal credit cards decreased by 14% in 2023 compared to 2019. The situation is different for active corporate credit cards which are constantly growing. 2023 recorded a 4% increase in active cards compared to 2019. Furthermore, in 2023 they also recorded a significant increase in average spending: company cards spent on average €17,023 in 2023 compared to €15,776 spent in 2022. These trends have led the sector to represent 9% in terms of the number of active credit cards and 20% of their transactions.
The growth of prepaid cards is slowing
2023 marks the lowest growth in the last 10 years in the number of transactions and volumes spent with prepaid cards, which stood at 16% and 11% respectively against an average of the last 10 years of 25% on the number of transactions and 20% on the volumes transacted.
PostePay continues to be the undisputed leader in the sector with a 67% share of card stock in circulation.
Small expenses and small consumption: the growth of operations does not stop, while the growth of volumes for private consumers slows down
An interesting reading of the published data concerns the type of spending on consumer debit cards and credit cards. The average ticket is decreasing for both types of cards analysed: for personal credit cards the reduction settles at -2% (€58.04 in 2023 compared to 2022) and -11% compared to 2019. Also debit cards continue to reduce the average ticket, going from €46.93 in 2022 to €44.28 in 2023. This reduction trend confirms the increasingly widespread adoption of digital payments, even for small amounts.
The growth in average annual spending on cards, however, although it does not appear to be stopping (confirming a greater adoption of payment instruments), has suffered a sharp slowdown. For debt, the average annual spend on cards went from 15% growth in 2022 compared to the previous year to a growth of only 6% in 2023 compared to 2022 (€3,697 in 2023 versus €3,472 in 2022). The trend is also confirmed for personal credit cards, with a growth of 14% in 2022 compared to the previous year, which was reduced to 5% in 2023 (€6,845) compared to 2022 (€6,504).
A challenge for the future of payments
From reading the data published by the Bank of Italy, it is clear that the development trend of the debit card is increasingly eroding alternative products, such as credit cards and prepaid cards. It is therefore necessary for the main players in the payments sector to question themselves on the composition of the future offer to guarantee solid growth in the sector, also focusing on innovations enabled by new technologies.
