For Italy’s right wing, cash is still king

Pulling out your Apple Pay or debit card for an espresso in Rome will often leave you disappointed. “Solo contanti” they will plead – cash only.

Unlike Scandinavia, Great Britain and the Netherlands, many citizens no longer carry cash, while in Italy having a few euros in your pocket is part of everyday life. Along with Germans and Austrians, Italians are among the most “cash-rich” people in Europe. Cash is a way to pay for your morning cup of coffee, fruits and vegetables at the grocery store, taxis, snacks, and gelato. According to a 2019 study, 86% of transactions at the point of sale were made in cash.

In 2020, the government introduced a new Christmas cashback scheme to encourage people to pay with cards by offering incentives and discounts. The government will refund 10% of card payments up to €150. But just before this year’s holiday, the country’s new hard-right prime minister, Giorgia Meloni, announced a budget that seemed to set Italy back, just as other European countries, including Italians, have embraced card payments, especially contactless. number.

“Cash should be king,” Meloni told the Italians. He proposed that in 2023, businesses would be allowed to refuse digital payments for transactions below €60 without penalty. On top of that, he will increase the current cash payment limit from €2,000 to €5,000.

The European Commission in Brussels immediately refused. Italy’s former government, home to Europe’s biggest black market and shadow economy, has promised Brussels to crack down on tax avoidance and revive its weakened economy under EU directives. In this context, the Commission has given Italy 220 billion euros (about 238 billion dollars) in the coronavirus recovery fund, the largest share in Europe.

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But Meloni was forced to scrap a plan to allow businesses to waive €60 payment card payments after Brussels said Meloni’s plan conflicted with Rome’s pledge to fight tax avoidance.

Meloni plans to keep his promise to raise the total legal limit for cash transactions to €5,000. This is well below the €10,000 cap proposed by the EU Council, but exceeds Italy’s pledge earlier this year to lower the cap to €1,000.

“The world is definitely moving towards a cashless society. Of course,” Spiros Margaris, a Swiss fintech consultant and “futurist” venture capital influencer, told me on Zoom. But he added, “a cashless society is both a curse and a blessing.”

A cashless society effectively ushers in a new era of the shadow economy – one that makes it harder for people to avoid taxes and makes life harder for criminals, traffickers and drug dealers. Denmark is celebrating its first year without a single bank robbery in its history, and the community’s appreciation is growing.

But there are significant disadvantages. A natural disaster or war can quickly disrupt access to electricity and, in turn, reduce our ability to pay our bills. New Yorkers walked miles uptown to get cash after parts of New York City were left without electronic payments after Hurricane Sandy flooded parts of the city. After Hurricane Maria hit Puerto Rico in 2017, the power grid was down for months, so the money economy dominated.

A cashless economy forces more cash transactions off the table, but anti-surveillance advocates argue that a cashless future will allow governments and banks to wield more power than ever before.

“The problem with a cashless society is a surveillance society. In a cashless world, governments, banks and tech companies can not only track what you earn and spend, but also control it in advance,” Silki Carlo, director of UK privacy group Big Brother Watch, wrote in an article. June. Author Brett Scott in Cloudmoney: A Cashless Society “A cashless world is a world where even the smallest payments have to be made through powerful financial institutions, which exposes us to their interests, surveillance, control, and their incompetence.”

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Meloni became a sort of anti-hero in the movement against a cashless future when he declared in November that “cash should be king.” Meloni says he stands up for poor people and small businesses, and against a world where the elderly and homeless are locked out of the digital economy. But his critics argued that he was actually protecting Italy’s vast black money industry.

“Meloni basically likes untraceable cash,” says Mirella Castigli, an Italian author who has written several books on digital privacy. “But it’s not a right to privacy, it’s just another way to wink at tax evaders. It’s anachronistic to say people should go back to where we were years ago.”

Italy’s black market is one of the largest in Europe and accounts for a significant portion of the country’s gross domestic product. Sociologist Marco Omizzolo said Meloni’s proposed cap on cash payments would “worse the situation of migrant workers and lead to greater exploitation”. The higher cash limit means traffickers can keep their transactions on the table, pay people well below minimum wage, and face impunity, he explained.

Many world leaders who disagree with Meloni have vowed to clamp down on their countries’ dark economies by imposing cash limits or withdrawing cash from circulation altogether. In 2016, Indian Prime Minister Narendra Modi announced that 86 percent of the money supply would be phased out of the more expensive 500 and 1,000 rupee notes. The move was aimed at fighting corruption and one minister described it as a “surgical strike” against black money. Meanwhile, Modi told India’s millions who rely on cash that demonetisation would “give you access to the digital world”.

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Digital rights group Privacy International said at the time that the move was intended to “link financial transactions to identities.” Six years later, “cashless India” remains the flagship program of the Indian government and has been hailed by the International Monetary Fund. The opposition, however, points out that the move has failed to eradicate black money and has left the rural poor in particular jobless and caused serious economic hardship. According to a recent survey, more than 75 percent of respondents said they still use cash to buy groceries, eat out, pay for home repairs, deliveries and other services.

While the jury is out on the success of Modi’s demonetisation, the fact remains that card payments are skyrocketing in terms of transaction rates. The Covid restrictions helped push the world towards a cashless future, as support for contactless payments as a way to stop the virus spread had little medical or scientific basis.

“People were more open to digital solutions and digital transformation,” said Swiss fintech consultant Margaris. “Adaptation [to a cashless society] It’s accelerated, and now people just have to absorb it.” In Italy, too, Meloni may inevitably bow out. But meanwhile, he’s scored bunny points for dealing with small businesses and those who see a cashless society as evidence of the concentration of power in the hands of governments, banks and big tech.

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