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Italy’s struggling economy could lead to increased use of prepaid cards

prepaid-debit-cards2The recent financial crisis and reduced spending by consumers could contribute to a rise in the growth of prepaid cards in Italy, as the cards allow consumers to establish firm spending limits.

While debit cards will likely remain the largest card category in terms of transaction value and volume, credit cards are expected to post negative growth.

The global financial crisis and subsequent austerity measures in Europe have led to a decrease in consumer confidence and a subsequent drop-off in consumer spending.

Italians generally avoid credit, and their conservative spending is likely to result in a decline in credit transactions, which is expected to reduce new credit card issuance and increase prepaid issuance.

The prepaid card category is expected to post a 6.37 percent increase in volume and a 15.03 percent increase in transaction value.

Additionally, the growth of card-based transactions will likely be affected by the Italian treasury’s 1.5 percent cap on merchant service charges, the fees paid to banks by retailers to process a card transaction.

The Italian banking industry has pushed to align the nation’s payment system with Single Euro Payments Area standards, which were made available to the country in January 2008. In April 2011, the Bank of Italy implemented a directive to reduce the number of cash transactions in the country.

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