2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - Italy Country Insights

ITALY INSIGHTS REPORT

 


Italy’s e-commerce activity may be dwarfed by other European countries in J.P. Morgan’s Payments Trends – Global Insights Report series*, but this market should not be overlooked. Ready acceptance of emerging payment options and an outward-looking consumer base willing to spend overseas are helping to make Italy a dynamic and fast-growing sector. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Introduction

 

The Italian e-commerce market is looking to make up for lost time, with the fastest growth forecast out to 2021 of the countries in J.P. Morgan’s Global Payment Insights series.* Politically, however, Italy has experienced a period of uncertainty since the 2018 general election, which has presented consequences for the country’s economy. Italy is forecast to grow by 1.3 percent in 2019.Ongoing risks stem from credit tightening and lower business confidence as a result of financial markets pressure.2

The unemployment rate has fallen to below 10 percent for the first time since early 2012,3 and inflation is rising at a rate of 1.3 percent year-on-year.4 Government debt (around 130 percent of gross domestic product) is a major cause of fragility for the Italian economy.5 Despite some of these opposing factors, e-commerce sales are showing strong growth.6 This rapid expansion may be due, however, to the sector being noticeably small for the size of the overall economy.7

This document is based on projected figures and is subject to change at any time.

A smaller e-commerce market, with big opportunities

 

Italy is a compact but swiftly evolving e-commerce market. Although the country’s online sales account for only four percent of European e-commerce overall,18 it is nevertheless a destination where e-commerce merchants and payment providers can capitalize on opportunities to develop in a rapidly-expanding market. The value of its business to consumer e-commerce sales jumped 17.3 percent in 2017,19 to become a €21.2 billion market.20

This growth is expected to continue at a compound annual growth rate of 14 percent to 2021.21 This double-digit prediction is reflective of a market that has plenty of room for growth, but is also tempered by high levels of unemployment amongst young people and women,22 lower-than-average internet penetration23 and a stagnating economy in late 2018.24 Newcomers to Italian e-commerce should be aware that basket values are currently low – companies must make greater efforts to entice shoppers to spend. Italian consumers spend €1,032 each year online, less than half the European average of €2,186,25 a figure explained by the country’s relatively low acceptance of the internet.

 

Online merchants must tailor sites to a nation still adapting to online shopping 

 

Given the historically low internet penetration and resulting lack of experience with online shopping, it is important that merchants provide Italian language-enabled sites and simple-to-navigate interfaces.26 At 73 percent, Italy’s internet penetration is still far lower than any other country included in J.P. Morgan’s Global Insights Report series,*27 and the state scores poorly (26th out of 29 countries)28 in the European Commission’s Digital Economy and Society Index, which tracks EU member states’ digital competitiveness. EU funds are being used to improve Italy’s digital infrastructure, so connectivity is expected to improve over the coming years.29

There is considerable opportunity in the Italian online shopping market. International e-commerce merchants can benefit from a willingness to make cross-border purchases. With domestic e-commerce still underdeveloped, 40 percent of Italian e-shoppers have made a purchase from overseas in the past year.30

Consumers in their teens and twenties, meanwhile, could be the shoppers to target. Unlike other European countries such as the UK where older demographics are keen internet users and online shoppers, in Italy, internet usage is far higher among younger people and declines with age. Only a third (31 percent) of 65 to 74-year-old Italians uses the internet, compared with 93 percent of 16 to 24-year-olds.31

 

Make fast, tailored delivery a point of difference

 

International e-commerce providers can make gains by providing faster, more tailored delivery options than their domestic competitors. At present, deliveries take three to five days, and the north of the country has stronger levels of logistics capabilities than in the south.32 Domestic delivery firms, including couriers SDA, Bartolini, and state mail service Poste Italiane, currently dominate e-commerce deliveries. The vast majority of business to consumer deliveries are still typically carried out to the buyer’s home address.33 This may change, as Amazon Locker collection points are beginning to appear in supermarkets.34 Couriers, including Fedex and DHL, also now offer an expedited 48-hour delivery service to Italy from the US and other major e-commerce markets,35 but an aversion to high postage costs may be a barrier to its growth.36 Free delivery and returns are important to Italian shoppers,37 so e-commerce merchants and delivery providers should be conscious of these potential high costs to doing business.

The growth of Italy’s business to business e-commerce sector has attracted the attention of numerous retail giants.38 Amazon Business, for example, launched in Italy in 2018, offering a platform for business to business e-commerce, one of only five European markets to have a dedicated Amazon Business site.39

Develop simple, platform-based apps for success

 

The Italian mobile commerce market is growing rapidly, with almost €7 billion of sales.40 This segment is expected to grow at a compound annual growth rate of 28 percent up until 2021,41 when it is forecast to become an €18.8 billion market, driven by increasing mobile commerce usage from Italian consumers within the 35 to 44 age group.42 To put this in perspective, however, over the same period, the UK market is expected to grow to be worth 10 times this amount.43

Despite having less sophisticated internet access than in other European countries, Italians have embraced smartphones, which have a 68.5 percent penetration rate.44 Around a third (33 percent) of Italy’s e-commerce is completed on mobile devices.45 The country’s consumers have shown a willingness to adopt new methods of shopping and the data also demonstrates good conversion rates from browsing to completed sales.

Italians lead e-commerce forerunners (the UK, France and Germany)* for app use, with more transactions competed in-app (54.6 percent) than on browsers (45.4 percent).46 As early adopters, creating app e-commerce sites should be a priority when targeting Italian consumers. Localized and classified ads platform Shpock is a highly popular shopping app in Italy, as are AliExpress, Zalando and Yoox.47 All four facilities act as gateways for international e-commerce merchants to reach the Italian market. This approach has been adopted by the majority of Italian e-commerce merchants, with 57 percent opting to sell via a third-party platform.48

Facebook, meanwhile, is considered the most effective social media channel to reach shoppers, with Instagram also rapidly growing in prominence.49 Snapchat and WeChat score lowest for e-commerce effectiveness.50 E-commerce merchants should ensure they provide strong customer service via social media and carefully monitor these channels. In Italy, there is a strong culture of leaving product reviews on social media or on shopping websites, with 61 percent of consumers stating they have done this.51

Cards and digital wallets are the payment methods of choice

 

At 93.8 percent,52 the percentage of Italians with bank accounts has risen to put the country on a par with France and Spain. Unlike the Spanish, however, Italians appear more wary of holding credit, with debit cards significantly more popular than credit cards, at 0.89 per capita versus 0.20.53 A distrust of electronic forms of cash led the government to back ‘No Cash Day’, an annual event designed to break down distrust of credit and debit payments. Despite these efforts, prepaid cards, where cash is loaded onto generic cards, remains a major feature of the Italian online payments market. Cash payment on delivery also remains prominent, accounting for 8.3 percent of sales,54 but this method is predicted to shrink to 6.5 percent by 2021.55

Cards are currently the most popular way to pay online, accounting for 33.8 percent of online transactions in Italy. However, digital wallets are also popular and currently hold just under a third of the market.56 In fact, digital wallets are used for a higher volume of payments than cards, even if cards account for a higher total transaction value. This suggests that digital wallets are the preferred method for low-value, high-volume online purchases.

Digital wallet growth looks set to receive a further boost with domestic mobile payment services turning their attention to the e-commerce sector. A popular instant person-to-person payment scheme is Jiffy, which has over five million users across Italy.57 Jiffy customers link an international bank account code (IBAN) to their phone number, using their current account or a prepaid card. The system is compliant with the Single Euro Payments Area and uses a deferred net settlement model.58 Jiffy is now being enabled to handle e-commerce payments via mobile phone: Italian debit card network Bancomat is starting to roll out Jiffy e-commerce payments across its 37 million cardholders.59 However, similar schemes have failed in other markets, so it will be interesting to see if this succeeds in Italy.

A market with lower rates of fraud than is perceived

 

Despite consumer concerns around card and banking security, Italy’s e-commerce market is relatively secure. Fraud is actually lower than in the UK, the leading e-commerce market in Europe.60 As card and digital wallet use increases and the revised Payment Services Directive (PSD2) regulations roll out across Italy, consumer confidence should improve as rules tighten around payment security. 3D Secure has been mandated for use in Italy for almost a decade, which will have also contributed towards lower incidences of card fraud.61

There are also domestic schemes designed to build trust in the e-commerce process for Italian shoppers. For example, the Italian Electronic Commerce Association offers a “SonoSicuro” certificate for qualifying members to display on their e-commerce site. The accreditation guarantees that the merchant offers appropriate levels of consumer rights and data protection. E-commerce merchants who fail to meet the standards of the code can be disciplined and publicly disclosed. International retailers could consider joining these schemes to help reassure potential Italian customers.62

Key takeaways

 

  • Italy’s e-commerce sector expanded by 17.3 percent in 2017,63 to become a €21.2 billion market64
  • At 73 percent, Italy’s internet penetration is still far lower than any other country included in J.P. Morgan’s Global Insights Report series*65
  • The Italian mobile commerce market is growing rapidly, with almost €7 billion of sales66
  • Cards are currently the most popular way to pay online, accounting for 33.8 percent of online transactions in Italy67

 

Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

* J.P. Morgan 2019 Payments Trends – Global Insights Report series includes the following European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Spain, Sweden, Switzerland, The Netherlands, UK.

Global Payments Trends Reports

International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s Global Payments Trends Reports aims to offer merchants the knowledge they need for global success through in-depth, country-by-country analysis.

About J.P. Morgan

 

J.P. Morgan offers a full suite of payments services to enable a seamless connection across the payments continuum for clients. We bring our consultative expertise, data-driven insights, and local service around the globe to provide a more unified view of payables, receivables and cash management. Merchant Services is the payment acceptance and merchant acquiring business of JPMorgan Chase & Co. (NYSE: JPM) – a global financial services firm with assets of $2.6 trillion and operations worldwide.i According to The Nilson Report, it is also the top merchant acquirer of e-commerce transactions in Europe.ii

 

i JPMorgan Chase & Co. Q4 2018 Earnings Report 2018.

ii The Nilson Report, #1132 May 2018.

For more information, please contact:

 

Your J.P. Morgan Relationship Manager or visit: https://www.jpmorgan.com/europe/merchant-services/payment-insights

 

Information contained in this document has been prepared by third parties or obtained from sources which are believed to be reliable; but neither Chase Paymentech Europe Limited nor any of its affiliates warrant the completeness or accuracy of the information contained herein. Chase Paymentech Europe Limited and any of its affiliates shall have no liability to the user or to third parties, for the quality, accuracy, timeliness, or for any special, indirect, incidental or consequential damages which may be experienced because of the use of or reliance on the data or statements made available herein. Third party trademarks, brand names, products and services are only referential and Chase Paymentech Europe Limited and its affiliates disclaims any sponsorship, affiliation or endorsement of or by any such third party.

 

Chase Paymentech Europe Limited, trading as J.P. Morgan, is regulated by the Central Bank of Ireland. Registered Office: J.P. Morgan, 200 Capital Dock, 79 Sir John Rogerson’s Quay, Dublin 2 D02 RK57, Ireland. Registered in Ireland with the CRO under the Registration No. 474128.

Directors: Catherine Moore (UK), Carin Bryans, Dara Quinn, Steven Beasty (US), Eilish Finan

Copyright© 2019

Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

2 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

3 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

4 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

5 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

6 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

9 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA, 2017.

10 World Bank Open Data. ‘Italy’. Accessed December 2018.

11 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

13 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

14 E-commerce Foundation, B2C E-commerce Report Italy 2018, 2018.

15  J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Newzoo, 2018.

16 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

17  J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via ECB Statistical Data Warehouse, 2018.

18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

19 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

20 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

21 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

22 OECD.org, 2017. ‘The Pursuit of Gender Equality: An Uphill Battle.’ Accessed November 2018.

23 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Internet Live Stats (2015 & 2016).

24 BBC.co.uk, October 2018. ‘Italy's economy stalls as eurozone slows down.’ Accessed November 2018.

25 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

26 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

27 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Internet Live Stats (2015 & 2016) and E-commerce Foundation, B2C E-commerce Report Italy 2018, 2018.

28 EC.Europa.eu, 2018. ‘The Digital Economy and Society Index (DESI).’ Accessed November 2018.

29 EC.Europa.eu, 2018. ‘Digital Single Market: Country information – Italy.’ Accessed November 2018.

30 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

31 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

32 Webinterpret.com. ‘E-commerce in Italy: the definitive guide.’ Accessed November 2018.

33 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

34GDOWeek.com, September 2017. ‘Negli store Pam Panorama gli Amazon Locker.’ Accessed November 2018.

35 Export.gov, October 2018. ‘Italy – e-commerce.’ Accessed November 2018.

36 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

37 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

38 Export.gov, October 2018. ‘Italy – e-commerce.’ Accessed November 2018.

39 FT.com, June 2018. ‘Amazon Business pushes into Italy and Spain after UK entry.’ Accessed November 2018.

40 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

41 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

42 E-Commerce Foundation, Italy E-commerce Country Report 2017, 2017.

43 E-Commerce Foundation, Italy E-commerce Country Report 2017, 2017.

44 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Newzoo, 2018.

45 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

47 Export.gov, October 2018. ‘Italy – e-commerce.’ Accessed November 2018.

48 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

49 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

50 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

51 E-Commerce Foundation, Italy E-commerce Country Report 2018, 2018.

52 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via WorldBank, 2017.

53 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via ECB Statistical Data Warehouse, 2018.

54 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

55 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

56 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

57 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via BIS & Jiffy, 2016.

58 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via BIS & Jiffy, 2016.

59 Finextra.com, July 2018. ‘Bancomat partners SIA to bring m-payments to millions of Italians.’ Accessed November 2018.

60 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

61 GetElastic.com, March 2011. ‘Who Needs 3D Secure? Verified By Visa and MasterCard SecureCode Examined.’ Accessed February 2019.

62 Sonosicuro.it. ‘SONO SICURO – L'e-commerce intelligente.’ Accessed November 2018.

63 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

64 Obsservatori.net, October 2017. ‘E-commerce B2C in Italia: Servono visione, coraggio e perseveranza.’ Accessed November 2018.

65 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Internet Live Stats (2015 & 2016) and E-commerce Foundation, B2C E-commerce Report Italy 2018, 2018.

66 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

67 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

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