Online Payments Not Ready for Prime Time in Italy

Sometimes, to get a new perspective on your business, it's a good idea to see what others are doing in different parts of the world. You might just appreciate the opportunities you have already and what you have accomplished with your online storefront or brick-and-mortar store. You might even be surprised.

This fall, my wife and I went to Italy for our honeymoon. While we were there, I kept my eyes open in order to get an idea where ecommerce is in this part of Europe. What I discovered was illuminating. Here are three points I learned:

Point 1: Online payments aren't as far along in Italy as in the U.S.
While credit card use is widespread in restaurants and retail stores, many of the small businesses we visited and places where we stayed preferred cash. Even the two hotels where we stayed asked us to pay in cash. While they took our credit card numbers as security, they preferred to get their payment in Euros.

Smaller agriturismos (family farms that rent out rooms and apartments to visitors) only took cash. Kent Benson, who with his wife Michelle owns the Belevedere Bed and Breakfast in Chambons, where we stayed in the Italian Alps, said that fees, taxes, and the continued prevalence of the "black market" are the reasons.

"Italian website mentality is almost 20 years out of step," says Benson. He and his wife moved to Italy from the UK about ten years ago to open their B&B. "Many companies have websites, but they have not got the idea of making online purchase simple and pain-free. On many, once you have selected the product, you then have to go to the bank or post office to send the money and then fax the receipt to them before they send the product. Few businesses accept credit cards generally (although this is slowly changing). This is due to the fact that a credit card payment is traceable and the tax man can get his cut. Italy works on predominantly on the Black market (one of the reasons why its public debt is so large), and so people do not want their financial transactions traced."

Point 2: Payment workarounds keep merchants doing business the old-fashioned way.
In the town of San Miniato in Tuscany, we went on a truffle hunt with Ricardo Nacci and his hunting dog Nebbia. Ricardo and his wife Monica own Tartufi Nacci, which sells truffles as well as truffle-infused products they create such as honey, oil, and liquor.

The family is finding fewer and fewer truffles in the forest with their specially trained dog, Nebbia. They adapt to reduced supplies by selling online and by creating and selling food products created with preserved tuffles such as truffle oil, truffle vinegar, even truffle chocolate.

Their website Tartufi-Nacci.com is pretty sophisticated, with content in three languages. Monica Nacci, whose grandfather started the business, said that approximately 25 percent of her sales come from the Internet. But when you click on the "Store" link and try to buy something, there is no shopping cart, and no checkout method. Those businesses who order pay using Cash on Delivery (COD).

Visa, in a list of domestic fees posted on the Visa Europe website, lists a variety of fees for purchases made using its credit cards. Some fees are charged immediately and some are deferred. The fees charged in Italy for Secure Electronic Commerce transactions are given as Euro 0.10 plus .25 percent of the purchase price in fees charged immediately, and .65 percent of each transaction charged as "credit and deferred debit."

Italian merchants, like others, can sell on eBay and accept credit card payments that way. On eBay's Italian version eBay.it, you do see online payments expedited with PayPal. But for many listings, Italian sellers advertise bank transfer payments in addition to PayPal. Some only take bank transfers.

Even Kent Benson, who says he can accept credit card payments via PayPal, doesn't like to do so because of the fees involved. "Our turnover is not sufficient to cover the costs of credit card service fees that we would incur if we were to have a dedicated account (we only have three rooms for guests)," he explains.

Point 3: Online marketplaces just aren't well known in Italy.
Sites like eCrater are completely free and enable sellers in the U.S. and abroad to accept credit card payments. Other ecommerce services like Jimdo and Ecwid, which I've written about for EcommerceBytes, have offices in Europe or Asia, and Italian sellers can use them, too. But they don't seem to know about these opportunities.

One Italian marketplace, Milan-based Yoox, has its corporate offices in Milan and ships high-quality fashion items around the world from a warehouse in Bologna, Italy. It does "power" storefronts advertising high-quality fashion, but its customers are big, well-known brands like Emporio Armani, Diesel, and Valentino, not individual mom-and-pop sellers.

Claudia Forno, who helps run the family agriturismo where we stayed called I' Suri Agriturismoisuriasti.it, had never heard of Yoox when I mentioned it to her. But she knows how to get exposure for her family business. We found them because they appeared on Google Maps in the Piedmont area of Italy where we were staying. Forno took steps to ensure they appeared in Google Maps, just as any business that depends on location should.

"We put our farm on Google Maps directly from Google's portal, choosing "Business Solutions" and following the online instructions," she explained.

My wife and I are glad she did - otherwise, we probably would never have found them online. But when we arrived, we still kept our credit cards in our wallets and paid with cash.

About the Author
Greg Holden is EcommerceBytes Contributing Editor. He is a journalist and the author of many books, including "Starting an Online Business For Dummies," "Go Google: 20 Ways to Reach More Customers and Build Revenue with Google Business Tools," and several books about eBay, including "How to Do Everything with Your eBay Business," second edition, and "Secrets of the eBay Millionaires, both published by Osborne-McGraw Hill. Find out more on Greg's website, GregHolden.com, which includes his blog, a list of his books, and his fiction and biographical writing.