Cashback: what it is and how it works

The idea is of Anglo-Saxon origin. The cashback, in fact, in our country is still not widespread and there is a lot of mistrust about its use and its effectiveness.

What is cashback?

The system works as follows: for every purchase made by ATM or credit card (and therefore traceable) you are entitled to a percentage of reimbursement on the expenditure made.

This is a marketing strategy that comes from online and has as its claim that of “earning money by spending”. A kind of after-sales “discount” that comes in the form of a refund. There are online platforms and cashback applications where those who want to, after registration, can make their purchase in stores and retailers.

The retailer then pays a commission to the platform that becomes an intermediary between the user and the retailer and then earns on the income of the merchant.

Cashback to combat tax evasion?

In the last hours, the cashback has returned to be the protagonist because it is a formula that is part of the measures that the government is studying to combat tax evasion and could be introduced into the next Budget Law as a means of refunding VAT paid.

Through cashback, the user who makes a payment by credit or debit card would be refunded the following month of VAT paid.

Whoever buys such a product paying by cash or card pays the same amount, but thanks to the cashback mechanism, those who bought with traceable payments are entitled to a refund equal to the VAT percentage of the product. 

All with the aim of combating tax evasion and discourage the use of cash that favors the black and with this tax avoidance.

POS costs and bank charges

The theme is that if things continue to be this way, those who will pay the greater cost of the Conte bis government’s cash battle will be the merchants forced to pay bank commissions and POS costs.

The Government in this sense is also considering the possibility of eliminating the costs of digital transactions below 5 euros and reduce the costs for those below 25 euros to ensure low costs to those sectors with “low margins” such as, for example, gas stations or kiosks for which the obligation of Pos would represent a serious economic damage.

In general, in fact, the POS has 3 fixed cost items: the one relating to the installation, the one relating to the monthly fee that the operator is required to pay to the bank and the percentage on each transaction. It is a duty that the merchant pays to the credit institution, a sort of hidden tax on his income that weighs in proportion to the size of the transaction: the lower it is the more burdensome for the merchant.

The cashback proposed by the current executive would concern both traders and families and would be introduced in stages starting from the sectors where tax evasion is greatest.

In the form of VAT refund and relief on POS costs, the cashback would enter the Italian economic system with a tense leg with the idea of reducing the black economy and encourage the use of digital payments.

The fear is that of the raising of shields by the credit institutes that on the costs of the POS we eat a lot and that they could see to be subtracted a beautiful slice of earnings.

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