Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Nexi third quarter 2020 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, please signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.
Good evening, and welcome to our results communication for the nine months, the first nine months of twenty twenty. I'm here, as usual, with Bernardo Mingrone, our CFO, Stefania Mantegazza, in charge for investor relations, and a few other members of our team. Tonight, we will comment the results for the nine months that we have anticipated earlier in the day. Obviously, we'll be covering the volume dynamics that we have been seeing over the last few months on the back of the COVID emergency. Obviously, we'll talk about the financials for the quarter and the nine months, and obviously, we'll also take Q&A. We'll have a Q&A session. We'll answer your questions as usual.
In our communication earlier today, we've also anticipated the fact that we are progressing our conversations for the possible merger with Nets. We have extended the exclusivity period to Monday in next week. Our conversations are progressing well, but we still need a little bit of time to finalize certain aspects that need to be finalized.
As a consequence, I prefer to anticipate that we will not be able to answer questions on this topic because we really prefer to do it if and when the communication on these possible deal will be complete, and therefore we prefer to have a much deeper conversation, a much richer conversation with all of you once we can provide the full set of information, which is well-deserved, given the importance of this possible deal. So, now moving to results. Before I jump into the content, I think there are two key messages for these results announcement.
The first one is that, as we were navigating through, the different dynamics, of, the COVID emergency, in the third quarter, our results were, I would say, pretty strong. We came back to revenue growth, and also, quite material, I would say, to EBITDA growth. It is also slightly growing, for the year, to date. These results are, a bit better than what, we had expanded, we were expecting, on the back of, better volume trends, but also a few other things that, have been happening, in the period. This is message number one.
The second message, the second comment, has to do a bit more with the dynamics that we have observed so far during the first wave of COVID, and that we believe provides to us two important learnings as we think about this new wave of COVID. The first learning is that the recovery from lockdowns and from, in general, the restrictive measures can be quite rapid, obviously varies by sectors, varies by type of customers, but actually, we've experienced a recovery of volumes that has been actually faster than what we thought. The second, I think, learning is that this normally comes also with a more and more visible shift from cash to digital.
I think from there is a broader shift from physical services to digital services, but digital payments are clearly a part of this, and therefore we see customers on the consumer side more keen to use digital to pay, and merchants on the merchant side also more keen to accept digital payments, given the fact that the benefits are clearer and clearer to both. Now going into the results, page three of the presentation. As we had anticipated throughout the recent period, we've seen a strong recovery from the lockdowns that we experienced in the spring period. From there you remember we were at minus 50% year-on-year in March and April.
From there, as the lockdown measures were released, we saw quite rapid improvement of the situation, with a particular acceleration, I would say, end of July and in August, with the acquiring volumes on Italian cards. It went basically back to pre-COVID growth levels in the month of August. Despite the fact that clearly the travel sector, more in general, was not performing yet in line with last year, and despite the fact that international travelers' contribution, so the inbound business, has been throughout the summer lighter than in the previous years. As far as transaction volumes are concerned, in the quarter, we saw, as a combination of acquiring and issuing, a minus 4% versus the same quarter last year.
Year to date is about a minus 12%, which obviously is affected by the minus 50% that we saw over a couple of months in March and April. So this is a situation basically up until the end of September, beginning of October. Obviously, as in many other countries around the world, probably a bit later than many other countries around the world, in October, we saw the first signals of a progressive slowdown in volumes, starting obviously, again, from the reduction in visitors and in travel activities, entertainment activities, more in general. And clearly, we see this continuing and changing, I would say, on a weekly basis, as the COVID emergency develops and as our government is implementing new restrictions in the country.
If we compare the measures with the measures that we saw in the first wave, they are quite different for a couple of reasons, at least. First of all, this time our government has decided to segment the regions in three tiers: red, orange, and yellow, and you can guess what the colors mean, and this segmentation is something that is evolving, so every week or so, the government will assess the situation in every single region. This will depend, obviously, on the number of cases, but also on the situation with the healthcare system and the ability to support the people that need support.
Even in the case of the red regions that are the most affected, the measures that are being implemented, at least for now, and again, the situation may change, the measures are not directly comparable with the ones that we had in March and April. That is why we're calling here this lockdown a soft lockdown. The government has been more selective, basically, on the back of the learnings from the first round. Just to give you a few examples, basically, all industrial production are running. Obviously, wherever possible, there is, and business-to-business activities are open.
There is a recommendation to do remote working, but the companies, they have not been shut down as it happened in the past, with the exception of companies such as ours, that are necessary because they provide basically the super necessary type of services. Bars and restaurants are closed, but actually, they're open for takeaway and home delivery, which was not the case at the peak of the previous lockdown. If you look at the categories of retailers that are closed again, there are a good number of categories at this time have been allowed to remain open, not only the typical grocery and pharmacy space, but also, for example, sporting goods, or for example, clothing for kids, and a few others.
So, obviously, we need to see how the situation evolves. The impact that we are observing at the moment in our volumes is therefore softer than what we saw in the past, luckily enough. The last data that was available when we did put this communication together was for the week ending on the fourth of November. It was minus 8% year-on-year on acquiring with a clear impact on the higher categories that are travel-related, entertainment-related, hotel, restaurants, cafes, and the usual suspects. Couple of last comments. Throughout, I would say, 2020, so throughout the first phase of COVID, the recovery, and now again, we see a strong growth in the commerce sectors that are not impacted by COVID.
This growth is around 35% in the quarter and year to date as well. While actually, overall, the e-commerce overall performance is impacted by basically the weakness, the visible weakness of the travel-related sectors that in e-commerce as do have a very important, with about 40%. Last but not least, as I've anticipated, we continue to see signals of positive acceleration of the transition from cash to digital transactions. Now, coming on the next page, on page four, on the results. EBITDA for the quarter was up 7% year over year, at around EUR 167 million, and it's up 0.4% for the nine months.
Revenues were also up about 1% in the quarter, at around 276 million EUR, although still a bit below last year, minus 3.6%, take the nine months. Basically, we've been progressing our operational activities, our operations, according to our plans. Merchant Services and Solutions, that is, more than half of our business, so we do see a continued positive growth of POS installations, a clear acceleration in mobile POS to support merchants that want to deliver at home, and in any case, need more flexibility to serve their customers, a step up in e-commerce and in digital services more in general. On current digital payments, we continue to see an accelerated interest, for international debit.
That is, a strong product for e-commerce transactions as well, and more in general, digital life. Now, at the same time, we continue to roll out new capabilities for the national debit scheme, Bancomat, that is, basically, improving rapidly in that sense, as well as we see an acceleration of mobile payments and contactless transactions. As far as Digital Banking Solutions is concerned, around 10% of our revenues, we basically continue to see an extension of our Nexi Open open banking ecosystem, both in terms of banks and third parties coming on board of our products and services, but also in terms of extension of the partnerships.
I think we have today around 25 partnerships, ranging from the larger digital players such as Microsoft to the smaller but fast-growing fintechs, like Meniga or Axyon AI. At the same time, we're also progressing, I would say, very well in the rollout of the more advanced solutions, both in digital corporate banking and corporate payments, more in general, and self-banking. On the cost side, we've done what we had committed to do in terms of trying to balance as much as possible the pressures on revenues, are working even harder on the cost side. If you remember, we've announced our EUR 100 million cash cost containment plan.
Bernardo will give you a more specific update on that one, but the combination of that program together with our usual efficiency work is allowing us to reduce costs year-to-year for the nine months by 8.4%. Last point on our performance, the net financial debt at the end of the period was at 3.7 times EBITDA already improving from what it was at the end of the previous quarter. One last comment before going into the volume dynamics. As you remember, we've announced the possible combination with SIA only a few weeks back.
We are progressing with the work that has to be done on transaction documentation and confirmatory due diligence and we expect to sign the binding documentation over the next couple of months and close with all the necessary authorizations around the third quarter this year. In the meantime, we just communicate the results that have been reported over the last few days by SIA. We'll try to do this as much as possible to start to give you visibility on what the profile of the new Nexi is becoming over time. Also, SIA had good results.
EBITDA growing about 8% year-on-year in the quarter and broadly in line with last year over the nine months, and revenues up 2 percentage points in the quarter and slightly better than last year over the nine months. There is in attachment a page that basically replicates the communication of SIA, and obviously, on their website you can find more information. Now, let me jump into the volumes, page five. This is the usual page that we've seen in the past. This is the combination of acquiring and issuing volumes, seven days rolling numbers represented as a year-on-year change for the rolling week. You remember March, April were around minus 50. You see here quite rapid recovery that we've already commented in July up until the end of July.
Actually, an acceleration beginning of August, in particular, back to growth levels similar to the ones that we had pre-COVID, and now, I would say, especially from August, with international travel starting to have issues, starting to slow down a bit again, and then from October, I would say, a more visible slowdown, and we're now running around minus 8, minus 9% on the back of the new measures that I have described before. The following page, and here we start to try and open up the different elements to try to give you as much insight as possible as we've done in the past. Page six gives you a snapshot, specifically now focusing in acquiring, where we have more detail.
In here, you see, the clear dynamics in between, the national cards, the Italian cards, and for the Italian customers, and how they've been spending, in our merchants, throughout. That's the lighter blue line. But you also see the dynamics that we've observed on the visitors, so the foreign card spending on our merchants, in Italy, and that's the gray line. You see that, as far as, the Italian cards are concerned, they came back to positive already from June, and they've accelerated, in July and August. So we had a good period in August, basically a double digit growth.
That is in line, actually, even better than what it was before, despite, as I said before, some weakness in certain travel sectors, as you can imagine. Then it did slow down a little bit around the 5 to 6%, and we've just seen some slowdown at the end of October, beginning of November. But I would say definitely good resilience of the Italian card consumption. At the same time, you know, the impact of COVID is super visible on visitors and foreign cards, have been going down at minus 95% the peak of lockdown, and then they did start recovering, I would say, slowly, but also consistently. You see, very regularly up until August, where they arrived at a minus 40%.
And then, as the international travel restrictions were going into place and COVID was starting again in some of the most important countries for our tourism, you see that we have seen a further deceleration, and we are now running at the minus 60% to 70% year-over-year. I think it's worth remembering that the weight of visitors is normally important for Nexi and for our country, more in general. And here in the table below, you see what is the weight in terms of total volumes. There's a peak, normally in the summer period, with more than 20% of the volumes coming from visitors. As we go more towards the winter, it's more around 10% to 15%. October was already 15%.
Now, let me give you as usual, a breakdown by sectors. On page seven, we gave you exactly the same snapshot, that we gave you in the past with updated numbers. If you allow me, and it's for your reference, and you have the comparisons with, with the data that you gave in the past. If you allow me, I would comment it on page eight, which is exactly now the same set of information, simply plotted on a graph that, I believe is particularly telling, visually to help you to understand what is happening. Here, again, the blue line is the total acquiring volumes, that we see. The green line is what we call the basic consumption services, and therefore, things such as groceries, medical, retail, utilities, services, and so on.
They are the largest segment, about 35% of our volumes. The gray line is the line on generic and discretionary consumption products and services, clothing, household laundries, beauty, these type of things. And last but not least, the red line is obviously the one on high impact consumption products and services, and mainly services, I would say, like hotel and restaurants, travel, transport, entertainment, bars, and alike. And here you see how visible the dynamics are. The green line has been obviously positive, basically throughout the period since the beginning of the year, and is remaining positive. Actually, over the last few weeks, we've seen a very visible acceleration. We're now running above 20% year-on-year growth.
Obviously, this is also a little bit driven by the fact that as the restaurants shut down, probably you buy more food to eat at home. But honestly, the speed of growth at the moment is so visible that I think there are good reasons to believe that there is a shift from cash to digital payments that is happening here. The gray line is probably the most telling, and the one that is the most correlated with the lockdown measures. You see that as the shops were closed in March and April, it was minus 80% to minus 90%.
As the shops did reopen in mid-May, you see a rapid acceleration back to a better space, then a slow recovery, and it went back to positive in August. And now, more recently, they started to suffer a bit more. Here, it is interesting because when you look at it under the more detailed sector, there is one sector that is suffering the most, it is clothing. That, as you can imagine, is also a little bit messed up with different seasons and fashion specific dynamics here, while I would say the majority of the other sectors are still in a positive territory, and last but not least, the red line is self-explanatory. Obviously, with lockdown, it was minus 90%.
Then, again, a gradual recovery here. There is a sector where you have the highest impact of foreign cards and visitors. They did recover up until August, close to positive in August. Actually, if you take Italian cards in August, it was quite positive. Restaurants, hotels, the most of the categories went back into positive for Italian cards. So there is a minus only because of the impact of the missing 40% of visitors. And then actually, as the new measures went into place, you see that the degradation started, and we're now running at about minus 40, minus 50 compared to last year.
So these are the dynamics, I think, that are explaining what is happening here more than any other detail or comment. Page nine, before going into results, a quick update on what we are progressing on our commercial activities with a little bit more focus on the ones that are related to the current situation on Merchant Services and Solutions. We see a continued positive growth on POS installations with new terminals or new merchants coming in. Mobile POS, as I said, is a good solution, which is having a lot of success in this period, given the environment. Continued progress on e-commerce and continued progress more in general on all digital properties, including the Nexi Business app, which is our business intelligence app.
As far as Cards & Digital Payments are concerned, good acceleration in international debit, continued evolution of the capability of the national debit products, and accelerated, I would say, pipeline of digital projects, more in general, with most of the banks. Here, may be interesting to underline the fact that mobile payments, year-on-year in the third quarter, we saw basically the volume tripling, so plus 190% versus the same period the previous year. And we see a continuous acceleration in the use of contactless from 38% pre-lockdown to 45%, these days. As far as Digital Banking Solutions is concerned, last but not least, as mentioned, we see progress on, I would say, in particular, most of the digital front. One last comment on the government initiatives.
You remember that in December last year, the government decided to implement a list of measures, and five are the key ones to support the transition from cash to digital payments. Obviously, they're doing it with a double objective, accelerate the modernization of the country, more in general, digitization of the country, first and depending on the benefit that this creates for citizens and enterprises and public administration in the entire country. At the same time, clearly, the government sees this as a way to reduce the impact of the black economy, and therefore create through the creation of more transparency in transactions. Three out of the five measures already went into place. There were two last measures that were postponed.
They were supposed to be implemented in the summer. The government, I would say, for very good reasons, decided to postpone them, and now they should go in place at the beginning of the new year. The two measures are the following. Let me start from the second one here. In January, we should see the beginning of the lottery on receipts. Basically, on a periodical basis, there will be lotteries with prizes, and most of the prizes, about 40 million, will be for people that are paying with digital payment methods, obviously cards being the main one, and that should go in place in January. The one instead that may be starting earlier, in December, at least with a test, is actually the cashback mechanism.
Now the mechanics are fairly well defined. It works as follows: for every purchase that you do in physical retail, so e-commerce is excluded, you will be receiving a cashback on a periodical period. So they've split the period in six months. At the end of the period, you will receive a cashback of about 10%, up to 10% of how much you spent. There is a cap for this, that is around 150 EUR per period. There is also a cap for each eligible transaction, up to 150 EUR.
And it's a clear incentive to use the card as much as possible, because definitely you need to use the card at least 50 times in the period before you're eligible for this cashback. And clearly, the mechanics are well designed to promote, not to just using the card once to buy something expensive, but actually the other way around, use the card as many times as you can for your daily life. And clearly, this is going in the direction of basically making digital payments normal as an everyday payment tool. The budget for this is quite important for the period December 2020 to 2021. It is gonna be about EUR 1.7 to EUR 1.75 billion.
The period of December is gonna be probably a bit more of a trial, if confirmed, because we're talking about only about a few millions, but then it's gonna be big next year. At the moment, there are budgeted an extra EUR 3 billion for 2022. Let me stop here and hand the floor to Bernardo that will take us through the.
Thanks, Paolo, and good afternoon to everyone. Moving on to slide 11, where we summarize the group results. I think we had a very strong set of third quarter results that highlight the great resilience of our business as it emerged from the discussion Paolo had with regards to, you know, the volumes and Nexi's operations during such difficult times. I think it has also highlighted the high level of elasticity of our business, how quickly we are capable of recovering following the trough we experienced during the lockdown months in the spring.
We have had a number of data points which suggest that there is a much higher propensity to pay by cards than with cash than in the past, and a higher growth rate in terms of penetration. This is translated, as you can see in the charts on page 11, to a growth of revenues in the third quarter of 1%, closing the quarter at EUR 276 million. Revenues have been growing within the quarter already since August, and this is five months ahead of what we had originally estimated to be a return to growth in revenues. When we discussed first half results back in July, we had indicated that we'd expect revenues to start growing on a year-on-year basis towards the end of the year, December.
This started earlier, thanks to the recovery in volumes that we were discussing just a short while ago. Even in terms of the nine-month figures, you can see revenues are down 3.6%, and this is at the lower end of the range we had identified back in July, which was to have revenues decline in the mid-single digit area. With regards to EBITDA, clearly we benefit from the uplift of performance coming from the cost management initiatives we have discussed with a number of you and back at the time of the announcement in the first quarter, and again in July. 7% growth in EBITDA, closing the quarter at 167 million EUR, which is obviously a good result for us.
If we look at the full year performance or the year-to-date performance, the third quarter, so the nine months to 30th of September, we also have a return to growth of the overall EBITDA, closing the nine months with 429 million EUR of EBITDA, and an EBITDA margin which is accreted by about 200 basis points from 55% to 57%. Moving on to the divisional performance. On slide 12, we have Merchant Services and Solutions. As you can see, volumes here performed, you know, they performed well compared to the prior two quarters, ahead of schedule, as for the rest of the business as well.
I think it's important to highlight how notwithstanding the improvement in the pickup in volumes, we still suffered from a low level of foreign travelers, particularly from outside the EEA, which impacted the acquiring volumes, and also helped us from a business mix perspective defend the revenues. Because the lower the profitability of domestic card transactions on the acquiring side are more profitable, which is a silver lining of this lower level of volumes. We also have had the benefit of the protection mechanism built into the acquisition of the book from Intesa, which helped us smooth the impact of the different volumes in the first part of the year.
And another, I would say another positive mix effect in the third quarter, which is as we had the relaxation of the lockdown measures at the end of the spring, beginning of the summer. We had a larger proportion of transacting merchants, which are SME merchants, which have inherently a higher profitability for us, compared to the larger customers, which were transacting during the lockdown period. So this helped us perform well in terms of revenues. You can see in the quarter, acquiring revenues were up 3%, EUR 251 million. And there's a slight disconnect with regards to the volumes, which are down 4.8% in the third quarter, if you look at international schemes, and down 13% for the whole year.
The level of installations was also up during the summer months ahead of what we had planned. And we have strong growth in e-commerce. If you look at the e-commerce, which was not affected by lockdowns, so excluding travel, tourism, which tends to be mostly e-commerce related, we've got 35% year-on-year growth. Which is significantly higher than what we're used to experiencing in these sectors, closer to around 20%. Moving on to issuing on slide 13. Here we have better performance in terms of volumes, and this is not a surprise, given the fact that issuing is not impacted by foreign travelers not being able to come to Italy. And it benefits from Italian cards transacting online on platforms where we're not acquirers.
Now, here, conversely, to the acquiring side, the fact that Italians not traveling abroad and not transacting with Italian cards abroad, that lack of transaction volume impacts us negatively on the performance of revenues, because they're higher profitability transactions for us. So we have a slightly different trend, where volumes were up 3.7%, if you look at the third quarter of 2020, in terms of managed transactions, plus 0.4%, if you look at the value of transactions in the third quarter, but revenues were slightly down 2.1%. This was also impacted by recovering volumes of the slightly higher mix of domestic debit transactions compared to international schemes. Again, those, from a business mix perspective, are slightly less profitable for us than international scheme transactions.
But all in, I would say, a solid quarter in terms of revenues, for Cards & Digital Payments, similarly to merchant services and solutions. With regards to DBS, now, DBS is not surprising, is the least impacted by COVID, given its greatest reliance on install base revenue. We have substantially flat performance. I would say we have growth in the quarter, 1.5% growth in terms of revenues, 29 million EUR, slightly down year to date, -1%. Better than merchant services and cards, as I was mentioning.
I'd say we're impacted to the extent that there was less work done on ATMs and other activities which required field work due to the you know the restrictions which were still in place to a certain extent during the summer months. But this didn't stop us from working, as Paul was mentioning, on the digital side of things in a number of areas, including open banking, where significant process was made progress was made during the quarter. Moving on to costs. On slide 15, we can see that we have successfully reduced costs on a year-to-date basis by north of 8%. In the quarter, down 7%. If you look at HR costs are down 8%, and non-HR, 6%.
On the non-HR front, I would highlight how the greater volumes we were speaking of earlier have hit us negatively on the cost reduction front. The greater volumes mean greater processing costs or payments made to our processing partners. These are obviously, I would say, good costs to be had, because they contribute revenues. And obviously, we, you know, notwithstanding this high level of volume-related costs, we remain committed to delivering on our 100 million EUR of overall cash cost containment plan.
The other thing with regards to cost that is worth highlighting is that, we had a bit of a, you know, we kind of changed the mix of our cost-saving initiatives during the course of the year, I would say, as things evolved. Basically, you know, making sure that we would, you know, we were reactive to opportunities or reactive to client needs. So we ended up spending a little more than we expected on the CapEx front, in particular, to support certain initiatives around online, on omni-channel, around certain initiatives which are in our mind, particularly relevant during these COVID-related times.
Obviously remained, as I was mentioning earlier, committed to finding savings elsewhere in order to fund this changed mix. We can see this on slide 16, where we talk about the progress we're making in achieving the 100 million net cost results, where we are absolutely on target to deliver the full savings. As I said, the mix might be slightly different, slightly less savings, I would say, on the CapEx front, slightly more on transformation costs or discretionary spend. Overall, I would say the degree of achievement is pretty much in line with what you'd expect. We're two quarters in out of three. We announced these measures during April or actually the beginning of May, during the discussion on first quarter results.
So we've had since April to work on these cost containment measures. We're now two quarters in out of three, and we are more or less two-thirds of the way there. We're ahead on discretionary spend, I say, as I mentioned, you know, this kind of compensates the lower level of achievement on CapEx, which is kind of a planned and an intended mix change in order to continue our focus on all those investments, as we highlight on this slide, and key initiatives which are structural for us and will grow and will basically in future scope growth and efficiency. So again, you know, there's no concern with regards to achieving these targets for the full year.
I'll end on the financial section with a word on our strong cash position. As you can see, leverage has come down to 3.7 times, as EBITDA has grown and cash generation has helped reduce the net debt position. This is down from four times at the half year mark. If we just assume similar kind of cash generation in the fourth quarter, you'll see will be towards the 3.5 times leverage, which is where we, you know, expect to be, given the targets we set ourselves when we IPO'd a year and a half ago. I think also the mix of cash and cash equivalents is improving.
On the cash equivalents side, we have received, you know, unrestricted Visa shares at the end of September, which we're in the process of trying to sell. We need to obtain certain documents before we can do so, but those will be transformed into pure cash during the course of the coming weeks. So having said that, Paolo, I would hand the floor back to you to conclude.
Yes. Thank you, Bernardo. Let me just go back to what we said in the past around the outlook for the year. As you remember, we have suspended our guidance back in spring on the back of the arrival of COVID, and clearly it is a good thing because given the dynamics are still changing on a weekly or monthly basis is really difficult to have a precise view of the short term, at least. In July with the half results, we said, however, that we had a certain ambition for the year, obviously depending on the evolution of the pandemic, the speed of recovery, the dynamics by sector and all of that. We basically said two things, two major things.
Number one, that we were expecting a possible return to revenue growth by year-end. And second, we said that, if that was happening, we were still targeting an EBITDA for the year around the same level of the EBITDA of last year, around 600 million EUR, actually slightly above last year, including the organic impact of the Intesa book acquisition. And as a consequence of all the work we're doing on cost and CapEx as well, we're expecting an increase in our EBITDA minus CapEx, with and without the contribution of the Intesa book. The only comments that we can make is basically on progress versus this this ambition. As you've seen, we are already back to positive growth in the third quarter.
Actually, we're positive in two months of the third quarter, both-
August.
In August and September. And this is clearly ahead of our plan when we did say that we were considering a possible return to revenue growth by year-end. Actually, our simulations were seeing a positive number more around November, December, and now it has happened in July and August already. However, as you can imagine, it's now a bit more difficult to say what will happen in the third quarter, because it will depend on the evolution of the pandemic, and most importantly, the evolution of the measures that are going into place.
As you may have read on the presentation, the measures that are in place at the moment are in place for the next couple of weeks, and the government will decide if and how to extend them, intensify or actually soften them, based on the region, based on the situation, and so on, so forth. So it's really difficult to have a precise view of for the next couple of months. Similarly, on EBITDA, actually, EBITDA was already back to growth in the quarter, but was already back to growth year to date, which is actually, again, earlier than what we were expecting.
Clearly, the dynamic for the next quarter will be mainly impacted by the evolution, again, of the situation and, in particular, through the impact that this will have on the revenues, while we'll keep on obviously executing our cost containment plan. So let me stop here, and before taking your questions, let me just remind the two key messages that we wanted to make sure that we remain with you from this call. Number one, performance for the quarter better than expected on the back of better volumes and a few other things. Second key message, let's keep in mind the learnings from the first round of COVID. There are two key learnings.
First one is that volumes can go down faster, but they can also recover faster, especially in many sectors. Second, lesson is one around the fact that now the shift from cash to digital in our country is not only happening, but it's actually happening at a faster pace than what normally would have happened. Let me pause here and take your questions again. Unfortunately, it is sad for us to say this, because we always like to take any questions from you, but we will not be able to take tonight questions on the Nets possible deal.
Excuse me, this is the global conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one from their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Hannes Leitner with UBS. Please go ahead.
Yes, good evening. Thank you for letting me on. Congrats to the results. In regards to your performance being slightly ahead of your expectations in EBITDA growth, driven by the cost containment program, should we expect that you basically start to spend a little bit more in Q4, or is this a little bit to just offset now the second lockdown? That's the first question, and then the second one is on the SIA business. Do you expect them to report also a similar Q4, which would then potentially drive them to EBITDA growth for the full year? And then the last one is just looking for your 2021 performance.
Do you expect that this continues now? What is roughly the growth rate of the core business of Nexi you would expect next year?
Thank you, Hannes, for the three questions. Let me try to answer them in order. Spending more on the last quarter. Honestly, we always try to spend exactly what is needed for the business, and therefore, we continue to implement our cost plans. We don't. We will not spend things on things that are unnecessary just because we are ahead of the plan on the third quarter, and by the way, now we have in front of us no uncertainty on the volumes for the last quarter, so we'll keep on running with our plans. Again, as we said in the past, whenever we see clear opportunities, I mean, our business is a growing, is a growth business, you know?
And therefore, wherever we see opportunities for growth that require us to spend a bit of money, even if I'm planned in the short term, we just go for it. We'll be around differently. Whenever I look at the quarter at the end of the story, but obviously for us, delivering consistently what we tell you is super important, super important, but despite that, we always keep a longer term view on everything we do. SIA fourth quarter result, honestly, it's a bit early for us to comment on a company that is an independent company. So honestly, we don't know. I think the results that they reported are very encouraging, and we should congratulate them for these results.
I cannot really comment on what will happen for them in the fourth quarter. Clearly, these results are showing a good both resilience of the top line and important work being done on the cost side as well. On your last question around 2021 performance, honestly, I mean, obviously we are preparing our budgets. We already have our budget ready for next year, but now we start doing simulations on the back of the COVID situation. I think again it will be affected by clearly how longer the potential COVID situation will be.
The news we all received on vaccine readiness are obviously very encouraging, but I think it's really too early to talk about next year. Obviously, also on the back of that performance this year, unless, you know, the situation on COVID that continues for a long time in the year, we expect that year to be a growth year. That's definitely what we are working on. That's definitely what is in our plans, but it's clearly too early to talk about more precise indications.
Very clear. Thank you.
The next question is from James Goodman with Barclays. Please go ahead.
Good evening. Thank you. I'll hold back questions on Nets as you ask, but one thing I think I'm allowed to just ask you is whether we should infer anything at all, just from the extension to the negotiation period. I mean, you've already announced preliminary terms. I just want to ask you really, whether there's a negotiation ongoing around any aspects of the deal, or whether we're really here just talking about, you know, the progression of the sort of legal aspects of the transaction. Then a couple of quick ones on the quarter, please. The first one just on the like-for-like performance, back to growth was very encouraging. Presumably, Intesa was supportive to that.
Just wondering if you can give us the organic Nexi performance, excluding Intesa, either for the merchant services business or the overall. And finally, appreciate that you, there's a lot of uncertainty in terms of the volume and top line development into 2021. Can you help us at all with the budgeting around the OpEx into 2021? It's hard to know how much of the cost containment plan on OpEx comes back next year, and to reconcile that with the ongoing cost containment within Nexi. So anything you can say on scenarios around OpEx in 2021 would be helpful. Thank you.
I'll let Bernardo cover the second and the third. Let me briefly comment on your first point. The fact that we are extending the exclusivity period by a few days, I believe means two things: number one is that we are progressing, and we are very keen to make it happen on both sides. And second, that there is still a few things that need to be finalized before being able, hopefully to close the deal. Bernardo?
Hi, James. On Intesa contribution, Intesa contribution is obviously positive. It's a great, you know, great quality book we bought, and therefore it helped, you know, stimulate growth during the whole course of the year. With regards to the protection mechanism I was referring to earlier, this didn't really kick in in the third quarter. It was more commonly related to the full nine months, where obviously in the lockdown months in the spring, this actually helped.
So with regards to OpEx for 2021. And by the way, going back to Hannes's point earlier, obviously, you know, you know, we are we, we're going to deliver the 100 million EUR, you know, protection of our P&L and cash flow during the course of the year, which doesn't mean the costs in the fourth quarter this year are not gonna be higher than the third quarter, and the costs in the third quarter were higher than the second quarter, and so on and so forth. It's a growing business. Every quarter we have higher revenues and higher costs, but ultimately, if you look at it on a year-on-year basis, that's where you get the savings, just to be perfectly clear. With regards to next year, I think we've discussed this a number of times before.
Most of these costs that we are cutting this year are gonna come back next year. You know, a lot of them are related to our discretionary and related to activities that we chose not to carry out because the market was not, sorry, conducive to them. Some of them were automatic reductions tied to, you know, lower performance. So if I think of Paolo and the ExCo, we're not gonna be receiving variable compensation this year because we're gonna miss our budgeted target for EBITDA. You know, we're paying less on processing costs as volumes have come down. All of these things, hopefully, at least with regards to variable compensation, will come back next year if we hit our budget target for next year. But a lot of them...
I mean, some things will stay. I mean, travel, we're unlikely to spend as much as we used to, on travel, you know? You know, we had a virtual bank convention this year, which was cheaper than hosting a live event. Hopefully next year, if COVID has been dealt with, we will go back to spending that kind of money in marketing, et cetera. Most of these will come back. Now, we remain wedded to making sure that our costs never go back to where they were, thanks to the investment we're making in IT and internalizing certain costs which are outsourced.
You know, even though year-on-year costs will rise again, hopefully volumes will rise much more than proportionately, and we'll still have costs which are below or around, I would say, the 2019 levels at most next year.
Okay. Thank you.
Thanks.
Let me just, before we take next question, underline again the point around Intesa, good contribution, while in the first and second quarter, that protection had a role in our performance. In the third quarter, basically, it had zero role. So our role is not impacted by that protection. This means that also that component of the business has been growing organically, well. Yeah, that's clear. Thank you.
The next question is from Mohammed Moawalla with Goldman Sachs. Please go ahead.
Great. Thank you very much, and good evening, Paolo, Bernardo. Couple of questions from my end. Firstly, just, on that sort of as you go into Q4 next year, obviously, you're not sort of... Can I just confirm that you said that even if we sort of exclude some of the guarantees you had on Intesa, the underlying merchant business still grew positively? And then as we go into Q4, your visibility, I know that there are many moving parts here, but your kind of ambition would be to sort of deliver close to kind of positive growth in Q4. And then as we move into 2021, I mean, some of the regulatory or the government initiatives you talked about, Paolo, could potentially act as further tailwind.
So how should we think of kind of the shape of the growth, and how much incremental growth could these initiatives add in terms of the kind of trend line growth that you expected that was gonna be more high single digit in a normal year? It could obviously grow faster than that, but are these on top or already built into some of your midterm projections?
Good evening, Mo, and thank you for the question. Listen, on fourth quarter, it's difficult for me to add on what I said before, you know, and this is a little bit dependent on the dynamics around the merchant book of Intesa that is actually performing very well. It really has to do with the evolution of the pandemic, and therefore it is impossible to speculate now what will happen in the fourth quarter. You've seen the volumes, you know that we are fairly resilient to volumes because half of our revenues, a bit more than half of our revenues, are more dependent on the store base.
The store base dynamics are okay, you know, and therefore, you should not expect major shifts, you know? But it's difficult to say if, you know, the growth that we've seen in August and in September will continue, given the environment out there. So I really cannot add a lot on projections for Q4. I personally believe that a key element will be what will happen, obviously, in the Christmas season. That is so important for all merchant categories, and if and how those categories will be affected by lockdowns in that period. The second, on your second question-
Listen, I think, I mean, the government initiatives, when they were conceived, at the end of last year, they were more focused on promoting digital payments. My point of view is that, especially the cashback, is now intended basically to promote consumption, to basically incentivize people to go and in-store and buy in-store to basically create momentum and support the relaunching of the economy. Obviously, there's a side effect that is the digital payments, and therefore, this could have a positive impact there.
As far as the outlook for next year is concerned, again, it will totally depend in the first part of the year, at least, on what will happen with COVID. But you know, I think we have seen an underlying acceleration of digital payments. I think in the past, we've commented that, cutting through a lot of analysis, advanced analytics outcomes, and stuff like that, if you really want to cut a long story short, our perception is that, this year, probably the penetration of digital payments that normally would grow one to two percentage points is actually growing more or less 50 to 100% more than that.
So kind of a two-speed underlying it. So hopefully that will support a good year next year again if we put COVID aside, and then on the effect of the government initiatives, I think it will very much depend on the communication effort and the support that this communication will provide. We understand that the government is very committed to these initiatives, again, for the benefit they expect not only the modernization of the country to have, but also the acceleration of, in general, consumption, therefore, the support of the economy and to the smaller merchants in particular. The impact will very much depend, again, on the effectiveness of this communication.
Obviously, from our side, we're already ready to support these efforts in all possible manners, both on the consumer side and on the merchant side.
Okay. That's great. Thank you very much. The next question is from Stéphane Houri with Oddo. Please go ahead.
Yes, hello. Good evening. I have two questions, if I may, not on the quarter, my questions have already been asked, but on the SIA deal, if you can share with us your thoughts after a few weeks of really looking inside the company, if you could, you know, there have been some questions in the market about the competition authorities, if you know, you're not going to be asked to do some effort. If you have more visibility on the competitive issue of the addition of the two companies. That's the first question.
And the second question, I know you said you don't want to talk about Nets, but there is a recurring question that we also have, is about your ability to conduct two deals of such a size at the same time. So if you could just share with us your thoughts about how you're going to organize yourself, you know, to make it happen smoothly. Thank you very much.
Good evening, Stéphane. Listen, on SIA, I can only repeat what I said in the past. We've done as much homework as possible around the analysis on the antitrust aspects of this transaction. And the reason why we are moving ahead with this transaction is because we believe this is compatible with the rules. Obviously, you know, I mean, we will have conversations. We already started to have conversations in some ways with the competition authorities that remain the ultimate judges of all of this, and it's impossible to have a precise early on understanding on the outcomes here.
I can only repeat what I said in the past, you need to look at the activities of the two companies in terms of vertical markets, not just in terms of payments in general. The markets that I think today the European competition authority is segmenting the payment space in at about 20. I'm not talking about geographical markets, I'm talking about vertical markets, about 20 already, and therefore, you need to segment all these businesses, and then you need to look at the overlaps, the potential overlaps in each one of these. And the reality is that the majority of these markets are already defined or are becoming more and more pan-European, you know?
And this is when you get this granularity and understand that actually we have quite different roles in the value chain, as more on the products, they are more on the platforms and processing. You realize that the picture is quite different, and this is the basis on which we have decided to move ahead, and we believe this is compatible.
On your second point, around the ability to execute, I would really prefer to discuss this if and when we get there, because I think that before having that conversation, it's really important to share with you where we see the synergies coming from, you know, how we think we can address and face them, and so on and so forth. So I think it's important to have that conversation in the context of a much richer set of information made available to you. Okay, great. Yeah, thank you very much.
The next question is from Adithya Metuku with BAML. Please go ahead.
Yeah, good afternoon, guys, or good evening, rather. Just three questions. Firstly, just on this 10% cashback measure that's being put in place by the government, it seems to me like this could be a pretty big deal, and even a bigger deal than the economic reopening as we go into 2021. Firstly, would you agree with this point of view? And secondly, you said earlier that the impact of these measures would depend on communication, but I really struggle to see why somebody, you know, wouldn't want to get 10% off their purchases. Are there any other reasons that we need to be aware of that could cause these measures to fail in driving adoption of digital payments as you look into 2021? That's my first question, and then I've got a couple of follow-ups.
Good evening, Adithya. Well, listen, I agree with you that a 10% cashback is a no-brainer. That's the way I would simplify it. Then I think it's, and it's a little bit of a rule of marketing. I mean, people, in order to get it, they need to subscribe. They need to subscribe on an app or on the issuer digital properties, and therefore, there must be a voluntary action to do it, you know? And marketing tells you that sometimes people don't pay too much attention to the messages they're receiving, and therefore, communication is key.
Even things that seems to be totally obvious and no-brainers sometimes don't happen because people still don't simply realize them, they don't know them, they're not aware of them, and they don't take action to make it happen. I think the size of the incentive is important, so that's the reason why I think that if people are aware, it's a complete no-brainer to participate, and because there is nothing to lose, there is only to gain. But again, I think communication is gonna be important. That's the reason why not only the government is, as far as we understand, planning to do important things in this space, but we will also try to help as much as possible.
Understood. And just a couple of follow-ups, just maybe one for Bernardo. When I look at the acceptance rates, I think you made a comment in one of the slides that the take rates are higher on Italian cards than they are on foreign cards. So could you shed some light on what sort of magnitude difference are we talking about? And then finally, just a question on Nets. You know, I know you can't say much, but you know, one of the misconceptions that seems to be in the market is that Nets is a low-growth company, and I just wondered if you're planning on presenting any financials on a pro forma basis with sharing the historical growth with the current perimeter, as you know, the company you will be acquiring.
Any thoughts around that would be helpful. Thank you.
Adithya, let me just take briefly the second one. Obviously, yes. Obviously, yes, I think there are already information available on their website. But, obviously, we will share with you our views. Let me pass the call to Bernardo.
So the difference is that, clearly, extra-EEA interchange is much higher than it is here in Europe, where it's capped at 30 basis points on international schemes. And, our interchange, our merchant fees don't always reflect the full difference in the interchange fee, which is paid to a U.S. issuer, for instance. The order of magnitude, therefore, can be several tens of basis points. It really, you know, depends per merchant, but it can be material. Obviously, I mean. So, you know, the way it works is, you know, you charge the merchant fee to the merchant. If it's a U.S. issuer, you take off the interchange fee paid to the U.S.
If it's a domestic issuer, you take off thirty basis points, and given that we're not issuers in the U.S., we lose that interchange fee, all in. So having a domestic transaction is better for us than having a foreign transaction. Unfortunately, the overall volume effect is overwhelming, and compared to this mix effect, it's, it trumps it. So, it's kind of silver lining. You know, lower volumes is bad, but within these lower volumes, the mix effect is positive.
Understood. Thank you.
The next question is from Sébastien Sztabowicz with Kepler Cheuvreux. Please go ahead.
Yeah, hello, everyone, and thanks for taking the question. The Italian government seems to be looking to increase the contactless payment limits to around EUR 50, if I'm right. Is it something that could give a clear boost to the card penetration in Italy in the coming months? And also, regarding contactless, do you have any data points regarding the usage of contactless payment in Italy since the beginning of the year? Would be quite helpful. And also, on Q3, can you share with us the level of free cash flow generation that you recorded in Q3? And also, where do you see your CapEx ending in 2020, based on the cost containment plan that is ongoing? Thank you.
So I'll let Bernardo handle your second and third questions, reminding that normally we don't communicate progress on CapEx on the quarter, on first quarter and second and third quarter, but only on full year and half year results. But I'm sure Bernardo can give you some indication, some high-level indication. Listen, on contactless, contactless is important. I think it's important. I think it's we realize it with our own experience, by the way, also mobile is important. And I think if anything, when we compare like-for-like customers, the frequency of usage for customers that migrate from mobile accelerates a lot, as much as the ones that when you go move from from.
F rom normal payments into contactless. Yes, the limits, the threshold for these transactions will be increased to EUR 50. This is under implementation already, so will happen at some point early next year. Just as a reminder, it's already possible, obviously, to pay contactless above the current limits, but you are requested to sign. So the difference is that what will be increased is the limit under which you don't even need to sign. And clearly, it's a big simplification, because at the end of the day, it's somehow replicating the ease of use of mobile, where normally you don't sign because you use your fingerprint or your face as an identification. So, we think it's a very positive move. Bernardo?
On the cash flow, I think probably you've answered the question. I mean, we don't give the breakdown, you can just see that cash balances have gone up by €90 million. The cash equivalents is actually the effect of the Visa shares, as I mentioned earlier, but in terms of cash balances, we've increased the quarter by €90 million, but we will come with, you know, a full breakdown of the cash flow and the full year numbers in, February.
Okay, thank you. And the CapEx budget for this year, what do you... Do you believe you can end in 2020 for the CapEx?
So that, I think we hadn't given you the exact number, but it will be lower than what we'd budgeted because of the cash containment program. I think we said we're gonna spend approximately EUR 40 million less than what we'd originally planned during the budget period at the end of last year. The truth is, we won't be spending EUR 40 million less than what we had planned because, as I was mentioning earlier, we have reshuffled the overall composition of the EUR 100 million, spending a bit more on CapEx. So a bit more than the revised budget on CapEx, and a bit less on transformation and operating expenses.
Okay, thank you.
The next question is from Please go ahead, sir.
Yes, good evening. A couple of questions. The first one, clearly, it's impossible to know what is going to happen with this COVID measure, but just for a sensitivity, what kind of revenue decline you think you can withstand in the fourth quarter, eventually, if the COVID situation deteriorates, to reach your ambition in terms of EBITDA, considering the possibility you have on the cost saving plan? The second question is just clarification on slide 12,13. When you talk about transaction and volume in the Q3 merchant and card, why we have seen that in the merchant side, there was a decline of minus five, and in card, a growth of plus four in the number of transaction and in the volume? Why there was this, divergence? Thank you.
While Bernardo tries to run the math on your third question on the different scenarios, let me take your second one. It's basically because you lack the contribution of visitors, no, in that case. So that's the key point. I mean, think this way, you know, if an American comes to Italy or if a French comes to Italy, you have the volume. If they don't come, you don't have the volume. So in the summer, for example, half of the volumes were not there, full stop, no? If an Italian doesn't go to France...
First of all, Italy is mainly an inbound market. Nexi is an inbound market. But that said, an Italian that is not going to the U.S. for his holidays is staying in Italy and he's spending in Italy, you know, that's the key point. And therefore, you still have those volumes, you know, and therefore, volume-wise, the impact, you know, is normally softer than what you have on acquiring. Although revenue-wise, instead, you have some impact, because normally, when an Italian, or in any case, your national customers spend abroad, normally the revenues that you make per transaction are higher for a number of reasons that you understand perfectly. So that's the dynamic that applies.
So on the fourth quarter, I mean, you know, first, we need to go back to first principles. I'd say a bit like we did back in during the lockdown months, and remind us that we have approximately, or if you believe our guidance, and you look at consensus, we would probably hit between EUR 1 billion and EUR 1.1 billion of revenues for 2020. And this means approximately EUR 90 million per month of revenues, if we don't weight them for you know, seasonality. And half of our revenues are, roughly half of our revenues are volume driven. So that means at risk, we have EUR 45 million.
So in the lockdown months, and we saw there was, you know, pretty simple math to be run in terms of, you know, the closures and impact on volumes. And when we lost half of the volumes, like in April, we lost half of the variable revenues, so approximately EUR 20 million or so. Now, what does that mean? That, you know, depending on, and this is where it's harder to run the math, depending on what you expect for the fourth quarter in terms of lockdown, which is different, very different to what we experienced in the spring months with the lockdown then, because of all the things Paolo was mentioning earlier.
You know, we don't expect the severity of the lockdown to be translated into such a steep decline in revenue, so I wouldn't be expecting to lose, for instance, 60 million EUR of revenues, which is 20 million EUR per month for three months. I would expect to lose significantly less than that, and if that stands to reason, then I think, you know, we stand by our guidance, and we shouldn't miss the target. Also, because if you then step down to the EBITDA level, we do have the ability to, well, we have, for starters, an automatic buffer which comes from the variable compensation, which may well be paid to some people other than the ExCo, who might have received variable compensation depending on whether we hit the forecast.
And then we have other variable components of cost, which, you know, where, you know, the trend I was mentioning earlier of spending a bit more on certain things because it made sense to do so, we could revert them to protect the EBITDA and the target we've given ourselves to be flat or slightly high year-on-year. So, sorry, I can't give you an exact answer because it really depends on-
No, it's very useful. No, I, this is what I want just is a kind of sensitive. Thanks. Thanks a lot.
The next question is from Paul Cuddihy with Jefferies. Please go ahead, sir.
Hi, good evening, everyone. So I have three questions on my end. I guess maybe starting with the merchant services business, could you maybe provide more color on the split between, you know, organic take rate accretion in the period, you know, due to mix, I guess, versus, you know, maybe higher POS installations, which should drive your installed base revenues? And, you know, if you could then maybe comment then on how we should think about that in the fourth quarter. The second question I have then really relates more to the Cards & Digital Payments business. Now, if I assume that the installed base revenues grew during the period, you would suggest that your volume-based revenues actually fell in the high single digits in that business.
I mean, could you maybe quantify then, what are the various buckets, you know, that kind of led to that high single digit decline? And again, maybe how should we think about that going into the fourth quarter, in terms of just, you know, our estimates? And then finally, I think on the acquiring insourcing side, you know, could you maybe comment on maybe any progress on that initiative? And I guess since obviously the SIA-Nexi deal is a vertical merger, is there any risk around some of your insourcing projects where, maybe the antitrust regulator might ask you to either halt some of those things, or they might affect maybe your ability to insource these things going forward?
Listen, let me take the third one, while Bernardo thinks on how to handle your first two questions, and maybe we will have to come back to you maybe with some more insight to help you run through that logic. Well, I mean, our acquiring platform has been developed, is already up and running. We're in trial phase with a few customers, and therefore, the project is progressing as expected. Honestly, we already run insource volumes on the back of Intesa, and therefore, we don't see any major impact there. Actually, this platform is very advanced, and we believe will be over time the group platform, given its characteristics and its efficiency. Bernardo?
Yeah, so a very complicated question you have there, Paul. I think, you know, what I would say is the accretion to the take rate in the third quarter, as mentioned earlier, was due to those effects which we discussed. One of there being a greater proportion of domestic card transactions in Italy, rather than than in the prior year, when we had, particularly during the summer months, a higher proportion of extra-EEA cards transacting. Now, the big difference is in the summer months compared to the fourth quarter, where this effect is much smaller. The proportion of extra-EEA cards transacting in Italy in the fourth quarter and year is much lower than it is in the third quarter.
So that effect will be less beneficial in the fourth quarter. The other effect, which will be less beneficial in the fourth quarter than the third quarter, is the increase on a quarter-on-quarter basis of SMEs transacting. So as we came out of lockdown, the larger chains kept on transacting during lockdown, and the SME, smaller merchants, started to transact only after the release of the lockdown provisions. Now, this helped performance on a quarter-on-quarter basis, so second quarter compared to third quarter. And this again will be lost on the fourth quarter if you look at it compared to the third quarter. So the mix effect will substantially be much lower in the fourth quarter than we've had in the third quarter.
With regards to installations, I don't know what numbers you're running, but you know, saying that installations you know were higher than we had planned. Clearly, now they're slowing down again because of the restrictions moving between regions. So, this again will impact revenue growth. Not so much, I would say, on the mix front. And that's where I was a little confused with regards to how you were thinking of this and what you wanted to hear from us. But I don't know, maybe I suggest if you want to send us a more detailed question, and then we can follow up later with greater detail.
No, that, that's fine. I'll follow up later on. Thank you.
Okay.
The next question is from Alexandre Faure with Exane.
Hi, good evening. Thanks for letting me on. I just wanted to go back again for a minute on the cashback incentives in Italy. Paolo, you mentioned that it was an opt-in mechanism and that consumers would need to take it up at some point. So I was just wondering who you think would be the channel to market the distribution for this offer? Is it gonna be card issuers? Is it gonna be merchant? Who's going to push that to consumers? And then, relating to that, I was just wondering if the Italian government has put in place some mechanisms to make sure that this cashback money goes to people who are new to electronic payments, and perhaps not to Nexi's top executives who already use their cards every day. Thank you very much.
So Alexandre, let me take these two ones. On the growth market, as you called it, well, the process is quite simple in the sense that there are basically two ways for the customers to activate the promotion. The fact it's a promotion, I would call it that way, if it was from a company. And you can do it either on a dedicated app that has been developed by the government, and it's an app where the government is also trying to bring a number of interactions with the public administration. I think the app's called IO, okay?
And second, no, you can also activate on the website or the app of the issuer of your card, in this specific case, also of Nexi, the banks and their own banking and so on and so forth. And I think this is important because then you will have somehow the double effort from us, the banks, and also from the government to promote these channels to activate the product. On your point around the... I mean, what type of limits they're putting in order to make sure.
I mean, I have a lot of sympathy for the point you're making, and I basically made the same example you're making to the people that were designing these mechanisms, no? I clearly said, "Listen, people like myself didn't need to have a further incentive to use digital, and therefore, any cashback that may come to me doesn't really create any further elasticity of behaviors, then there's an important role of marketing as well." However, there is a very important point. The key point is that mechanics also have to be simple for people to join.
Any, and this is true for any promotion in any sector, any industry, any country, and if you start putting too many limitations, and too many segmentations, and too many conditions, then people basically get lost and say, "Listen, this is not for me. This is not really gonna be, no, working, there is a, there is something that is, is really not, not, too tricky for me," no? And that's the reason why, because the only way to manage what, you, the point that you made, it was actually to put a threshold that was basically comparing. Which we also proposed at some point, because we're sympathetic with what we're saying.
That basically says, "I will give you cashbacks only on the extra amount of money that you're spending, compared to the same period of last year." This is super complicated to be managed for a system that is working on many, many different issuers, many, many different acquirers, and is also more complicated for communication purposes. So they did decide not to go in. By the way, there is also another point you will make, that is that certain merchant categories are from this angle more useful to be incentivized for many good reasons, no? But again, it was too complex, no?
Therefore they went for something very simple, that is, there is a protection mechanism that says, "Listen, in any case, you know, there's a cap, then, you will not get more than a 150 EUR back." Overall, there is a cap for the overall spending period of 1,500 EUR, and therefore, let's say the leakage of these benefits to the super users, like, like ourselves, and I think, the vast majority of the people in this call, not just, ourselves. That leakage will be, in any case, limited, and therefore the majority of the value will go to the people that are really coming in, and, changing behavior.
I see. That makes lots of sense. Thanks very much for the detailed answer here. Thank you.
The next question is from Marco Baudona with Crédit Agricole. Please go ahead, sir.
Hi, just a quick question regarding your debt levels. I was wondering, maybe, just the transaction, if there will be something like, repayment of debt, so you might need refinancing or something? If you can elaborate something more.
Sorry, could you repeat the question? I didn't quite understand it. Apologies.
Yeah, sorry. I was just wondering regarding your debt levels and your debt maturities, because of the transaction with SIA, there is maybe something like change of control, something which require refinancing over your debt. Maybe if you can elaborate more on this?
Yeah, sure. No, the covenants within our debt structure would cater for the SIA merger without change of control being issued, with change of control being triggered, sorry. SIA on the other hand has a term loan facility, which would require to be refinanced, and it's something that you know is being built into, let's say, the work we're doing now with SIA in order to make sure that we hit our timeline.
Thank you.
Okay.
Gentlemen, there are no more questions registered at this time.
Thank you for attending this call so late in the day, and thank you for your questions as usual. Come back to us for any further questions. Again, the key messages for today are quite simple. Good performance, strong performance in the quarter ahead of our plans, and good learnings from phase one of COVID as we walk into phase two. Rapid recovery is possible, especially in certain sectors. And second, shift to digital payments is happening faster than usual. With that, again, I wish all of you a good evening, and hopefully we will talk quite soon, again. Bye bye, have a good evening.
Bye-bye.