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Vatican Hit as Card Ban Leaves Sistine Chapel Visitors Cashless

A suspension of electronic payments in the Vatican City is threatening finances in the world’s smallest state as thousands of pilgrims and tourists are forced to use cash only in museums and shops with yearly sales of more than $100 million.

Credit and debit card payments as well as cash withdrawals remained suspended in the papal state for a fourth day after the Bank of Italy refused a request by the operator, Deutsche Bank AG (DBK)’s Italian unit, to keep providing the services. The central bank acted because the Vatican doesn’t comply with international money laundering rules, a Bank of Italy official said.

“We expected to buy tickets with the credit card, but we had to use the cash which is a problem for us as we will now have less money to use for the rest of the day,” said Zhou Lingli, an university student from Zhejiang, China, before entering the Vatican museums, which includes the Sistine Chapel decorated by Michelangelo.

The sale of memorabilia, postage stamps and admission tickets to the Vatican museums is the main source of revenue for the Holy See apart from investments and donations. The Vatican museums alone, with over 5 million visitors, had sales of 91.3 million euros ($119 million) in 2011, according to a July 5 statement from the Holy See.

Online Tickets

The interruption to electronic payment services will be “brief,” the Vatican, which is home to Pope Benedict XVI and is located in central Rome near the Tiber river, said in a statement yesterday. Cash withdrawals from machines operated by the Vatican bank IOR are not affected, a Vatican spokesman, who declined to be named, said. Tourists will be able to buy tickets for the Vatican museums online until Jan. 15, he said.

The ban also affects souvenir and book shops within the 0.2 square-mile papal state. Items to be paid in cash at the Vatican museums’ gift shops include a hand-painted miniature of Fra Angelico’s painting of the Virgin Mary with diamonds and 18- karat gold frame bearing a tag price of 430 euros and a 720-euro medal depicting late Pope John Paul II weighting 21 grams. Many people complained because they didn’t have enough cash at hand, a shop assistant, who declined to be named, said.

The Rome-based central bank found in an inspection in 2010 that the Deutsche Bank unit, which started operating the papal state’s point-of-service payment services in 1997, didn’t have the authorization to operate in the Vatican City, a Bank of Italy official said. The central bank on Dec. 6 refused a permit request to Deutsche Bank SpA because the state lacks required banking and financial legislation, the official said. A Deutsche Bank spokeswoman for Italy declined to comment.

New Operator

Vatican authorities are trying to find another bank provider, the Vatican press office said in a statement yesterday. A new operator may be announced Jan. 7, the Financial Times reported today, citing an unidentified person familiar with the matter.

“At the gift shop we bought a book and four rosaries, but we had cash and we spent about 50 euros,” said Sheila Schlageter from Birmingham, Michigan, who’s travelling in a group of three. “Normally I would have paid with credit card,” she said. An online ticket to the Vatican museums costs 16 euros.

Moneyval, the Council of Europe’s monitoring body for money laundering and terrorism financing, said last year that the Vatican is making progress in complying with international standards on financial transparency, though more work needs to be done. The body’s recommendations are used by the Organization for Economic Cooperation and Development to decide whether a nation should be included on the so-called white list of countries complying with international standards on financial transparency.

Financial Scandals

In the report Moneyval also recommended that the Vatican bank should be independently supervised. The IOR has been at the center of several financial scandals in recent years. Paolo Cipriani, director general of the bank, and its former head, Ettore Gotti Tedeschi, were placed under investigation by Italian prosecutors in 2010 for allegedly omitting data in wire transfers from an Italian account.

Prosecutors seized 23 million euros from a Rome bank account registered to the IOR amid suspicion or money-laundering violations, as part of the probe. The Italian investigation triggered calls to bring the city-state in line with European Union financial rules and become more transparent.

“It would have been better to pay with credit card, but it doesn’t matter, we will pay in cash,” said Gianni Bianchi, visiting from Milan with his wife. “It’s not a big deal and anyway it’s not worth to get upset because of so little.”

To contact the reporters on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net; Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net

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