Vatican City State vendors, including the Vatican Museums and supermarket, have stopped accepting credit- and debit-card payments, citing technical difficulties amid unofficial reports of regulatory concerns by Italian financial authorities, reports the Catholic News Service.

Jesuit Father Federico Lombardi, Vatican spokesman, said on January 2: "The arrangement between several Vatican City State offices and one of the POS (point of sale) providers, whose services were employed to facilitate payments by tourists and pilgrims inside the Vatican, is about to expire."

He said the Vatican already was in negotiations with other providers, and the no-plastic policy was expected to short-lived.

While declining to speak on the record, sources at the Vatican did not dispute reports that the credit- and debit-card problem arose when Italy's central bank denied Deutsche Bank Italia - the Vatican's point of sale provider - permission to operate in Vatican City State, a foreign country.

The central bank, the Bank of Italy, said it discovered in 2010 that Deutsche Bank Italia had been handling the Vatican's credit- and debit-card transactions without the necessary approval.

Deutsche Bank applied for permission, which was denied in December by the Bank of Italy, claiming Vatican City State did not have banking and financial laws stringent enough to prevent money laundering.

While the Vatican negotiates with potential new credit card handlers - presumably non-Italian companies - it continues voluntarily updating its financial laws and procedures to comply with international norms against money laundering and the financing of terrorism, a Vatican official said.

FULL STORY Vatican suspends acceptance of credit cards (CNS)