MILAN, July 2 (Reuters) - Italian payments group Nexi

said it had signed a partnership with Amazon's ( AMZN )

local arm allowing clients of the e-commerce giant to

shop on its Italian website paying with a local debit card

service dubbed BANCOMAT Pay.

Italy's ATM machine operator BANCOMAT, owned by more than

100 Italian banks, has been working to expand its online payment

service BANCOMAT Pay following an investment by Italian private

euquity fund FSI which is now the biggest single shareholder.

At present, Italians mostly use the 34 million BANCOMAT

cards in circulation for ATM withdrawals.

BANCOMAT is Italy's main debit card payments provider,

managing around 2 billion payment and withdrawal transactions

every year, worth more than 160 billion euros.

Nexi Merchant Solutions Director Italy Filippo Signoretti

said in a statement the company was a good fit for global

players such as Amazon ( AMZN ), when they needed partners with a strong

presence in domestic markets but also international scale.

The payments sector has grown rapidly in recent years,

mostly through a wave of mergers and acquisitions, companies

sought the financial muscle to keep up with technological

advances while contending with the threat from new entrants.

Betting on the prospect of further consolidation, Italian

fund FSI has been investing in the sector by purchasing a 43%

stake in BANCOMAT as well as building a retailers' payment

business in partnership with banks ICCREA and Banco BPM

.

Italy's top bank Intesa Sanpaolo, which owns 18% of

BANCOMAT followed by UniCredit with 11%, acted as a

technology partner in the Nexi-Amazon deal.

Earlier in April, BANCOMAT and Nexi struck a multi-year

contract to develop a centralised technology infrastructure to

allow BANCOMAT to manage on its own new payments it planned to

offer.