Recent Evolution of the Retail Payments Market in Hungary

Posted on Mar 27, 2020 by László Kajdi, Senior Economic Analyst, Magyar Nemzeti Bank

Over the last decade, the Hungarian payments market has gone through a major development, and the use of electronic payment methods is constantly growing. The Central Bank of Hungary (MNB) actively contributed to the favourable processes in line with MNB’s payment strategy. MNB defined two main goals for the payments market: on one hand to provide an electronic payment option in all payment situations, on the other hand to promote the use of these cashless payment methods.

In order to reach these goals, MNB stepped up as coordinator and regulator, and also actively used the advantages coming from the sole ownership of the market’s central participant, the GIRO clearinghouse.

Like in most countries, cash transactions constitute the majority of retail payments in Hungary; however, MNB’s data and analyses indicate that in the major fields, the gap between the European Union average and Hungary is disappearing.

The MNB defined indicators for three key areas of the payments market signal steady improvements in recent years (Table 1, below).

  1. Regarding the use of credit transfers, no significant lag can currently be identified. Further, following the mandatory introduction of instant payments in 2020, the turnover of credit transfers is expected to rise steeply.
  2. The field of electronic retail payments also showed major advancements in the last couple of years, which can be mainly attributed to the soaring popularity of contactless card payments among Hungarian consumers.
  3. A key focus in the mid-term is perhaps related to the electronic payment of regular bills, where a Hungarian peculiarity, the paper-based postal payment orders (so-called “yellow cheques”) are the most widely used payment method. The introduction of instant payments and request-to-pay services can greatly help to transform manual processes to electronic solutions.

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Instant Payments, Retail Payments, Modernisation, Mobile Payments, Innovation