Good News on Instant and Electronic Payments

The number of payment cards and, in line with the outbreak of the coronavirus pandemic, as a result of the rapid growth in home delivery services and preference to contactless payments, the number of virtual merchant outlets accessed via internet increased significantly in Hungary in the first quarter of 2020.

An information release by the National Bank of Hungary, the expansion in electronic payments continued to result mainly from dynamic growth in the number and value of payment card purchases. The number and value of domestic purchases conducted with payment cards issued in Hungary grew by 13% and 23%, respectively, compared with first quarter of 2019. Online card purchases, which number and value rose by 38 and 50%, respectively, contributed strongly to the expansion in turnover, compared with the same period of 2019. In the case of credit transfers, the stable upward trend characterizing earlier periods also continued, with the value of individual forint credit transfers increasing significantly, by almost 12%, compared to the same period of the previous year. The start of instant payment service on March 2, 2020, representing a milestone in domestic payments, also contributed to this outstanding growth. Turnover of the payment and settlement systems continued to grow in first quarter of 2020. Payment and settlement system liquidity continued to be ample.

Debit cards dominant
The number and composition of payment accounts managed by domestic payment service providers were barely changed in first quarter of 2020, with their number being slightly more than 10.4 million. In addition, the number of customer accounts primarily used for payment purposes was still approximately 6.7 million. The number of domestically issued payment cards was nearly 9.6 million, reflecting an increase of 185,000. This represented an increase of 2% relative to the end of 2019. Within payment cards, debit cards continued to be dominant, with their percentage share being nearly 87% at the end of first quarter of 2020 following a slight increase. The number of contactless cards continued to rise, with their number being close to 8.3 million. This reflected an increase of nearly 247,000 or 3.1% relative to the end of 2019. Their percentage share of total payment cards was more than 86%. In first quarter of 2020, there was a slight increase of less than 1% in both the physical merchant acceptance points belonging to the payment card acceptance network of domestic payment service providers and the POS terminals operating at the acceptance points.. The number of acceptance points and terminals, respectively, was close to 115,000 and 148,000. Nevertheless, the expansion of foreign service providers in Hungary, not obliged to report data to the MNB, biases these numbers downwards, as they increasingly provide cross-border card acceptance services and operate POS terminals in Hungary. The number of virtual merchant outlets accessed via internet increased by 8% to exceed 14,000. The swift expansion in home delivery services as an effect of the coronavirus pandemic may have strongly contributed to this growth.

Card payments on the rise
The volume of purchase transactions conducted with payment cards continued to grow also in first quarter of 2020. The approximately 228 million purchase transactions conducted with payment cards issued in Hungary in a total value of HUF 1,754 billion reflected an increases of 13% and 23%, respectively, in the number and value compared with first quarter of 2019. There was also a strong growth in the use of domestically issued cards abroad relative to the same period a year earlier. The number and value of cross-border purchase transactions was nearly 23 million and HUF 280 billion, respectively, rising by 16% in number and by 26% in value. In terms of developments in turnover; however, there was a strong expansion in online payment card purchases due to the rapidly spreading home delivery services as a result of the coronavirus epidemic, as well as the related conscious consumer behavior. The number and value of domestic payment card transactions conducted at physical merchant acceptance points rose by 10% and 18%, respectively, compared with a year earlier, indicating a slight slowdown relative to earlier periods and may be related to the negative economic effects of the outbreak of the coronavirus pandemic in March; however, the number and value of domestic online payment card purchases increased sharply, by 38 and 50%, respectively. In terms of transactions conducted abroad, the difference is even more significant, partly reflecting a decline in, and restrictions on, cross-border travels.