Contactless overtakes traditional card payments in Hungary – 63% of cards and three-quarters of POS terminals allows contactless payments

Contactless payments accounted for more than half of all transactions made with payment cards in Hungary in 2016, the country’s central bank says. “Whereas in 2015 contactless payments accounted for 30% of payments, in 2016 more than half (51%) of payments were conducted with the new technology,” says Magyar Nemzeti Bank (MNB).

Data published by MNB showed that the increase in Hungarian electronic payment turnover characterising earlier periods continued in the final quarter of 2016. In the payment card infrastructure, the expansion in the technology allowing contactless payment continued throughout the year. As a result, nearly 63 per cent of payment cards and more than three-quarters of POS terminals allowed contactless payments.

In addition to the payment infrastructure, contactless payment has been dominating payment card turnover, with the result that this technology accounted for more than half of total domestic purchase transactions conducted with payment cards.

The growth rate of frauds committed with cards moderated in the third quarter of 2016, and moreover the value of loss caused by frauds on the issuer side did not increase at all. Due to seasonality around the end of the year, turnover in the payment and securities clearing and settlement systems rose.

The number of payment accounts managed by financial service providers was nearly 2 per cent higher in 2016, rising to almost 10.4 million at the end of the year. Although the number of consumer accounts used primarily for payment purposes edged up by less than 1 per cent relative to the previous quarter, it nevertheless exceeded 6.6 million. During the year, the number of domestic payment cards rose by more than 130,000 to 9.1 million.

At more than 18 per cent, the dynamic increase in the number of contactless payment cards continued. As a result, nearly 63 per cent of domestic cards were available for contactless payments. In respect of the payment card acceptance infrastructure, the number of POS terminals operating at more than 85,000 physical merchant acceptance points rose by more than 9 per cent during the year and, as a result, more than 110,000 terminals were available for payment with card in the fourth quarter. More than three-quarters of these terminals allowed contactless payment. The number of online acceptance points grew by nearly 4 per cent to almost 8,500 relative to the previous quarter.

Strong growth in purchase transactions conducted with domestic payment cards continued in 2016.

The more than 488 million transactions conducted in the domestic acceptance network with cards issued in Hungary, representing a total value of HUF 3,401 billion, rose by 24 per cent in their value and by 20 per cent in their number relative to the previous year. Looking at turnover in terms of the types of card, this growth mainly affected payments conducted with debit cards, which rose by nearly one-quarter both in terms of number and value relative to 2015.

By contrast, turnover conducted with credit cards rose less strongly, by over 15 per cent both in terms of the number and value of transactions. An important change in 2016 was that, following the expansion in the infrastructure, contactless technology became dominant in payment transaction turnover as well. Whereas in 2015 contactless payments accounted for 30 per cent of payments, in 2016 more than half (51 per cent) of payments was conducted with the new technology.

The volume of card-not-present transactions, mainly Internet transactions, continued to rise strongly relative to 2015, both in terms of number (36 per cent) and value (42 per cent); however, its ratio to total turnover continued to be low (accounting for 6 per cent and nearly 10 per cent, respectively, in terms of number of value). The value of cash withdrawals using payment cards fell slightly, by around 1 per cent in 2016; however, their total value rose by largely the same amount as in the previous year. As a result, the average value of transactions was close to HUF 65,000.

Source: Magyar Nemzeti Bank