The Financial Stability Board of the Magyar Nemzeti Bank has discussed and approved the Payment Systems Report 2016. In the Board’s view, the Hungarian financial infrastructure overseen by the MNB continued to execute real economic, financial and capital market transactions efficiently and with a high degree of reliability in 2015, thereby contributing to the strengthening of financial stability. Households’ use of electronic payment instruments has been increasing continuously, and there was significant progress in the past year in the areas of electronic bill payments and electronic purchases. Developments implemented in the payment system in 2015 accelerated the execution of payment transactions further. Upcoming developments in the area of payment system may set in motion a dimensional shift within the next few years: in 2015, work commenced on developing a concept for the Hungarian introduction of an instant payment system.
In 2015, the turnover of electronic payment methods increased in line with the trends of previous years, and the payment account and payment card coverage of households remained stable, despite a moderate decline in the number of accounts. Regarding the indicators measuring the level of development of payments, owing to a robust increase both in the total amount of electronically paid utility bills and other service charges and in the value of electronic purchases, significant progress has been made in terms of the convergence of the indicators to the European Union averages. The 20 per cent increase in the number and value of payment card purchases contributed substantially to the positive developments. The increasingly widespread use of contactless technology may support the electronisation of retail payments even in the short term. Developments affecting postal bill payments, in particular, ensuring the possibility of card payments on favourable terms, facilitate the electronisation of bill payments.
Electronic payment services are extremely safe in Hungary even by international standards. The ratio of payment card fraud to total turnover remains low, despite the fact that fraud associated with domestically issued cards and with the Hungarian acceptance network increased in the past period. Thanks to consumer protection regulations, the vast majority of the losses written off in relation to payment card fraud are not borne by cardholders. In view of the increasing prominence of online payments, the MNB considers the related safety aspects to be of utmost importance. With that in mind, after the adaptation of the relevant international guidelines, it has drawn up its own recommendation regarding the safety of online payments. One of the most important changes affecting both customers and banks is the tightening of the customer authentication procedure. In order to ensure a more accurate mapping of the operational risks of payment services, the MNB monitors the malfunctions affecting payment services.
As in previous years, the operation of the overseen systems was highly reliable in 2015, safely and efficiently supporting the functioning of money and capital markets, which was also reinforced by the comprehensive oversight assessments conducted in 2015. Developments implemented in the Hungarian payment infrastructures in 2015 improved the efficiency of the systems without any undesired increase in operational risks. Thanks to the quick and adequate adjustment of system participants to the effects of the modification of monetary policy instruments and the MNB’s Self-Financing Programme on the liquidity of financial infrastructures, the level of clearing and settlement risks did not increase. Participants have increased their government securities holdings to ensure sufficient liquidity for the execution of their payment transactions, and they continue to engage in active liquidity management.
According to the regulatory inspections carried out in 2015, institutions providing payment services essentially complied with regulations. During the inspections, the MNB attaches great importance to exploring problems affecting a broad range of consumers, such as the failure to provide information, inadequate rectification of payment transactions and inappropriate liability and loss allocation. The number of measures prescribed declined in 2015 compared to 2014, but the fines imposed rose markedly, boosting the compliance of payment service providers and improving consumers’ confidence in payment services.
After two years of preparations by the MNB and by Hungarian foreign exchange market participants, on 16 November 2015 the forint was added to the CLS system as a settlement currency, making it the first currency in the region to join the leading financial infrastructure of the international foreign exchange market. With the accession of the forint, the elimination of foreign exchange settlement risks between the forint and key international currencies has become possible, which bolsters financial stability especially in times of financial crises. In 2015, the KELER Group continued to broaden its range of services, assigning key priority to taking advantage of international business opportunities. The Group is expected to join the pan-European settlement infrastructure of TARGET2-Securities in 2017. In the first half of 2015, the risk management framework of KELER CCP successfully averted the spill-over of the default of brokerage firms subjected to supervisory measures to the rest of the capital market participants.
With the participation of GIRO Zrt., in 2015 the MNB implemented significant developments in the clearing infrastructure of credit transfers, which accelerated the execution of payments further. From the autumn of 2015, credit transfers are cleared every hour between 7:30 am and 5:00 pm on working days, ensuring more favourable conditions both for retail and corporate customers using this payment method. In 2015, the MNB commenced developing the concept of instant payment services. According to the MNB’s plans, within a few years a new system will be available every day of the year, twenty-four hours a day to credit payment orders to beneficiaries’ accounts within a few seconds. The magnitude of the change may set in motion a dimensional shift in the domestic payment system.