The Financial Stability Board of the Magyar Nemzeti Bank discussed and approved the Payment Systems Report 2017. The Board establishes that the Hungarian financial market infrastructures overseen by the MNB executed real economic, financial and capital market transactions efficiently and with a high degree of reliability in 2016, thereby contributing to the strengthening of financial stability. The development of the use of electronic payment instruments by households is unbroken. Last year, significant progress was made in the area of electronic bill payments and the electronic payment of retail purchases. The creation of the instant payment system will be the largest development in the area of financial market infrastructures in the near future. In December 2016, the MNB approved the operating model of instant payments, then, in March 2017, it decided that the central infrastructure of the new payment system will be set up by GIRO Zrt., which is owned by the central bank.
Similarly to previous years, the turnover of electronic payment instruments expanded in 2016 as well. With a slight increase in the number of payment accounts, the rate of access to payment accounts and cards by households can be considered adequate. Considerable progress has been made in terms of the convergence of the indicators measuring the level of development of the payment system to the EU averages, due to an increase in the amount of the electronically paid public utility bills and other service fees as well as in the value of electronically paid purchases. The widespread use of the contactless card technology may facilitate the electronisation of retail payments already in the short run.
The payment card system is extremely safe in Hungary in international comparison as well. The number of frauds and the value of losses caused by them increased in 2016, but their ratio compared to the total payment card turnover remained at an extremely low level. As a result of the favourable regulation that protects consumers, more than 90 per cent of losses caused in connection with payment card frauds are borne by the issuer and acquirer payment service providers and not the cardholders.
As in previous years, the operation of the overseen financial market infrastructures was highly reliable in 2016, supporting the functioning of money and capital markets efficiently and safely. Operational risk decreased, overall, in the overseen financial market infrastructures, mainly as a result of a decline in the number and duration of incidents. The participants of the systems quickly and adequately adjusted themselves to the effects of the MNB’s changing monetary policy instruments on the liquidity of financial market infrastructures. As a result, the clearing and settlement risk did not increase.
Based on the official payment inspections conducted in 2016, the institutions that provide payment services basically complied with the relevant regulations, although there were occasional violations as well. During the payment inspections, the MNB lays great emphasis on exploring problems that concern a broad range of customers, including the failure to provide required information, make the payment transactions to be credited to customers available immediately as well as the improper application of the liability and loss allocation rules.
On 6 February 2017, KELER Central Securities Depository successfully joined the TARGET2-Securities pan-European securities settlement platform, which gave way to an upswing in the demand side of the Hungarian securities market and to the expansion of the European securities supply available in Hungary. In 2016, the risk management framework of KELER CCP efficiently managed and averted the spillover of the defaults – that rose both in number and value during the year – to the rest of the market participants, without the need to use emergency measures. In 2016, there was a more than six-fold increase in the value of FX transactions involving the forint that were settled through the CLS system with the elimination of foreign exchange settlement risk, which supported the stability of the banking sector significantly.
Following consultations with affected market participants, on 13 December 2016 the Financial Stability Board of the MNB approved the operational model of instant payment service. According to the MNB’s plans, as of 2019 H2, a new system operating 24 hours a day, every day of the year will ensure the crediting of payment orders below HUF 10 million within five seconds to the beneficiary. GIRO Zrt., which is owned by the central bank, started to set up the central infrastructure for instant payments in the spring of 2017. The MNB’s expectation is that, simultaneously with an improvement in service level, usage of the instant payment service should not entail perceptible fee rises for the customers.
The changes in regulation implemented under the new Payment Services Directive (PSD2) support new, innovative players’ entering the market, and thus as a result of the appearance of fintech firms and the digitalisation of the financial market infrastructure, competition will continue to grow in the market of payment services, resulting for consumers in more comfortable, faster and innovative payment services, which meet the challenges of our times.