Financial Cards and Payments in Hungary

COVID-19 impact on consumer payments

The COVID-19 pandemic had a substantial impact on Hungary’s financial cards and payments industry during 2020. Perhaps the most noticeable and important changes seen in consumer behaviour during the year was the shift away from the use of cash and towards card payments.

COVID-19 country impact

The Hungarian government launched its official COVID-19 webpage and Facebook page on 4 March, the same day as the first cases were announced in the country. The government declared an indefinite state of emergency on 11 March, which saw public gatherings in an enclosed space with more than 100 people prohibited, sporting events that could attract more than 500 spectators held behind closed doors and foreign exchange programmes suspended.

Shift away from cash and towards digital commerce presents opportunities

One of the few positive changes to everyday life in Hungary brought about by the COVID-19 pandemic is the revolutionary shift seen in the way that people receive and send money. Specifically, as the COVID-19 pandemic forced major changes in the way that Hungarian people live, many turned to online banking, digital financial services and the use of payment cards as they sought to avoid going out wherever possible and, in particular to avoid handling cash.

Upcoming changes to regulations to continue promoting the use of payment cards

As of 2021, all merchants and service providers with digital and online cash registers, including store-based retailers, consumer food service establishments and lodging providers will also be obliged to provide all of their customers and clients with the option to pay electronically or via a payment card. The Hungarian government has been introducing its obligatory online cash register system gradually and this forms a central part of its efforts to formalise the national economy and reduce widespread tax evasion.

The emergence of strong fintech players present a favourable scenario

Towards the end of the review period, numerous leading fintech brands made strong headway in Hungary. Among the strongest names in this area are international players Revolut and Transferwise, which have built their reputations on adding value via convenience, speed and lower cost.

What next for consumer payments?

The forecast period is expected to see Hungary’s financial cards and payments industry continue to develop strongly, against a background of strong government support and rising consumer interest in alternative to cash payments. The experiences gained during the COVID-19 pandemic are expected to underpin a strengthening of the current shift towards card payments while accelerating the move towards the use of virtual cards and mobile apps for payments in both the remote and proximity environments.

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