Hungarian Competition Authority finds no major problems with payment cards

Hungary

Bringing a sigh of relief from payment-card issuers, the Hungarian Competition Authority (HCA) has just released a final report on payment card acceptance services (Final Report), and identified no serious competition concerns.

Although giving the sector a clean bill of health, the HCA issued recommendations designed to boost card acceptance and remedy market failures.

The HCA launched its sector inquiry into the card acceptance market in 2017 based on the fact that card payments were not satisfactorily widespread in Hungary, despite pro-public interest promotions promising cash-free payment and overall cost reductions.

The HCA suspected that the card industry might be creating adverse effects on competition due to higher services charges applied to smaller merchants.

During the sector inquiry, the HCA collected information from market players and public bodies, and used this data to identify the factors that could be hindering the acceptance of card payments and creating barriers in the market.

According to the Final Report, between 2013 and 2018, the number of merchants accepting payment cards significantly increased and the number of transactions per card approached the EU average.

The HCA lauded incentives to promote cash-free payments, such as capping the multilateral interchange fee by legislative action and introducing the Ministry of Finance’s POS terminal installation programme.

The HCA also found, however, that the number of merchants accepting payment cards remain extremely low in some parts of Hungary, and smaller merchants still face relatively higher charges in relation to transaction numbers. Merchants are also finding it problematic that it sometimes takes days for their accounts to be credited after a transaction.

Although the Final Report established that the market trends identified did not represent competition law concerns, the HCA set down the following recommendations for lawmakers and market participants to enhance competition:

  • Expand the businesses that can take part in the POS installation programme;
  • Introduce more favourable tax policies, awareness programmes and the ability to conclude contracts online;
  • Apply service charges proportional to transaction numbers rather than fixed fees, and make sure merchant accounts are credited faster;
  • Have banks make the transition from passive to active sales.

There are expectations among analysts and market players that this Final Report will lead to positive changes in regulation and the industry. 

For more information on the Final Report and its potential effects, please phone or email your usual CMS contact or one of our local CMS experts: