If it does not move around, money is worth nothing

Dr Ferenc Gerhardt

Deputy Governor of the Magyar Nemzeti Bank in charge of the project coordinating the introduction of the instant payment system until 22 April 2019

All the players in economic and social life are interested in money, the consideration received for their activities and work, being exchanged as fast and at as low a cost as possible.

The state is the largest payer and collector of payments, and it relies heavily on the steady, reliable and time-bound flow of payments.

The two keywords are therefore speed and infallibility. From a technical perspective, we can do almost anything, but we cannot create time, only use the existing amount as fully as possible.

Having acquired GIRO Rt. from the banks that owned it in the spring of 2014, the Magyar Nemzeti Bank requested the company to acquire these two qualities as soon and as fully as possible.

First, from September 2015, in the context of steadily diminishing prices, there were ten cycles when money could be transferred. The necessity and possibility of a payment system available on 24/7/365 basis was already mooted back then. After looking at international examples and taking into account the potential solutions in Hungary, it was decided that the central infrastructure for instant payments should be established in GIRO Zrt. The decision enabled the attainment of the MNB’s strategic objectives: keeping the most important

infrastructures in national hands, increasing the efficiency of Hungarian payment services and financial services, and finally reducing the costs of all these.

It is very important to note that all the players involved in payments were obligated to participate in the project. This enabled everyone to use the services of the instant payment system. The close and daily cooperation between the market participants concerned and GIRO became one of the most important, if not the most important, elements of the project. In this spirit, a national project committee comprising the Hungarian Banking Association, the Hungarian State Treasury and the Hungarian Chamber of Commerce and Industry was established to coordinate the introduction of the system.

The central infrastructure purchased from and deployed by Danish-based Nets proved to be a good choice: the various users employing different proprietary IT systems successfully completed the most complex and expensive task of the Hungarian financial sector to date, facilitated by hard work, intensive information exchange and the occasional bump on the road. One has to applaud the dedication, mutual tolerance and support, without which the strategic objectives set by the MNB would not have been fulfilled.

The conditions augured well: there was a need and an intention, we had the technology at our hands, and the dedicated and qualified teams were set up. It was time for implementation.

As the go-live date set for 2 March 2020 approached, the frequency of (load) tests and local and central coordination and adjustment needs increased. The experiences of the go-live and the period following that exceeded our wildest expectations: only a negligible number of interruptions were registered, and no errors prohibiting continuous operation occurred. And we can still say that about the instant payment system. Users were very receptive to the introduction and use of secondary identifiers—the number of such identifiers continues to grow rapidly. Requests to pay are also increasingly used.

The deployed system offers several novel opportunities that facilitate payments and the purchase of goods and reduce cash use. The MNB attaches strong importance to reducing cash use, due to its high social costs and the need to combat the shadow economy.

It is impossible to overestimate the significance of instant payments as part of the digitalisation of the financial sector. The currently available uses have already enabled reliable, cheap and fast payments that have produced tangible financial benefits in the

economy. Market participants have clearly recognised this, and the transactions completed in a couple of seconds are used more and more each day.

Finally, I would like to thank the banking sector and our Danish partner once more for their very positive and helpful cooperation. The internationally endorsed success of the instant payment system was only possible as a result of our common efforts and interests and close cooperation.

We can say that money now moves around in Hungary on a 24/7/365 basis, elevating it from a simple means of payment to a major instrument in increasing productivity and profitability.

Movement is life itself.