2.4 Developments in Hungarian and international regulation affecting payments and financial infrastructures in Hungary
Adoption of the Payment Accounts Directive may help consumers receive better and comprehensive information, while also reinforcing competition between payment service providers. Moreover, the regulation may also pave the way for the introduction of basic accounts that can contribute effectively to the process of financial convergence. In May 2013 the European Commission proposed a draft Directive on payment accounts, the finalised version of which was adopted by the European Parliament on 15 April 2014. The Directive stipulates the instances and conditions under which payment service providers operating in EU Member States are required to ensure access to basic payment accounts. Thanks to the provisions on basic payment accounts, service packages offering low-cost access to payment accounts and allowing citizens to make a designated number of payments each month – adjusted to household payment habits – can become widely available. Basic accounts can contribute to financial inclusion by making payment services required for electronic transactions available, at low fees and without ancillary services, to citizens who, under current market conditions, are unable to or not interested in opening accounts. The Directive establishes rules as regards the comparability of fees linked to payment accounts, as well as the conditions and underlying process of switching between accounts. As a result of the rules of the Directive, clients of payment service providers will be able to obtain more transparent and consolidated information on applicable service fees and charges, and websites operated independently from service providers will allow consumers to easily compare conditions for payment accounts offered on the market. The rules on payment account switching make it easier for consumers to switch between payment service providers, by requiring the affected service providers to cooperate on a number of issues to ensure a smooth transition. In order to ensure that the Directive can sufficiently facilitate the development of payments in Hungary, it must be transposed into national law with due care. Following the regulation on interchange fees that went into effect in 2014, interchange fees on card payments have been significantly reduced in Hungary. The underlying reasons and the background of the regulation jointly initiated by the MNB
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Payment Systems report • June 2014
and the Hungarian Competition Authority are presented in detail in the 2013 publication Report on Payment Systems. Under the regulation, interchange fees charged on domestic card payments shall not exceed 0.2 per cent of the overall purchase amount for debit cards and 0.3 per cent for credit cards. These limits are in line with commitments on the fee rate applicable to cross-border transactions by the two largest card companies present in Hungary, in accordance with the European Commission’s competition proceedings. As a result of the regulation, acceptance-related fees payable by merchants are being decreased; meanwhile unambiguous provisions allow for long-term predictability and thus facilitate the growth of Hungary’s payment card market. Furthermore, the regulation creates level playing field for the two major card companies, which in turn can boost competition between them. By regulating interchange fees at European level and rewriting the business rules of the European card market, the European Commission’s proposed regulation may further improve the efficiency of payment card systems, which could have positive impacts on the Hungarian payment market as well. Thanks to the draft regulation published by the European Commission in July 2013, it will be possible to establish harmonised rules on interchange fees at the European level, which, according to the plans, will be in line with the fee caps that are currently in place in Hungary. In addition, the business rules on the operation of card systems are also likely to undergo several modifications in the future, enabling the many participants in the card market to compete with one another under transparent rules and on equal terms. The planned regulation facilitates competition both at the level of service providers and card products, and promotes the creation of a single EU card market. With the review of EU regulation on payment services, it will be possible to establish a Directive supporting the development of the European payment market and aligned to recent developments in technology and changes in markets. On 24 July 2013 the European Commission published on its website a proposal for the revised Payments Services Directive (PSD2) on payment services in the internal market. Above all, the PSD2 would introduce significant changes in terms of scope, as the regulation would extend to third-party service
