3.2 Possibilities for transforming the pricing of the retail payments clearing system

One of the potential development directions for the ICS may be to transform service pricing and introduce a more efficient and internationally more competitive pricing structure. Such a transformation of the current ICS fee structure could enable payment service providers to render electronic payment services at lower, and thus more competitive prices than at present. The volume of electronic payment transactions is continuously rising in Hungary, and the number of transactions cleared within the ICS is also increasing in conjunction with growing nominal GDP, creating greater demand for efficient and low cost clearing of payments transactions among banks.

Due to the cost structure of executing electronic payment transactions, as the number of transactions continues to rise, the price of clearing services can be scaled back, which must fully be reflected in the pricing of services rendered to

the customers of payment service providers. As electronic payment infrastructure typically has elevated fixed costs but far lower variable costs, transaction processing costs do not increase in proportion to the number of transactions. In addition, it should be noted that the ICS has the capacity to handle a far higher number of transactions than at present, and could therefore accommodate even a substantial increase in turnover without any capacity expansion necessary. Therefore, the higher the number of transactions within the system, the lower the cost per transaction, meaning that a rise in turnover could pave the way for cutting fees following their review. Lower fees could also narrow the gap between the fees of large European clearinghouses and those of the ICS, making the latter’s services more competitive both on the international scene and compared to other electronic payment solutions. Thanks to its acquisition by the MNB of a majority share in GIRO, the operator of the ICS, steps resulting in fee reduction can now be implemented more easily, enabling cost reduction and payment efficiency gains that are also felt by bank clients.