Hungary Payment Systems Map

The study reveals a surprising disparity in bank branch distribution across Hungary. While villages and small towns surprisingly rank first in terms of bank branches per 1,000 residents, Budapest, despite possessing approximately 25% of all branches, ranks a significantly lower 1227th. This indicates an uneven distribution, suggesting limited access to banking services in many areas. The research highlights the challenges in using simple per capita indicators to assess regional development because larger settlements typically offer more bank choices than smaller ones. Further analysis shows that 60% of Hungary's population lives in 142 settlements with populations exceeding 10,000, while over 50% of settlements have fewer than 1,000 residents. Despite the generally high cost of establishing and maintaining branches in sparsely populated areas, some exceptions exist, such as Ibafa (239 residents) having an operational branch. However, the majority of smaller settlements lack a bank branch. Chart 3 illustrates the number of branches included in the Routing Table, clarifying that while some are 'virtual', most growth in recent years was due to physical branch openings. The analysis also notes that the map clearly shows a lack of branches in certain counties (Vas, Zala, Somogy in Transdanubia, and Nógrád, Borsod-Abaúj-Zemplén, and Szabolcs-Szatmár-Bereg in Northern Hungary), while the Great Plain largely lacks settlements without a branch. This difference is attributed to Transdanubia having numerous small settlements compared to the Great Plain's fewer but larger settlements. The proximity of a bank branch significantly impacts bank choice for customers, influencing competition between banks, even with the rise of remote banking options.

The study continues its analysis of Hungary's payment infrastructure by examining the distribution of ATMs and POS terminals. The data reveals that ATMs, like bank branches, are unevenly distributed, with a concentration in larger towns. Zala County serves as an illustrative example, ranking fifth in ATMs per 1,000 persons despite most settlements lacking ATMs. This concentration makes accessing banking services challenging for residents of smaller settlements, hindering the efficient channeling of social transfers (pensions, benefits) to bank accounts. International comparisons reveal that Hungary lags behind other EU Member States in ATM availability per capita, similar to other Central and Eastern European countries. The situation is slightly better with cash withdrawal points, as savings co-operatives and post offices with POS terminals also provide this service, although their availability is limited to business hours. Concerning POS terminals, the analysis shows an even more pronounced concentration than with ATMs. Excluding Budapest and county seats, most POS terminals are found in settlements near Budapest and around Lake Balaton. Tourist destinations like spa towns show significantly higher numbers than average, suggesting a strong link between POS terminal usage and tourism. International comparisons show that Central and Eastern European countries, including Hungary, lag behind Western Europe in POS terminal density, although some Eastern European nations surprisingly outperform Germany, likely due to tourism.

The study acknowledges several methodological considerations and data limitations that affect the interpretation of the results. The definition of a 'bank account' in the study differs from international comparisons, only including accounts with at least one interbank transaction during September-October 2008. This exclusion of dormant and intra-bank accounts results in a potentially different count from international statistics. The analysis also notes a bias in bank account data, where residents of smaller settlements may hold accounts in nearby larger settlements for convenience, leading to an overestimation of bank accounts in larger settlements and an underestimation in smaller, neighboring ones. This bias is particularly relevant when interpreting the data for major settlements and their surrounding conurbations. Additionally, some banks report only one branch in the Routing Table despite having multiple branches, potentially distorting the data. Transactions related to branches unrelated to specific settlements (e.g., credit card or foreign exchange branches) were excluded. The study explains that the data does not differentiate between banks and credit co-operatives since both offer similar payment services and are subject to the same regulations. Finally, the study highlights that while multiple accounts per person may suggest inadequate service quality, factors like corporate needs for efficient transfers and accounts held by foreign citizens can also influence this indicator.

This section analyzes payment transactions between different settlements in Hungary, moving beyond aggregated national data to reveal significant variations across individual locations and counties. The research uses detailed data from two months to map these transactions, providing a geographical representation of financial flows. The analysis demonstrates that, in general, payment relationships are strongest between neighboring settlements, reflecting proximity and likely business connections. A key finding is the exceptional role of Budapest, which acts as a central hub for the entire country, regardless of distance. Even when state-related payments are excluded, Budapest remains the dominant center for domestic transactions. Approximately 40% of all transactions involve payers and payees within the same settlement, underscoring the importance of local economic activity. The total distance covered by these transactions, calculated using settlement coordinates, was a staggering 13,608 million kilometers, highlighting the scale of Hungary's payment network via the Interbank Clearing System. The study also notes that while counties typically exhibit stronger payment relationships with neighboring counties, exceptions exist where remote counties within the same region demonstrate a preference over closer counties in different regions. County seats tend to play a dominant role in their respective counties’ payment operations. The data is presented in tabular and map formats for researchers and interested parties.

A core focus is the relationship between distance and the volume of payment transactions. The analysis uses the geographic coordinates of settlements to calculate the distances between bank branches involved in each transfer, effectively measuring the 'virtual' distance traveled by payments within the automated Interbank Clearing System. The findings support the intuitive notion that as distance increases, the number of business relationships, reflected in payment transactions, generally decreases, mirroring the increased cost of transportation. However, the study also identifies exceptions to this rule. Charts visualize this trend, demonstrating a general inverse correlation between distance and transaction volume. A significant portion of transactions are concentrated between Budapest and county seats, creating outliers in the distance-volume relationship. This highlights Budapest's disproportionate influence as a central hub, even when distances to county seats are equal. The study speculates that two factors contribute to this pattern: the central location of many regional public utilities (electricity, gas, water) in larger cities, and the concentration of national service providers (telephone companies, insurance firms) in Budapest.

The analysis examines different payment methods, emphasizing credit transfers as the most frequent, both in terms of transaction numbers and total amounts. The geographical distribution of credit transfers strongly mirrors the overall volume of payments, underscoring Budapest's dominant position and the prominence of county seats within their respective counties. Western counties show higher transaction volumes than Eastern counties, and Pest County exhibits unusually low levels, likely because many businesses within Pest County maintain accounts in Budapest. The research also investigates batch credit transfers, used for social benefits and pensions, and confirms Budapest's centrality in these payments. While Budapest's role is notable, the amounts transferred between individual counties often approach the volumes related to Budapest, suggesting significant inter-county economic connections. Direct debit transactions, while designed for utility bill payments, are more common in the financial sector (insurance, building societies) than in traditional public utility sectors. This concentration is partly due to the concentration of non-traditional utility providers in Budapest, but also partly because banks, with their stronger bargaining position, often mandate the use of direct debit for loans and other services. The study suggests there is significant potential for growth in direct debit usage among traditional public utility companies.

Credit transfers emerge as the most prevalent payment method in Hungary, both in terms of the number of transactions and the total amount transferred. This dominance is reflected in the geographical distribution of transfers, which closely resembles the overall payment volume map. Budapest's central role is particularly striking, significantly outperforming all other counties. Western counties generally exhibit higher transaction volumes compared to eastern counties, with Pest County notably lagging behind. This lower volume in Pest County is likely attributed to many Pest County businesses maintaining accounts in Budapest rather than locally. The research emphasizes that state-related redistributions (pensions, public servant wages), which constitute a substantial portion of direct credit transactions, are excluded from the regional maps and tables to ensure a clearer analysis of other economic relationships. While Budapest’s central role is undeniable, its dominance is less pronounced with credit transfers than with simpler transfers; inter-county-seat relationships appear stronger in this specific payment method.

The analysis delves into the characteristics of direct debit transactions, designed primarily for settling utility bills. However, the study reveals that the usage patterns of direct debit in Hungary differ significantly from those observed in Western Europe, partly due to consumer distrust and technological developments. Direct debit transactions show a higher concentration in the financial sector (insurance companies and building societies) compared to traditional public utility sectors (gas, electricity, water), despite the method being originally intended for utilities. This discrepancy is partly explained by the concentration of many non-traditional public utilities (telecommunications, internet providers) in Budapest and banks having stronger leverage to encourage direct debit use. The study highlights that traditional public utilities have considerable untapped potential for direct debit adoption, but further research is needed to understand the barriers to realizing this potential. Budapest’s central role is again prominent, mirroring the distribution of many other payment types. Surprisingly, despite this, in terms of debits, Budapest only ranks 76th, preceded by smaller settlements and county seats, implying that smaller settlements show higher utilization of direct debit.

The study also examines specialized payment methods like batch credit transfers and batch collection orders (direct debit). Batch credit transfers are highly efficient for mass payments, frequently used for distributing social benefits and pensions. Budapest's dominance is clearly observable in these transfers as well; however, the amounts transferred between counties are often comparable to the amounts transferred to or from Budapest, suggesting significant inter-county economic relations. Direct debit transactions, used for collecting payments (typically for utilities), have a high rejection rate (around 16% of transactions and 23% of value), largely due to insufficient funds in accounts, especially later in the month. This is mostly related to smaller payment amounts, mitigating the risks for the banks involved. The average amount transferred via direct debit is significantly lower than that of credit transfers, reflecting the nature of the payments involved. The method of allocating transaction volumes and amounts (to the settlement date rather than the initiation date) is also explained, acknowledging the T+1 settlement day for small-value interbank clearing, typical for the Hungarian system.

The research concludes with an international comparison of Hungary's payment methods, utilizing data from the ECB's Blue Book and BIS's Red Book. Hungary's performance is comparatively lower than several other European countries regarding the population-proportionate use of direct debit, notably lagging behind Denmark and the Netherlands. The gap relative to Germany, an advanced economy, is comparatively smaller. This comparison focuses solely on interbank transactions as intra-bank data is not fully comparable due to methodological differences. The study highlights that credit transfers are particularly suitable for high-value transactions, making the analysis of payment methods by value distinct from analysis by volume. The overall assessment suggests considerable room for improvement in Hungary's payment systems' efficiency and modernization, particularly considering the potential for increased use of direct debit and the progress towards the Single European Payment Area (SEPA).

The study compares Hungary's ATM availability to that of other European Union member states. The data reveals that Hungary lags behind other EU members in terms of ATMs per capita. This is particularly evident when compared to Western European nations. While similar to other Central and Eastern European countries (CEE) in this respect, there is a consensus that a more widespread adoption of cashless payment methods would be beneficial. The analysis shows that even compared to countries like Denmark and the Netherlands, which are considered relatively less advanced in cashless payments, Hungary has room for improvement. Even Sweden, despite its reputation for sophisticated cashless systems, has a lower ATM density than Hungary. The study highlights the uneven distribution of ATMs within Hungary, with a significant concentration in larger cities and a notable absence in many settlements. While access to cash is somewhat improved by cash withdrawal points at savings co-operatives and post offices with POS terminals, this is limited to their operational hours and cannot fully compensate for the lack of ATMs.

The research analyzes the distribution of Point of Sale (POS) terminals in Hungary, revealing an even more uneven distribution than ATMs. The data shows a significant concentration of POS terminals around Budapest and Lake Balaton, and especially in tourist destinations. Spa towns and villages near these locations show many times higher POS terminal densities than the average for smaller settlements. International comparisons indicate that CEE countries, including Hungary, lag significantly behind Western European countries in POS terminal density. This is largely due to the longer-standing history of bank card usage in Western Europe. It's noted as somewhat surprising that several Eastern European countries show better figures than Germany. The study concludes that the usage of bank cards in Europe is still strongly linked to tourism, with the costs and risks of using cash and currency exchange being significant factors that drive the higher density in tourist areas.

The section examines the number of bank accounts per capita in Hungary and its international context, emphasizing the limitations and nuances in data interpretation. The study defines a 'bank account' as an account involved in at least one interbank transaction during September-October 2008, excluding dormant and purely intra-bank accounts. This creates a methodological difference compared to typical international comparisons. Despite this difference, the analysis shows that Szekszárd ranks first in Hungary (2.6 bank accounts per person), followed by Veszprém and Békéscsaba. A significant bias is acknowledged: residents of smaller settlements often open accounts in larger nearby settlements for convenience, leading to an overestimation of accounts in larger areas and underestimation in smaller neighboring ones. The research notes the difficulty of defining a socially ideal number of bank accounts per capita, given that businesses are mandated to have accounts, and large corporations often hold numerous accounts across various banks (over 1 million legal entities in Hungary). Individuals, too, frequently hold multiple accounts. The study concludes that a simple 'more accounts equals more development' assumption is not universally applicable, considering the influence of factors like corporate practices and the prevalence of banks requiring account openings for loans.