European Payment Cards - Volume 2: Hungary

11. Hungary
Market Overview
Market Structure

While credit and charge card issuance is growing,

debit cards continue to account for more than 90% of
cards issued. Cards are mainly used for cash
withdrawals, though use for payments is growing.
Cash withdrawals accounted for over 75% of
transactions by number and 90% of transactions by
value in 2001.
OTP, the former state savings bank which dominates
the banking sector, is the largest card issuer. It has
issued over 2.5 million cards.

International Schemes

Almost all Hungarian bank cards carry one of the

Europay or Visa badges. Europay is the larger
scheme, with 3.1 million cards at end 2001 compared
with 1.8 million Visa cards. Almost 80% of the
Europay cards are Maestro and/or Cirrus. Over 85%
of the Visa cards are Electron cards.

Interbank Organisations

GIRO Bankcard

Key Statistics
Cards

Debit: 4,632,000
Charge and Credit: 454,000

POS Terminals

18,734

ATMs

2,544

Purchases

Number: 28.6 million

Value: HUF 252 billion (1.0 billion)

Cash Withdrawals

Number: 91.6 million

Value: HUF 2,466 billion (9.6 billion)

Notes:
1. Key Statistics are for 2001 unless otherwise specified.
2. Payment and cash withdrawal value figures are for domestic and international transactions
on Hungarian issued bank cards.

Sources: National Bank of Hungary, Europay International, Visa CEMEA

HU - 1

European Payment Cards - Volume 2: Hungary

Banking Sector
OTP, the former state savings bank, is the largest Hungarian Bank. OTP ranked as
the sixth largest bank in central and eastern Europe at end 2000 according to an
analysis by Bank Austria. It accounts for over 40% of the market in customer loans
and deposits. OTP had assets of HUF 2,127 billion (8.6 billion) at the end of 2001.
It is one of the few remaining indigenous banks in central and eastern Europe without
a major western bank as owner or majority shareholder. However, foreign investors
owned almost 47% of its share capital at end March 2002.
Other major Hungarian banks are:

MKB (Magyar Klkereskedelmi Bank Rt Hungarian Foreign Trade Bank Ltd)

in which Bayerische Landesbank has a majority stake
K&H (Kereskedelmi s Hitelbank Rt) in which KBC of Belgium has a majority
stake, and
CIB (Central-European International Bank Ltd) in which IntesaBci has a majority
stake
Budapest Bank which is owned by GE Capital

K&H has merged with Magyar Bank, controlled by ABN AMRO, to create Hungarys
second largest banking group. Following the merger, KBC owns 59% of the enlarged
K&H and ABN AMRO 40%.
A number of foreign banks are active in the Hungarian market. These include
Citibank, Erste, ING and BNP in partnership with Dresdner. HVBs acquisition of
Bank Austria, both of which already had operations in Hungary, has given it the
largest direct presence of a foreign bank in the market.

Market Infrastructure
Card transactions are cleared through three systems, The GIRO Bankcard Company
(GBC), the only domestic card clearing and settlement company in Hungary, and
Europay and Visa which provide domestic clearing services in Hungary. As of early
2002, GBC was 74.58% owned by K&H and 25.42% owned by HVB Bank Hungary.
However, its services are used by a range of other banks as well.
The number of ATMs had reached 2,544 by end 2001. In addition, cash withdrawal
facilities are available at approximately 8,000 terminals installed in bank branches and
in post offices. The ATM figures have shown little growth during the last three years.
According to the central bank, POS terminals installed in bank branches and post
offices are generally used to withdraw larger amounts of cash. The average
transaction value was HUF 20,532 (80) at ATMs and HUF 113,745 (443) at POS
terminals in 2001.

HU - 2

European Payment Cards - Volume 2: Hungary

OTP Banks BankPont network accounts for almost half of the ATMs in Hungary.
There were 1,091 OTP ATMs at end 2001. Among the other ATM operators in
Hungary is Euronet Worldwide, which operates the largest independent ATM
network in Europe. By mid 2002, it had over 350 ATMs in Hungary. It offers
recharge services to prepaid customers of all three GSM mobile operators in Hungary.

Electronic Cash Withdrawal Equipment

1997
ATMs
1,553
Banks/Post Offices
1,706
Source: National Bank of Hungary

1998
2,070
6,794

1999
2,358
7,764

2000
2,476
7,914

2001
2,544
8,068

The number of POS terminals was 18,734 at end 2001 according to the National Bank
of Hungarys statistics. The apparent fall in terminal numbers during 2001 in fact
reflects the elimination of parallel reporting which affected statistics for previous
years. The number of POS terminals accepting Europay and Visa cards was
approximately 18,200 out of 18,734 terminals at end 2001.

POS Terminals
Terminals

1997
14,348

1998
18,171

1999
20,643

2000
22,085

2001
18,734

Note:
Apparent fall in terminal numbers in 2001 reflects the elimination of earlier parallel reporting.

Source: National Bank of Hungary

Europay and Visa acquisition is concentrated among a small number of banks.
Citibank owns the exclusive right to accept Diners cards. Last year, Commercial and
Credit Bank owned the right to contract with retailers to accept American Express
cards, in addition to American Express Hungary Ltd. Commercial and Credit Bank
has the right to acquire JCB in Hungary.

Market Size and Dynamics

Card in Issue
The number of bank issued cards had reached 5.1 million by end 2001 according to
the National Bank of Hungary, Hungarys central bank. This represents an increase
of 13.8% on 2000. The number of bank cards in issue has more than doubled during
the last five years.
The Hungarian market is dominated by debit cards. By end 2001, debit cards
continued to account for over 90% of Hungarian payment cards. With the number of
private bank accounts increasing by 50% to 6.6 million in 1999, the potential for

HU - 3

European Payment Cards - Volume 2: Hungary

further growth remains significant. The proportion of cards which are credit or charge
cards is slowly increasing. Credit and charge cards have grown from 1% of total
cards in issue at end 1998 to 9% of the total by end 2001.
According to the central bank, cards linked to credit accounts can be divided into two
distinctive groups. There are standard credit cards and cards with no interest-free
period. Slightly more than a half of cards are linked with credit accounts but do not
have an interest-free period.

Payment Cards in Hungary

December 31 - 000s
Debit cards
Credit cards
Total
Europay:
- Debit
- EC-MC
Total
Visa
International total

1997
2,052
<1
2,052

1998
2,905
29
2,934

1999
3,695
148
3,843

2000
4,192
276
4,468

2001
4,632
454
5,086

750
312
1,062
708
1,770

1,413
395
1,808
1,038
2,846

1,864
495
2,360
1,282
3,642

2,408
529
2,937
1,517
4,454

2,457
788
3,245
1,775
5,020

Notes:
1. International cards are included in, not additional to figures for debit and credit cards.
2. Charge cards included in credit cards.
3. Europay and Visa numbers in this table are those published by Europay International and
Visa CEMEA. There are slight discrepancies between these numbers and those
published by the central bank (National Bank of Hungary) see next table and section on
the international schemes.

Sources: National Bank of Hungary, ECB Blue Book, Europay International,

Visa CEMEA
Europay and Visa badged cards dominate the market, accounting for over 95% of
cards in issue at end 2001. There are a small number of American Express and Diners
Club charge cards, with the remainder private label cards.

Bank Issued Payment Cards

End December
2001
Europay
Visa
Diners Club
American Express
Private label cards
Total

Debit

Credit

Charge

Total

2,818,517
1,702,355
111,313
4,632,185

286,020
84,365
76,996
447,381

94
18
3,510
2,600
6,222

3,104,631
1,786,738
3,510
2,600
188,309
5,085,788

Note: Citicards (which carry the Cirrus badge) are included in the Europay total

Source: National Bank of Hungary

HU - 4

European Payment Cards - Volume 2: Hungary

In addition, 393,000 Hungarian fuel cards had been issued by end 2001. These are
mainly issued to firms, though Aral and Total offer cards to private customers as well.
Card Use
The Hungarian central bank (National Bank of Hungary) published detailed statistics
on payment card use in Hungary. There were 124 million card transactions (both
purchases and cash withdrawals) in Hungary in 2001 with a value of HUF 2,822
billion (11.0 billion). This comprised:

118.3 million domestic transactions on Hungarian cards with a value of HUF

2,649 billion (10.3 billion)
5.6 million transactions on foreign cards in Hungary with a value of HUF 173
billion (0.67 billion)

In addition, Hungarians made 1.8 million card transactions with a value of HUF 68
billion (0.27 billion) while abroad in 2001.
Hungarian cards are mainly used for cash withdrawals. Withdrawals accounted for
92% of the HUF 2,649 billion value of domestic transactions on Hungarian cards in
2001. This was little changed on 2000. Purchases accounted for a much higher
proportion of international transactions, but international transactions accounted for
only 2.5% of the value of card transactions on Hungarian cards in 2001.

Payment Card Transactions 2001

Value of Transactions (HUF billion)

(1) Cards issued & used in Hungary
(2) Foreign Cards used in Hungary
(3) Hungarian cards used abroad
Total in Hungary (1) + (2)
Total on Hungarian cards (1) + (3)
Number of Transactions (millions)
(1) Cards issued & used in Hungary
(2) Foreign Cards used in Hungary
(3) Hungarian cards used abroad
Total in Hungary (1) + (2)
Total on Hungarian cards (1) + (3)

Cash
Withdrawal

Purchase

Total

2,429.4
99.2
36.2
2,528.6
2,465.6

220.0
73.3
32.2
293.3
252.2

2,649.4
172.5
68.4
2,821.8
2,717.8

91.0
2.6
0.6
93.6
91.6

27.3
3.0
1.3
30.3
28.6

118.3
5.6
1.8
124.0
120.2

Notes:
1. Totals may not agree because of rounding.
2. National Bank of Hungary uses the term volume of transactions to describe the number
of transactions. For consistency with use elsewhere (and in particular the international
schemes use of the term volume to describe value!), the term number of transactions is
used in this profile.

Source: National Bank of Hungary

HU - 5

European Payment Cards - Volume 2: Hungary

Average transaction values on cash withdrawals differ significantly from those of
purchases. There were 118.3 million domestic transactions on Hungarian issued cards
in 2001. Of these, 91.0 million (76.9%) were cash withdrawals and 27.3 million
(23.1%) were purchases. The ATV of HUF 26,697 (104) for cash withdrawals was
more than double the HUF 8,058 (31) ATV for purchases.
Debit cards dominate Hungarian card use. The 116.2 million debit card transactions
in 2001 accounted for 97% of total bank card transactions. The HUF 2,658 billion
(10.4 billion) value of these transactions accounted for 98% of the total HUF 2,718
billion (10.6 billion) value of transactions on Hungarian cards. More than 90% of
debit card transactions by value and 76% by number in 2001 were cash withdrawals.

Hungarian Cards - Transactions by Card Type 2001

Cash
Withdrawal

Purchase

Total

2,429.7
35.2
0.7
2,465.6

228.1
21.7
2.3
252.2

2,657.8
57.0
3.0
2,717.8

89.7
1.8
<1
91.6

26.5
2.0
<1
28.6

116.2
3.9
0.1
120.2

Value of Transactions (HUF bn)

Debit cards
Credit cards
Charge cards
Total
Number of Transactions (millions)
Debit cards
Credit cards
Charge cards
Total

Notes:
1. Figures cover both domestic and international transactions on Hungarian cards.
2. Totals may not agree because of rounding.

Source: National Bank of Hungary

Trends in Card Use
Statistics for the last three years capture the rapid growth in the Hungarian market.
Transactions on Hungarian cards increased by almost 40% between 1999 and 2001.
However, purchases as a proportion of total card transactions increased only modestly
from 16% of transactions in 1999 to 24% in 2001.

HU - 6

European Payment Cards - Volume 2: Hungary

Hungarian Cards Value and Number of Transactions

Value of Transactions (HUF bn)
Cash Withdrawals
Purchases
Total
Number of Transactions (millions)
Cash Withdrawals
Purchases
Total

1999

2000

2001

1,567.3
122.7
1,690.0

2,043.4
187.9
2,231.3

2,465.6
252.2
2,717.8

73.4
13.6
87.0

83.0
20.5
103.6

91.6
28.6
120.2

Notes:
1. Figures cover both domestic and international transactions on Hungarian cards.
2. Totals may not agree because of rounding.

Source: National Bank of Hungary

Changes in legislation during 1999 facilitated the use of cards according to the central
bank. First, as of January 1 1999, the salaries of civil servants have been paid into
bank accounts. Second, a new government decree regulating electronic means of
payment includes a consumer protection clause, protecting a cardholder from fraudrelated losses once the card issuer is notified that a card has been lost or stolen.
Major Issuers
The market is concentrated. Four banks issue 83% of cards and are responsible for
87% of card turnover according to the central bank.
OTP Bank dominates the Hungarian market. It had issued approximately 2.6 million
cards on retail account at end 2001 (excluding cards issued solely for customer
identification). OTP issues both Europay and Visa cards. It issues both Maestro and
EC-MC and both Visa Classic and Electron. Among OTPs cards is the C-loan card,
its first revolving credit card. It had issued 72,000 C-loan cards by the end of 2001.
K&H Bank is a major merchant acquirer in Hungary. At end 2000, it had a market
share of almost 30%. Bank cards issued by K&H had reached 273,000 by end 2000.
In June 1998, it was announced that K&H Bank would issue forint denominated
American Express cards in Hungary under an independent operator agreement
between the two companies.
Though primarily a corporate bank, MKB has been extending its activities in the
personal banking market. By end 2001 it had issued over 50,000 bank cards. Its card
products include the first euro based bank card introduced in Hungary.
Among foreign issuers, Citibank issues forint-based Diners Club cards in Hungary,
and also offers bank accounts with Citicard ATM cards which can be used
internationally in the CIRRUS network. Cetelem has started issuing its proprietary

HU - 7

European Payment Cards - Volume 2: Hungary

Aura card in Hungary. GE Capital is present in the market through its ownership of
Budapest Bank.

International Schemes
The number of international payment cards was approaching five million by the end
of 2001. Unlike in some of the other CEE markets, the great majority of Hungarian
cards are internationally-badged. The major banks issue cards under both schemes.
Europay cards accounted for just over 60% of Hungarian bank cards in issue at end
2001.
In terms of card brands, almost 80% of the Europay cards at end 2001 were Maestro
and/or Cirrus. Over 85% of the Visa cards were Electron cards.

Europay and Visa Compared - 2001

Cards in issue (000s):
Debit
Credit and Charge
Total
Value of Trans. (HUF billion):
Debit
Credit and Charge
Total
Number of Transactions (m):
Debit
Credit and Charge
Total
Acceptance:
Merchant Locations
POS Terminals
ATMs

Europay

Visa

Total

2,819
286
3,105

1,702
84
1,787

4,521
371
4,891

1,686
36
1,722

815
19
834

2,501
55
2,556

72.7
2.1
74.9

41.2
1.7
42.9

114.0
3.8
117.8

17,186
18,224
2,444

17,123
18,147
2,362

na
na
na

Notes:
1. Figures for value and number of transactions cover both payments and cash acquisition.
2. Figures for value and number of transactions cover domestic and international
transactions on Hungarian issued cards.
3. Other than the ATM statistics, the above statistics are taken from those published by the
National Bank of Hungary.
4. Europay ATM figure is for Eurocard-MasterCard. Maestro/Cirrus figure was 2,500
according to Europay.
5. Totals may not agree because of rounding.
6. In reconciling figures in the above table with those in previous tables, allowance needs to
be made for American Express, Diners Club and particularly private-label cards. There
were 2.3 million transactions with a value of HUF 159 billion on private label debit and
credit cards during 2001.

Sources: National Bank of Hungary, Europay International and Visa CEMEA

HU - 8

European Payment Cards - Volume 2: Hungary

Note that there is a slight discrepancy between the statistics published by the schemes
and those published by the National Bank of Hungary. The end 2001 total of
3,245,000 Europay cards from Europay compares with a total of 3,105,000 from
NBH. The end 2001 total of 1,775,000 Visa cards from Visa CEMEA compares with
1,787,000 from NBH. The NBH sourced statistics have been used in the table above
because of their greater detail and because they are compatible with the statistics in
the other tables in the profile.

New Products and Delivery Channels

EMV Implementation
Hungary, like other CEE markets, faces the Europay EMV liability shift on January 1,
2005 and the Visa CEMEA shift on January 2006.
The issuance of EMV cards in Hungary is now underway. Following a pilot, K&H
announced in May 2002 that, it had delivered the first Hungarian EMV compliant
chip cards. K&H has worked in cooperation with Visa on its chip project, and tested
the new cards and terminals for over a year before launch. During 2002, it plans to
install over 600 chip card terminals nationwide.

Exchange Rates
Average Exchange Rates
HUF to the:
1997
ECU / Euro
210.93
Dollar
186.75
Source: National Bank of Hungary

HU - 9

1998
240.98
214.45

1999
2000
252.80 260.04
237.31 282.27

2001
256.68
286.54

European Payment Cards - Volume 2: Hungary

HU - 10