It is used more and more often fintech-applications are also used by Hungarians, although there is a considerable difference in the way of use compared to Western European countries, overall we are not doing badly. Foreign-based financial service providers are already considered a significant player in the domestic payment market. According to data from the Magyar Nemzeti Bank (MNB), at the beginning of the year, they issued nearly 700,000 physical and 1.25 million virtual payment cards to Hungarian customers.
In the fourth quarter of 2023, 76 percent of customers used the traditional bank cards of foreign service providers for purchases, while this ratio was only 71 percent for Hungarian banks. In the case of foreign-based financial companies, the virtual card is not very popular: only 35 percent were used. The low number can be explained by the fact that, for example, at Revolut, we cannot withdraw cash with the virtual bank card.
If we want to use the ATM cash withdrawal, we have to order the physical card, for which only the shipping costs have to be paid at the mentioned fintech companies.
The combined size of the foreign financial service providers is already such that they have a customer base equivalent to that of a medium-sized Hungarian bank, so they would be the fifth largest bank overall.
We like to pay by mobile
Despite the fact that fintechs are comparable in size to domestic banks, significant differences can be observed in how customers use their cards from Hungarian and foreign service providers. Moreover, the difference is also visible in the use of mobile wallets. While only 23 percent of the cards of Hungarian service providers were registered in mobile wallets at the end of 2023, this ratio was 69 percent for foreigners.
They stay competitive with cheap and convenient service
When we talk about fintechs, their biggest advantage is that a good part of the basic services – in some cases all of them – completely free. Many customers use these service providers because account management is free, foreign exchange rates are favorable and an unlimited number of single-use virtual cards can be created. The latter is a huge advantage, since one of the best ways to protect our card data is to use “disposable” payment cards.
Hungarians typically use fintech applications not instead of their traditional bank accounts, but in addition to them, although a counterexample can be mentioned from the group of twenty-somethings. Nonetheless the presence and market acquisition of foreign actors indicates that customers are open to new banking solutionsas long as they are cheaper and more convenient for them.
The competition created by new players also encourages domestic banks to improve their services, so for example mobile wallet payments or currency exchange at a favorable exchange rate are increasingly appearing at traditional banks as well.
In our previous article, we summarized how you should pay on vacation. Should you choose a bank card or cash? Should we pay in forints or euros at the terminal? – our analysis also answers these questions, which you can read here.
Fintech abroad, traditional bank for cash
In terms of turnover, cards issued by foreign players are used by customers abroad almost four times as often as cards from domestic service providers. Customers made a total of more than 125 million purchases with the cards of foreign service providers, worth approximately HUF 1,000 billion in 2023, compared to 1.85 billion transactions, worth HUF 11.5 billion, conducted by domestic players.
Thus, it can be said that almost a tenth of Hungarian customers’ purchases are made with these cards: for foreign operators, the annual purchase turnover per physically issued card was HUF 1.43 million, which means approximately HUF 119,000 per month. By the way, this is 77 percent of the similar data of domestic service providers.
Roughly one-tenth of the transactions conducted with cards issued by Hungarian players took place abroad during the year, in contrast, two-thirds and roughly half of the value of purchase transactions with cards from foreign service providers were foreign. Favorable exchange rates clearly play a big role heredue to which Hungarian customers often use these services only for foreign use.
With foreign cards, 44 percent of the value of purchases was made online, while this was only 30 percent with Hungarian-issued cards. While 17 of the number of purchases and 30 percent of the value of purchases with Hungarian cards were made through a remote acceptance channel, almost a quarter of the number of purchases and 44 percent of the value with the cards of foreign players were made via remote (typically internet) payment.
While a third of the value of transactions with Hungarian cards in 2023 was cash withdrawals, with foreign players this is only 9 percent. Cash withdrawals accounted for 5 percent of the transactions conducted with Hungarian-issued cards, but this represented a third of the total value of the transactions.
Usage habits are therefore very different, which is not surprising due to the different business policies of individual service providers. On the one hand, it is typically not possible to request free cash withdrawals of HUF 150,000 with foreign service providers, but there is only a lower limit that can be used abroad in foreign currency.
Source: www.economx.hu
