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We never used a lot of credit cards in stores, and we declined cash payments

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MNB examined last year’s electronic and cash payments data and analyzed payment transactions. Books on the topic Professional article As a result of the Covid-19 pandemic, most payment methods declined in the first two (March-June) and second (August-December) waves, as low-value cash payments were strongest, while electronic payment methods became more popular. In multiple payment situations. Due to general caution with travel and restrictions in place, there has also been a significant drop in in-person payments abroad.

On the other hand, from a cash flow point of view, the clear winner in prolonging the coronavirus epidemic has been online card payment, and the value of online purchases has increased dramatically, especially in Hungary, greatly surpassing the already significant expansion. In terms of card types, domestic credit card transactions declined to a much greater extent than moderately increased debit card payments.

Source: MNB

While the number of individual transfers used by households and businesses alike increased by 3 percent in 2020, group transfers (mainly wage payments, and other regular transfers), direct deductions used by residents (loan repayments, account payments) and the state treasury. . The number of transactions sent (mainly corporate tax payments) decreased by 3-9 percent. In the spot and instant systems, the number of small-value transfers (between 0-50 thousand HUF) was much higher than the same period in 2019 every month since spring.

Based on this, it is assumed that as a result of the epidemiological situation, some previous low-value cash transactions may have been permanently redirected to the instant payment system launched in early March 2020, which provides instant payment service available to all customers from all banks.

Note the authors of the article.

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The demand for electronic payment has increased in stores

Some purchases, including card payments, have been diverted from range under 5,000 HUF to higher-value bands, possibly due to changing shopping habits due to the virus. As a result of the coronavirus pandemic, residents are buying less, but spending more value afterward. Due to the increase in the limit for contactless payments without a PIN code to 15,000 HUF initiated by MNB, as well as the change in consumer habits and are still in place as a result of the first wave of the epidemic, 91% of card transactions can be paid without a physical contact, as in the case of the 5000 limit. HUF. This could also support the long-term use of electronic payments.

Source: MNB

As a result of the larger decline in cash payments and a moderate decline in card purchases, the share and value of electronic transactions also rose significantly within online cash register payments, with particularly strong increases in April, May and then December.

Consequently, 40 percent of the value of purchases was made electronically in 2020, on an annual basis, and the share of card payments increased by 5 percentage points to 22 percent in terms of the number of items, which corresponds to the largest annual growth since the cash register database was on. Internet.

Source: MNB

According to a general survey conducted in the fall of 2020, more and more people are choosing electronic payments as a result of the Coronavirus pandemic, which is in line with the results obtained from various transaction databases. Almost 40 percent of respondents indicated that they would often pay online in the future as a result of the Coronavirus pandemic.

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The demand for cash

The coronavirus pandemic has had a two-way effect on cash demand over the past year.

The demand for cash increased dramatically, particularly during the first wave of the epidemic in Hungary, while the cash use of transactions, that is, cash payments, fell sharply.

This phenomenon was not unique to Hungary, but was a feature of almost all countries with advanced economies in 2020. In March 2020 – in relation to the emergency that the Hungarian government ordered due to the first wave of the coronavirus epidemic – there was a cash flow Exceptionally large from Magyar Nemzeti Bank for 8 working days, reaching 250 billion CHF, and 5-7 months of natural growth based on previous trends. Answered. The initial severe period of the epidemic was followed by a major correction, with a significant drop in demand in April and May, and in the summer months most cash flow indicators reached or approached their previous values, and finally in the last third of another wave of 19 epidemics causing a further decline in the demand for cash , Especially in December. As a result of this volatility in demand, money in circulation increased from 6530 billion HUF to 7164 billion HUF in 2020 last year, which corresponds to an increase of 634 billion HUF, or 9.7 percent.

Thus, the intensive cash demand is not mainly generated through the use of transactions during the epidemiological situation, but rather reflects the response of the population’s reserves due to the uncertain situation. International experience, as well as related research, confirms that in the event of social and economic crises, residents usually begin to accumulate more cash than usual, and treat cash as a kind of contingency reserve. This phenomenon is present in most developed economies, such as the countries of the euro area, the United States of America, Israel, the United Kingdom, Australia, Canada and the countries of our region in their own currency (the Czech Republic and Poland) since 2020. When evaluating the above-mentioned processes, it can be said that the dynamic growth of electronic payments and the simultaneous expansion of the cash stock They are not two contradictory processes – as the authors of the professional article believe.

Financial and Corporate Information Technology 2021

Payment trends will also be discussed in detail at the Financial and Corporate Information Technology 2021 conference on June 3. Register here!

Cover image source: Getty Images.