Two more months and we can forget about cash for good in Hungary

Not much time left

There are only two months left for merchants currently accepting only cash payment to prepare to accept some form of electronic payment, as well. Installing the remaining card terminals from the Finance Ministry’s support programme seems to be an obvious solution, but instead of that, or rather in addition, it is worth creating the opportunity for customers to pay with instant bank transfer.

Simple tool

Until the use of banking applications based on instant bank transfers becomes widespread, it is worth trying to make bank transfers as simple as possible. The best way to do this is to use a secondary ID: instead of a bank account number comprising up to 24 digits, for a bank transfer it is enough for the customer to give the phone number, email address or tax number used by the seller as a secondary identifier, this way shortening the procedure and reducing the chance of errors as well.

Already in use

From the statistics published by GIRO Zrt on penzforgalom.hu, it is clear that secondary identifiers are already being used, but they have not become widespread yet. On October 25, for example, secondary identifiers were used for 0.1 percent of all bank transfers, which accounted for 0.07 percent of the total cash flow. E-mail addresses were used in 49 percent of the cases, while in 51 percent a phone number was provided. At the same time, 61 percent of the total amount transferred with the use of secondary IDs was sent to mobile phone identifiers and only 39 percent to e-mail address IDs.

On that specific day no transfers were made with the use of a tax number or tax identification number; these identifiers, however, are also used on other days, although in a relatively small number of cases.

More online shopping

Due to the pandemic there has been a significant change in shopping habits this year: e-commerce i.e. the number and value of online purchases has skyrocketed. According to a report by digital marketing agency Growww Digital, after March 17, when the emergency came into effect the growth in online purchases intensified and by May it doubled compared to January 2020. Although the expansion slowed down in the summer, there is no sign of a marked decline, as even at the low point in August the increase was more than 50 percent higher than at the beginning of the year. The turnover of e-commerce began to rise sharply again at the end of September as a result of the second wave of the pandemic.

Cash flow data of the Hungarian National Bank also confirm this trend, showing that the value of online purchases increased significantly: the number of transactions grew by 43 percent, while the total basket value of purchases rose by almost 50 percent compared to the second quarter of 2019.

It’s simple and it helps to avoid wrong transactions

In online purchases the record-breaking number of electronic payment transactions are either made directly by card payment (by providing card details), or a significant part is made by bank transfer. In this case it is particularly convenient for the customer if instead of having to enter the 24-digit bank account number of the beneficiary, a much shorter telephone number, tax number, or e-mail address can also be used.

Therefore, online merchants are particularly encouraged to use secondary IDs: customers may find this simple payment method attractive by itself, and, at the same time, it can considerably reduce the chance of errors, which may be an important factor, as it is not possible to get back the amount of a wrong transaction without the approval of the receiver, so the process can be time consuming.