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MasterCard means business in digital payment race

In Hungary

There’s a lot happening on the e-payment market, where MasterCard is busy taking the lead with a host of innovative solutions, such as pre-paid cards, mobile wallets or a new instalment payment solution – to name a few. The next turn-to-cashless segment may be vending machines, Endre Eölyüs, Country Manager for Hungary and Slovenia says in this interview with the Budapest Business Journal.

Endre Eölyüs (40) has been Country Manager for Hungary and Slovenia at MasterCard since 2013. Prior to his appointment, he worked as a director of Zuno Bank Hungary and also fulfilled various roles in management positions at Budapest Bank (GE). He graduated from CEU and Szent István University (Gödöllő).

The MasterCard instalment payment solution is soon to have its debut on the domestic market, and it should sound attractive to customers wishing to settle their higher bills in more than one go. Is this going to be a win-win situation for every participant of the transaction?

Consumers in Hungary tend to be not entirely comfortable with using credit cards as the terms of use are often not clear enough to them. Our solution, creates flexibility, control and transparency, whereby users can see exactly how much money there will be due and how many equal instalments are to be expected. Banks may charge an extra fee, but in return they can offer a product with a clearly predictable payment scheme that can be communicated with simple messages. Retailers are bound to win as well, since this structure opens up new channels for a product loan of a sort that will boost their revenues.

According to MasterCard’s 2012 data, pre-paid cards represent the fastest spreading payment method worldwide. Global transactions made by “open loop” type cards will hit $822 billion by 2017, a growth of 22%. Surveys conducted in Hungary show that 61% of respondents look forward to the product. Why do you expect pre-paid cards to gain popularity in Hungary in the near future?

As a result of new legislation, pre-paid cards can no longer be requested only at banks, and customer identification rules have also become less stringent. You actually need to file identification papers in person only if you use reloadable pre-paid cards with a value of more than HUF 650,000. This simplifies procedure and revs up use.

What situations are ideal for using pre-paid cards?

Parents can give pocket money to their children in this fashion and thus keep control of their spending. Others who still lack confidence in online payment security prefer pre-paid cards to their debit or credit cards. This way they minimize risk to the amount of money the actual card carries. In Western Europe insurance companies tend to use them for settling damage payments, and allowances may be placed on them by municipalities.

What about festivals? Are they an optimal venue for these cards as well?

Absolutely. They give a lot more freedom than festival cards that can be used only at a particular event. Pre-paid cards allow you to spend any remaining amount afterwards at points of sale accepting MasterCard.

Mobile wallets are another hot topic these days. You have joined forces with Vodafone among others in this respect.

There is a lot going on as far as mobile wallets are concerned. These are all about finding ways to insert our plastic bank card into our phones. NFC-based contactless payment is one path here. But think of online shopping too, where at check-out you are asked to approve payment on your mobile, sparing the hassle to enter your bank card details every single time you buy something on the internet. In such cases entering a personal code on the phone is sufficient.

Apparently, however, there’s fierce competition out there to gain momentum on the mobile wallet front.

A lot of projects are out there that will result in banks issuing mobile wallets where user-friendly payment itself is only one, but not such a crucial element of a value package. The success of mobile wallets will be subject to how banks can identify services and determine the right communication messages that make customers like, and start using them.

Your involvement in developing mobile wallets fits well into global trends, as payment is becoming less and less physical and it’s gradually going digital. Another effort of MasterCard in this regard is MasterPass. This smart function has been available in Hungary since July 2015 and it makes shopping on the web a lot smoother. In what way does it provide added value?

So far more than 200 domestic e-stores have signed up, but worldwide you can enjoy the benefit of this function in 250,000 online shops. This is of huge advantage, because you need to enter your bank card details only once, and from then on you can pay by clicking on the MasterPass button in a comfortable way on all those websites. We are also trying to focus on websites where repeat customers are frequent, say, in the case of food delivery services. This is where such convenience is appreciated the most.

Are users actually confident about the security issue in the case of MasterPass?

You always need to use your own code to verify the transaction. The point is that you don’t leave your bank card details with an e-commerce retailer where you wouldn’t know what they might want to use them for. Those details are instead left with MasterCard, by which the required data is sent to the retailer on a case-by-case basis without giving the option for storage.

MasterCard is a dedicated ambassador to promoting a cashless life, which also helps cut the weight of the black economy. What steps can you imagine would push into this direction?

One current project on our agenda is targeting vending machines. The technology to go digital exists, but it’s always key to convince users that they do need that technology because it makes their life simpler. Now with vending machines, customers and operators alike encounter a lot of inconvenience because of cash. They would all be relieved without it. There’s a lot of potential in the 30,000 strong vending machine market where our ambition is to make most of them fully cashless.

But will operators be partners in this? They still might want to stick to cash which gives them a way to do murky business if they please.

It remains to be seen, but it’s also in their interest to play along, so we are confident. Again, it’s crucial to make the change in people’s heads so that it becomes automatic to go with cashless methods even if only small amounts of money are to be paid at a time.

Apart from the vending machine segment, where do you see particular room for bank card penetration?

In Hungary only about 20% of all retail transactions are made electronically, according to the research of Euromoney. Our purpose is to go after the remaining 80% covered by cash. It’s a viable strategy to reach out to people through simple life situations where they can experience that electronic payment is safe, fast and convenient.

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