Thanks to safer bank cards, online payment and purchase are on the rise.
The past year has definitely been the year of clicks. Many of our daily activities, including shopping and banking, have gone online, and banks have been supporting the trend by increasing their vendor network and weeding out shadier businesses, thus encouraging many to switch to online payment. Card companies have also pitched in, launching more and more cards that can be used online.
MasterCard, which accounts for 65% of the Hungarian bank card market, will make its Maestro card fit for online purchase from mid-April. Maestro cards are currently already accepted for online payment by OTP Bank. According to MasterCard regional chief Milan Gauder, the move was made to meet growing demand. Online purchases by holders of MasterCard cards issued in Hungary have grown twice as fast as purchases by cardholders in shops, Gauder said recently in Budapest.
Interestingly, the number of bank cards has not changed. It has been steady at around 9 million for a few years, which indicates that the market is saturated. The proportion of different card types, however, has changed: while the popularity of credit cards, which accounted for around 30% of all cards before the crisis, has slumped but the expansion of debit cards has made up for this loss.
There are several reasons why online payment is on the rise. Time constraints and comfort have made many overcome their initial fear of falling prey to credit card abuse. “If one sees that his or her spouse, colleague or friend encounters no problem when using a bank card to pay online, they get encouraged as well,” said Péter Homa, editor-in-chief of Bankkártya.hu, an online publication on bank cards. Some services, such as buying tickets for budget airlines, are only available online. “The opportunity of cheap travel and the increase in the number of no-frills flights have greatly contributed to the spread of online bank card payment in Hungary,” Homa noted.
Increased confidence is also reflected in the expansion of e-commerce. Although the number of e-shoppers has not increased, market turnover has climbed from HUF 60 billion in 2008 to HUF 135 billion last year, according to GKI.
The security of online shopping has been enhanced by the sending of instant text messages on cash withdrawals and deposits, improving traceability. Card companies’ attempts to cut back on credit card abuses have also had a positive effect on engaging customers that were earlier wary of giving out their card information online. Due to technical developments and the introduction of chip cards, the ratio of bank card abuses fell to 0.049% in 2010 from 0.057% in 2009, according to the data of Visa.
According to Kálmán Fejes, director of security at MasterCard Europe, the number of chip cards, which offer higher security than cards with magnetic strips, grew by 70% last year. In Hungary, 97% of all points of sale (POS) accept this new generation of plastic, as opposed to the 85% EU average. Due to its enhanced security properties and an EU legislation allowing only chip cards to be issued as of January, 2011 will most probably be the year of these smart cards.
While in Hungary, both banks and card companies are seeking ways to involve more people in online purchasing, in the US the government is trying to prevent some people from spending. A recent proposal by the Fed intends to prevent spouses with no separate income from getting credit and credit cards. The aim of the move is to stop card companies from targeting people who can’t afford to settle their bills and who run up huge debts.