Hungary Regulates Minimum Currency Infrastructure Requirements

Hungary is the latest country to intervene in the cash cycle to ensure ongoing access to cash for its citizens in light of declining usage, with a new regulation from Magyar Nemzeti Bank (MNB) governing minimum requirements for the number of ATMs operated by commercial banks.

The amendment of ‘MNB Decree on the processing and distribution of banknotes, and on technical tasks relating to the protection of banknotes against counterfeiting (Banknote Decree)’ was issued in January. It sets out the number of ATMs to be operated primarily on the basis of the number of payment cards with cash functionality issued by each commercial bank and credit institution. The number of cards issued is defined as the total number of debit cards plus credit cards issued less a weight of 0.5.

On the basis of this indicator, the MNB has defined four categories, and for each of these four categories it sets an expected average number of ATMs available per three groups of settlements (districts of the capital, county seat, other settlements in the county).

In addition, the regulation also provides that credit institutions issuing bank cards in the range of between 600,000 and 1.2 million and more than 1.2 million must operate ATMs in at least 65% (214 towns) and 80% (263 towns), respectively, of the towns other than county seats.

In addition to territorial coverage, average annual cash withdrawal turnover per ATM and average annual deposit turnover per ATM with a deposit function must not exceed the benchmark values set by the MNB. The benchmarks are established on the basis of previous years’ ATM cash withdrawal and deposit turnover, with the current values averaging HUF 2.3 billion per ATM per year (€5.9 million) for cash dispensing machines and HUF 3.25 billion per year (€8.3 million) for deposit machines.

The provisions on the ATM infrastructure were introduced after months of preparation, impact analysis and consultation. There are banks with a significant network that are already in compliance. For those credit institutions that will need to expand, network upgrades must be completed by 2025.

By international comparison, the level of ATM coverage in Hungary is significantly lower than in countries with similar cash usage habits and of a similar size. The number of ATMs per 100,000 adult inhabitants is much lower in Hungary than the average of some Western European countries, but also below the average of the other Visegrad countries (Poland, Czech Republic, Slovakia) plus Slovenia.

Although the total number of cash withdrawals has been falling for years, the value of cash withdrawn from teller machines, apart from the transitional period of COVID-19, has been rising continuously. The value of cash withdrawals per ATM exceeded HUF 2 billion (€5.1 million) by 2022. With the emergence and spread of ATMs capable of accepting cash payments, there has also been a rapid increase in the number and value of deposit-type transactions.

At the same time, Hungarian commercial banks have been slimming down their ATM networks, which has led to an increase in the network load as turnover has kept growing. This has been compounded by the closure of bank branches and a reduction in opening hours of cash offices.

Taking all these into account, the aim of the MNB’s regulation is to ensure that in the design, maintenance and operation of the Hungarian cash infrastructure network, the security of supply and fair access to cash for the public are also taken into account, in addition to the operators’ business policies and cost-efficiency considerations.

This should lead to a more equitable national cash network in terms of social cost allocation and a robust national cash network in terms of the security of supply.