Where there is an online cash register, it is mandatory to provide the option of electronic payment from Friday on. And when shopping online, you may need to enter many more IDs than before. More than 9.7 million credit card users will be affected by the changes.
Payment methods will change radically from January 1st in Hungary and across Europe. Two important rules come into force at midnight on New Year’s Eve: one of those is a common EU law on strict customer authentication. From the moment the first notes of the Anthem are played on TV, all EU online stores and banks will have to switch to the new system. This is a super-secure innovation of the PSD2 (Revised Payment Services Directive) EU regulation, which will require customers to enter new security codes in addition to the previously standard information every time they make a purchase, writes Napi.
So, anyone who wants to order pizza after midnight on New Year’s Eve and wants to pay by card may now be faced with not only having to enter their credit card details, but they will also have to confirm the purchase in the mobile banking application installed on their phone or complete the transaction on the online banking platform. It is also possible that you need to request a code via a text message, but only after you have asked for all kinds of online pin codes and telecodes from your bank, on the internet bank platform, or through the telephone customer service.
Banks are already preparing for the chaos.
OTP Bank has proactively started to introduce the strict customer authentication process since November, and in December, it warned all of its customers about what they have to do. The other banks are also preparing for the Thursday midnight switch in connection with credit card purchases. Based on the answers received by Napi, it seems that starting January, those who have a relatively new smartphone with the mobile banking application installed will be able to make purchases on the internet with a credit card.
Shopping will be a more complicated procedure for everyone else. Bank cards will require some online pin code, and transactions will typically only be approved by this pin code and another code received via text message. These codes effectively prevent unauthorised people from shopping online with others’ credit cards – at least from EU webshops. This is because online stores in other countries are not subject to the restrictions, meaning that you will still be able to buy from the United States, China, and other third countries next year by entering your standard credit card information. However, no one will be able to order pizza from a Hungarian restaurant next year with their friend’s credit card.
Making the rules stricter is well-founded because – although the Hungarian National Bank (MNB) claims that there are very few credit card frauds in Hungary compared to other countries – the statistics clearly show that online shopping is the area where the volume of such frauds has exponentially grown in recent years. In the first quarter of this year, for example, stolen or lost cards were abused a total of 1,166 times, amounting to a loss of almost HUF 13.5 million (€37 thousand), i.e. on average, a loss of HUF 11.56 thousand (€31) was caused by one card. The number of online shopping frauds in the same three months was 14,579, which is 12.5 times the number of frauds committed with stolen cards, and the total amount of damages caused exceeded HUF 310 million (€850 thousand), which is 23 times higher than that committed with stolen cards. The amount of damage caused by online shopping fraud was also much higher: it exceeded HUF 21,000 (€57).
The other very important change does not affect all European countries, only Hungary. An important amendment to the Commerce Act will take effect on January 1,
requiring all merchants and service providers using an online cash register to allow their customers the option of electronic payment.
Merchants with signs that they only accept cash can remove these from Friday because they run the risk of being penalised for not doing so.
A total of about 60,000 service providers in the fields of commerce, hospitality, and others were affected even a few weeks before the deadline, where no other payment method was accepted than cash. Merchants and hospitality workers were still lobbying at the end of November to get an extension on introducing electronic payment options. However, the Ministry of Finance gave an answer within a single day, saying that this was out of the question.
Nevertheless, the Commercial Code does not specify the form in which the electronic payment options should be implemented in the affected locations. Paying by credit card may be a convenient option for shoppers, but for merchants, they are often expensive, especially where only smaller amounts are paid. The most affordable solution might be for the merchant to issue a bank account number, to which the buyer transfers the amount of money on the receipt, and once the money arrives, the receipt is considered paid. On the other hand, if many people are queuing at the checkout, they may become quite frustrated if a customer wants to pay for a small item by bank transfer and it takes several minutes.
There are also QR code solutions, by using a static QR code that the customer can scan to access the shopkeeper’s account details, but they have to enter the amount to be paid themselves, or they can use a dynamic QR code that already contains the amount to be paid. Apart from these, card companies have also begun to offer various solutions to make transfers faster and more practical.