Will paying by cash be terminated in Hungary?

Never have Hungarians stored so much money at home, and the banks are not liking it. To have cash does not only have economic and social costs, but clients feel it on the weight of their wallets as well when they keep their savings in cash. The causes and possible solutions have been revealed by a recent study – one of which is none other than terminating cash in big sums. And what will come of it? It all depends on the decision-makers.

The number of cash payments is astonishingly high in Hungary – to be exact, it is at an all-time high. Cash use has increased by 18.7 per cent in the past year and has reached six thousand billion forints, about €17,947,422,324, reported Penzcentrum. This is shockingly high. So bad, in fact, that we are in sixth place in the European Union, as cash substance in proportion to GDP is 14.9 per cent. The banking association lists the following as causes:

• low prevailing money market rates,
• transaction fees that have made non-cash payments more expensive (mainly transfers),
• free cash withdrawals two times a month up to 150,000 forints (€449)
• a high rate of black and grey economy,
• not many options for electronic payments,
• rate of pension, pension-like services, and support being paid in cash.

According to the study, Hungarians like cash because it makes immediate, anonymous payments possible. Many get their income and pension in this form, and like that, it has a physical form – this is a unique Hungarian attitude. Of course, the disadvantages are known as well: cash comes with incredibly high social costs. The study states that costs related to cash give the GPD a 0.4 per cent kick, and the shadow economy takes 1.3 per cent away from the economy – these together are costs that exceed a thousand billion forints (€2,992,609,612), which we pay indirectly. According to experts, keeping cash cost around 200-400 billion forints (€598,531,590-1,197,063,181) in 2018.

But Penzcentrum adds what the study left out: cash is not that safe. Although Hungarian bank fees are high and thus keeping cash may be cheaper than having a bank card, in terms of comfort and safety, it is easily damaged, can be lost, stolen, and after having been stolen, it is easily spent immediately.