Transcript 1. dia - Magyar Nemzeti Bank

Costs of retail payments
and payment habits of the public sector
Dr. Anikó Turján
1 April 2011.
STARTING POINTS AND OBJECTIVES
Starting points
•
•
•
•
•
•
Implementing payments
involves costs
Network market
Market mechanisms
alone are not enough to
achieve the maximal
social benefits
Costs studies by a
number of NCBs
Excessive use of cash in
Hungary
Market share of the
public sector in the
„retail” payments is
about 30%
Objectives of MNB
• Estimating the number of
„retail” payments and their
costs
• Overhauling payment habits of
the public sector and identifying
the most in-effective areas
• Investigating the options for the
increase in efficiency
• Outlining the ways for achieving
greater efficiency
Costs - dr. Anikó Turján
2
SCOPE OF THE TWO PROJECTS
Costs of payments (CoP)
Coverage
Payment habits of public
sector (PHP)
W hole economy (basically legal
Incoming and outgoing payments
economy)
related to public sector
Domestic (Ft) retail payment transactions
Number and values of domestic retail payment transactions
Costs, revenues, fees
Motivations
Potential cost savings stemming from changes in the use of payment
instruments
Ideas for policy measures
Reporting period
Number of payment instruments
Covered payment instruments
2009
6+4
7
Cash transactions
Payment card transactions
therof debit card transactions
thereof credit card transactions
Credit transfers
thereof paper based
electronic
Direct debts
Business to business (B2B) direct debits
Core (business to consumer, B2C)
direct debits
Postal inpayment money order
Postal outpayment money order for pension
Postal outpayment money order for
social benefits and other purposes
Legend: code of colour
joint aspect
Costs - dr. Anikó Turján
3
DATA
COLLECTION
in CoP
Costs - dr. Anikó Turján
4
DATA COLLECTION IN PHP
Social
security
system
- Number and values of
transactions,
- Motivations
Central
government
Local governments
Dec.
financial
funds
CR(105)90%
CR(26)85%*
* Based on data supplied by credit
institutions
Costs - dr. Anikó Turján
5
DEFINITIONS
1. PRIVATE COSTS
•
Total used resources, including the fees paid within the
payment chain
2. SOCIAL COSTS
•
•
Total used resources, excluding the fees paid within the
payment chain
 the costs of MNB, PSP-s, CiT-s, households, companies and
public sector(excluding the fees paid within the payment
chain)
3. PAID AND RECEIVED FEES
•
•
within the payment chain
e.g. CiT, banking, interchange, merchant fees, etc.
4. NET PRIVATE COSTS: RETURN ON COSTS
•
Private costs less received fees.
Costs - dr. Anikó Turján
6
OVERALL RETAIL PAYMENTS IN HUNGARY IN 2009
Payment instruments
1. Cash transactions
Volume
Value
Share based on (%)
(in millions) (in Ft billions) volume
value
2 834,82
51 454,18
76,08%
12,20%
150,25
1 050,35
4,03%
0,25%
3. Credit card transactions
24,57
200,42
0,66%
0,05%
4. Credit transfers, thereof
277,23
362 772,29
7,44%
86,02%
47,13
230,10
61 671,29
301 101,00
1,26%
6,18%
14,62%
71,40%
0,86
507,43
0,02%
0,12%
77,00
639,97
2,07%
0,15%
271,48
2 990,43
7,29%
0,71%
22,00
1 541,93
0,59%
0,37%
15,98
440,80
0,43%
0,10%
52,08
118,35
1,40%
0,03%
3 726,26
421 716,15
100,00%
100,00%
2. Debit card transactions
paper based credit transfers
electronic credit transfers
5. Business to business (B2B) direct debits
6. Core (bussines to consumer, B2C) direct
debits
7. Postal inpayment money orders
8. Postal outpayment money orders for
pension
9. Postal outpayment money orders for
social benefits and other purposes
10. Prepaid (food and recreation) vouchers
Total
Legend: code of colours
involving cash
paper based
Costs - dr. Anikó Turján
7
RETAIL PAYMENTS IN CASE OF PULIC SECTOR
Retail payments involving cash in case of
public sector
Incoming
payments
Number (in millions)
Value (in Ft billions)
•
45
1000
Outgoing Total
payments
55
3400
100
4400
 Cash related payments  17 % of GDP
• Each third payment involved the use of cash
Costs - dr. Anikó Turján
8
CASH: SOCIAL COSTS AND FLOW OF FEES IN THE
PAYMENT CHAIN (TOTAL IN FT BILLIONS)
Costs - dr. Anikó Turján
9
CURRENT SOCIAL COSTS
Payment instruments
Volume
(in
millions)
Value
Social
costs
(in Ft billions)
Unit social costs per (Ft)
transaction 100 Ft value of
transaction
1. Cash transactions
2. Debit card transactions
3. Credit card transactions
2 835
150
25
51 454
1 050
200
208,82
30,22
19,56
74
201
796
0,41
2,88
9,76
4. Credit transfers, thereof
277
362 772
75,08
271
0,02
47
61 671
35,01
743
0,06
electronic credit transfers
5. Business to business (B2B) direct
debits
6. Core (bussines to consumer,
B2C) direct debits
230
1
301 101
507
40,07
0,79
174
919
0,01
0,16
77
640
7,73
100
1,21
7. Postal inpayment money orders
8. Postal outpayment money
orders for pension
271
22
2 990
1 542
38,96
6,65
144
302
1,30
0,43
3 658
421 157
387,81
1,49%
106,01
0,09
paper based credit transfers
Total
Social costs in % to GDP
Costs - dr. Anikó Turján
10
TYPES OF COSTS
Type of costs
1. Fix
2. Variable: linear to
value
Cash
Debit card Electronic Core
transactions transactions credit
(B2C)
transfers direct
debits
Postal
inpayment
money
orders
Paper
based
credit
transfers
Postal
Credit card
outpayment transactions
money orders
for pension
Total
33,5%
8,8%
62,3%
0,4%
52,5%
1,5%
63,2%
12,6%
17,0%
4,2%
8,6%
0,4%
23,0%
0,0%
73,9%
0,1%
32,9%
9,0%
8,8%
2,0%
0,0%
0,0%
0,4%
0,0%
1,0%
2,0%
10,0%
4. Variable: linear to
number
19,5%
5,0%
0,0%
0,0%
62,3%
83,7%
41,9%
5,9%
23,3%
5. Variable:
degressive to number
29,4%
30,4%
46,0%
24,2%
16,1%
7,4%
34,2%
18,1%
24,7%
6. Fix and degressive
elements together
71,7%
94,6%
98,5%
87,4%
33,5%
15,9%
58,1%
94,0%
67,6%
209
30
40
8
39
35
7
20
387
3. Variable:
degressive to value
7. Total social costs
(Ft billion)
Legend: code of colours in terms of the share of fix and degressive cost elements
(Relatively)
HIGH
LOW
Costs - dr. Anikó Turján
11
HYPOTHETICAL SOCIAL COSTS
Payment instruments
Volume
(in
millions)
Value
Social costs Unit social costs per (Ft)
(in Ft billions)
transaction 100 Ft value
of transaction
1. Cash transactions
1 885
15 322
166
88
1,08
2. Debit card transactions
3. Credit card transactions
4. Credit transfers, thereof
1 000
25
530
11 050
200
391 946
46
20
43
46
796
80
0,41
9,76
0,01
0
0
530
391 946
43
80
0
1
507
1
919
0,16
217
2 130
10
48
0,49
0
0
0 n.a.
n.a.
0
0
0 n.a.
n.a.
3 658
421 156
paper based credit transfers
electronic credit transfers
5. Business to business (B2B) direct
debits
6. Core (bussines to consumer, B2C)
direct debits
7. Postal inpayment money orders
8. Postal outpayment money orders
for pension
Total
Social costs in % to GDP
0 n.a.
285
1,09%
n.a.
78
0,07
Legend: code of colours in terms of the changes in the number of transactions
DECREASED
INCRESASED
UNCHANGED
Costs - dr. Anikó Turján
12
SAVINGS IN THE CONTEXT OF CoP
In the current In hypothetical Absolute
situation
situation
saving*
Social costs (Ft billion)
Social costs in % to GDP
Unit costs per
Cash transactions
Debit card transactions
Electronic credit transfers
Core (B2C) direct debits
Total payment
transactions
Relative
saving* %
388
1,49%
285
1,09%
-103
-0,40% n.a.
-27%
74
201
174
100
88
46
80
48
14
-155
-94
-53
19%
-77%
-54%
-53%
106
78
-28
-27%
Note
* - sign: decrease in costs
w/o sign: increase in costs
Costs - dr. Anikó Turján
13
SAVINGS IN THE CONTEXT OF PHP
Postal payments  60
million
Cash withdrawals from/
cash deposits to payment
accounts  6 million
Payments from/to own
cashier‘s office  34
million
Annual
saving
at the
level of
society
 21 Ft
billion
Állami fizetési szokások - Lajos Brigitta
Note:
• in case of full
electronisation
• non-payment
related
aspects/factors
should be also
considered 
Actual size of
saving depends
on a.m. factors
14
COMBINED SAVINGS
After excluding the overlaps
the potential annual saving:
about 107 Ft billion (0,41% of GDP)
Costs - dr. Anikó Turján
15
RETURN ON COSTS, I.E. NET PRIVATE COSTS
IN CASE OF CASH TRANSACTIONS AND POSTAL INPAYMENT MONEY
ORDERS W/O SEIGNIORAGE (FT BILLIONS)
MNB
Cash-in-transit
companies
Payment service
providers* +**
Companies*+**
Households*
Government**
Total
Cash
Debit card Credit Paper
Electronic B2B
transactions transactions transfers based
credit
direct
total
credit
transfers debits
transfers
6,95
0,00
0,00
0,00
0,00
1,28
Core
(B2C)
direct
debits
0,00
Postal
Total
inpayment
money
orders
0,40 7,36
-1,05 0,23
17,12
-3,81
-17,50
1,29
-18,79
-0,47
1,38
-6,95 -10,23
144,14
17,76
67,58
13,89
53,70
1,26
4,66
34,32 269,73
37,39
16,27
25,00
19,84
5,17
1,69
8,58 88,93
7,73
3,65 5,59
38,96 361,60
1,94
208,82
30,22
75,08
35,01
40,07
0,79
Note:
* Total value excludes the net private costs related to credit cards transactions.
** The net private of costs of the companies and the government are separated only in case of cash transactions and postal inpayment money
orders. In case of the remaining payment instruments the net private costs of the goverment are included in the net private costs of the
companies.
Costs - dr. Anikó Turján
16
INTERNATIONAL EXPERIENCES
• Cautious, sporadic measures, no clear trend or best practice
• Fight on cheques
 Cost/transaction-based pricing (Norway)
 Plans (Ireland, Malta, UK)
• Payment cards
 Regulation on interchanges fees (Spain, Australia, US)
 Subsidy, VAT reduction (the Netherlands, Argentina, South-Korea)
 Surcharges allowed (the Netherlands) or forbidden/limited (Sweden)
• Administrative intervention against cash
 above a value limit and related to fight on money laundering (Belgium,
Italy, the Netherlands, Bulgaria)
• More ambitious and stronger regulation affecting retail
payments from/to the public sector
 Payroll payment for Govt. officials exclusively in scriptural money
(Belgium, Latvia, Denmark)
 Tax payments exclusively in scriptural money (Belgium, Greece)
 Paying pensions almost exclusively in scriptural money (Lithuania)
Costs - dr. Anikó Turján
17
SOME IDEAS FOR HUNGARIAN POLICY MEASURES AT
VARIOUS TIME HORIZONS
•
•
•
•
•
•
•
•
•
•
to create an incentive system for encouraging the use of non-cash
payment instruments from/to public sector, and thus prompting
changes in payment habits
to establish a joint fund for setting up POS terminals at SME
retailers (in the undersupplied sectors and regions)
to introduce Govt control above the size of interchange fees
to further electronise the voucher market (via incentive system)
and to implement the turnover at the POS terminals
to charge the payer for the use of postal inpayment money order
or at least to make its costs transparent for the payer
to establish an overall EBPP open to all users and service providers
to further improve the access to payment services in the
countryside:  full electronisation of the postal payment services
to make unambiguous to all that cash payments may be rejected
to improve the overall infrastructure
to centralise the liquidity management in the entire Govt. sector
Costs - dr. Anikó Turján
18
CONCLUSIONS
• Strong cross-subsidisation between payment
instruments at payment service providers
• Annual potential savings: Ft billion 107 (0,41%
of GDP)
• Modernisation is worthwhile
• Actual savings depends on the changes in the
use of payment instruments
• Enough input to launch war on cash
• Social dialogue: underway
The primary objective of the MNB shall be to achieve and maintain price stability.
19
THE IMPORTANCE OF DIALOGUE
With public sentiment,
nothing can fail;
without it nothing can
succeed.
(Abraham Lincoln)
Costs - dr. Anikó Turján
20
AUTHORS
Costs of payments
•
•
•
•
•
Anikó Turján
Éva Divéki
Éva Keszy-Harmath
Gergely Kóczán
Kristóf Takács
Payment habits of public sector
• Éva Divéki
• Brigitta Lajos
• Miklós Luspay
Costs - dr. Anikó Turján
21