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As digital payments have become part of everyday life, regulators are growing concerned about the decline in access to cash. Hungary has become the latest country to regulate the number of ATMs that card issuers must provide.
In a January 17 decree, the Hungarian National Bank (MNB) ordered card issuers to increase the number of their ATMs depending on the size of their card segment.
“The number of ATMs per capita in Hungary is far below that in other countries of similar size in Europe, while the value of cash movement via ATMs per capita is the highest compared to other European countries. And this value is constantly increasing," the MNB told a local newswire.
The central bank said there were a number of professional reasons why setting a minimum ATM limit was necessary and issued a detailed set of regulations that included a four-tier system for the provision of ATMs.
Under the new requirements, small banks, those whose total number of debit cards plus 50 percent of their credit cards in circulation do not reach 600,000, must provide the smallest number of 169 ATMs across the country.
Meanwhile, the largest banks, those that have more than 2.4m cards in issue, including debit cards and 50 percent of credit cards, must deploy 1,686 ATMs.
According to end of 2021 numbers, only incumbent OTP can already comply with this requirement with its 1,900 ATMs. Other large Hungarian banks fall significantly below this number, with Takarék Bank at 800, K&H at 480 and Erste at 410 ATMs.
The MNB has also regulated the geographical spread of the ATMs in the decree. The fewest number of ATMs will be deployed in each of the 23 districts of the capital, while the highest number of ATMs must be offered in towns and cities outside the capital and county towns.
Financial institutions that do not offer a payment account or have less than a 1 percent share of the debit and credit card market, are exempt from the rule.
Additionally, the MNB said banks could end their cash services in a bank branch only if they registered a downward trend in the usage of the service in that particular branch throughout the last 24 months and customers using that branch could easily switch to the use of ATMs.
The decline in access to cash has been a growing concern in many parts of the digitalised world, with many regulators taking a less prescriptive approach.
In the UK, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) first acknowledged in mid-2020 that access to cash could be an issue and called for the industry and regulators to address this shared challenge.
Although the FCA's hands are tied when it comes to protecting cash, the FCA laid out the expectation that banks should consider the impact of planned closures, either full or partial, particularly on vulnerable customers and make sure their needs continue to be met.
Protecting cash has also recently come up in the EU’s digital euro discussion. The issue is currently not regulated within the bloc but the European Commission hinted at the possibility of a legislative proposal to ensure that everyone has access to cash.
