Changes in the fees on payment services and the structure of payments following the introduction of the financial transaction tax

Payment service providers passed the transaction tax on to their clients in several steps and to a significant degree, both in the spring, upon introduction of the tax, and in the autumn, when the rates of tax were raised. For cash withdrawals and bank transfers, the tax was typically passed on by being charged against the transaction directly. The tax was passed on directly at a much lower average rate among card purchases; however, the annual fees of payment cards were increased considerably. Moreover, in contrast to the claims made by banks in their communication, the tax was passed on in full or, for some banks, at an even greater rate in both spring and autumn. In the period between December 2012 and October 2013, total increases in payment fees exceeded the level justified by the transaction tax. Payment statistics for Hungary for the first half of 2013 do not suggest a deviation from the trends of earlier years, as electronic transactions continue to slowly gain ground and the use of cash declines. Accordingly, the introduction of the transaction tax did not affect the development path of the payments structure in Hungary either positively or negatively in this period. There appeared to be no significant adjustment among corporate payments in the first half of 2013 following introduction of the transaction tax: the data reported by Hungarian banks shows no signs of relocation of payments abroad or the merger of transactions in order to reach the tax threshold. Nevertheless, on account of the increase in the transaction tax rate in August 2013, the analysis of adjustment should be repeated once the figures for the second half of 2013 become available.