Hungary Sees Surge in Electronic Payment Fraud, National Bank Issues Recommendations

The National Bank of Hungary has taken a proactive step to address the growing threat of electronic payment fraud by issuing a new recommendation to help prevent such incidents. This move comes as authorities strive to stay ahead of emerging risks in the digital space.

Recommendation No. 5/2023: A Guide to Preventing Electronic Payment Fraud

The National Bank of Hungary’s (NBH) Recommendation No. 5/2023 aims to support the application of law by market participants and establish uniform jurisprudence. The bank has identified new forms of fraud in electronic payment services that require related transaction monitoring mechanisms and customer education measures from service providers.

Key Recommendations for Payment Service Providers

Framework Contracts between Customers and Service Providers

• Contracts should not contain clauses that could lead to grossly negligent behavior by the contracting party.
• Clauses should be clear, concise, and easily understandable by customers.

Customer Notification and Consent

• When issuing new cash substitute payment instruments without customer consent, service providers must notify customers of the reason and provide an opportunity to indicate their reasons for application or registration.

Mechanisms for Withdrawal of Suspected Abuse Orders

• Service providers must establish mechanisms to withdraw suspected abuse orders as soon as possible after a customer reports the issue.
• Compliance with these expectations should not decrease customer experience in payment services, proportionate to the risks involved.

Implementation Timeline and Monitoring

Service providers are required to apply the measures outlined in the recommendation from January 1st, 2024 at the earliest. The NBH will monitor these measures through control and monitoring activities to ensure compliance and effectiveness.