mobile payment, smartphone

Hungary’s Mobile Payments Monopoly Illegal, Says EU Court

November 9, 2018         By: Steven Anderson

New options for mobile payments seem to open up fairly routinely, but in Hungary, that wasn’t so much the case. In fact, according to reports, the Hungarian government pretty much had a monopoly on the mobile payments market in its country. Now, the European Court of Justice has declared said monopoly to be illegal, and that the exclusive control the Hungarian government maintains over the market must be halted.

Ever since July of 2014, reports note, the mobile payments market in Hungary has been run by a company called Nemzeti Mobilfizetsi Zrt. Hungary, when presenting its case to the court, reported noted that the single-provider theory should have been just fine, as it served the country’s general economic interest.

That was a point the court took exception to, suggesting that there might have been other ways to go about providing for the general economic interest that weren’t running a state-sponsored monopoly. From the ruling: “In particular, standardization and interoperability could have been achieved through legislation while preserving the existing market structure. Similarly, a new state-owned body could have been created, one without exclusive rights. It would also have been possible to put in place a system of concessions for the operation of the platform of the national mobile payment system at issue or to create a monopoly only for a limited period.”

Given that Nemzeti Mobilfizetesi wasn’t just running mobile payments, but also had that system associated with public transportation, public parking, and road tolls, it was likely just a bridge too far for the court to accept. It might have been one thing if Nemzeti Mobilfizetesti had just been a way for Hungarians to pay for breakfast in the morning, but by connecting it to all those necessary civil projects, it probably just got so ingrained into the country’s everyday operations that the court couldn’t ignore it.

The lesson here is that competition isn’t just a way to ensure that the market can run as it should. It’s also a good way to stay out from under regulatory scrutiny, even in the European Union. It will be interesting to see what steps into the suddenly-opened Hungarian market to take over from Nemzeti Mobilfizetesti.