HUNGARY Law and Practice Contributed by: Pál Rahóty, Lakatos, Köves & Partners
2.2 Regulatory Regime In almost every vertical, the MNB is the key competent authority. Hungarian financial regulation is strongly activity-based: if a model falls into a regulated activity bucket, one will need an MNB authorisation/registra - tion – or possibly authorisation from another European Economic Area (EEA)-based regulator (or must oper - ate via a regulated partner and remain outside the regulated perimeter). The MNB maintains extensive licensing guides and a “fintech legal repository” within its Innovation Hub, which reflects this approach. Note that EU Regulations are directly applicable in Hungary (there is no transposition), but Hungary may adopt local procedural/penalty/supervisory rules around them. EU Directives require Hungarian implementing acts; local drafting choices can create edge cases where one must reconcile EU intent with Hungarian text and MNB practice. 2.3 Compensation Models Hungarian fintechs may use a wide range of com - pensation models – including flat or per-transaction fees, subscriptions, FX spreads, interest and late fees (for lending/BNPL), merchant-funded commis - sions, marketplace take-rates, investment manage - ment and performance fees, custody fees (including crypto) and referral or inducement payments. These models are generally permissible, but their legality and structure depend on the regulatory perimeter involved (payments, e-money, lending, investment services, insurance, crypto). In Hungary, most secto - ral regimes are based on EU law – the Revised Pay - ment Services Directive (PSD2), Markets in Financial Instruments Directive II (MiFID II), the Insurance Dis - tribution Directive (IDD), the Markets in Crypto-Assets Regulation (MiCA) and the Consumer Credit Directive – and implemented or supervised locally by the MNB, which places strong emphasis on transparency and consumer protection. Across sectors, the core requirement is clear, pre- contractual and ongoing disclosure of all costs and charges. For payment services, PSD2 requires ex- ante disclosure of fees, exchange rates and currency conversion margins, plus per-transaction breakdowns. For consumer credit and many BNPL models, Hun - garian law (reflecting recent EU reforms) requires dis - closure of the annual percentage rate/annual percent -
tech solutions (B2B) to maintain their dominant market position. The predominant fintech business models/verticals in Hungary (according to public sources) are as follows. B2B Fintech Solutions (Software and Infrastructure) Over 80% of Hungarian fintechs operate in the B2B space, focusing on providing technology to financial institutions. Financial software development and sys - tems integration is the largest sub-segment, includ - ing white-label apps and core banking modernisation. Data analytics and business intelligence is another major focus area, helping banks analyse customer behaviour and automate processes. Payment Services and Digital Wallets (The Dominant Vertical) This remains the most mature and widespread verti - cal, driven by the rise in cashless transactions and electronic payments. Mobile wallets (Apple/Google Pay) and instant payments are standard. Incumbent banks have fully integrated these services to stay competitive. Lending Infrastructure and Buy Now, Pay Later (BNPL) Fintechs are revolutionising the lending process, shift - ing away from long, paper-based applications towards digital, instant or white-label solutions. BNPL and digital factoring are growing rapidly for SME liquidity management. Local players are active in white-label lending/BNPL, digital factoring and B2B BNPL. Regtech and Cybersecurity (Fraud Prevention) As digital transactions increase, so too do cyber threats, making fraud detection a high-growth verti - cal. Key players focus on AI-powered fraud detection. Open Banking and Banking as a Service (BaaS) While the adoption of direct PSD2 API usage in Hun - gary is slower than in Western Europe, the ground - work has already been largely completed. This is a key area for new fintechs – both for open banking/BaaS providers and account information services.
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