Banks, Estonia, Financial Services, Internet

The share of payments that are made by card has now been over 60% for three years. The number of payments made by card has also increased and in the last quarter of 2013 it was 7% higher than a year earlier.

Payments through an internet bank are the next most popular method of payment. In the fourth quarter of 2013, 21% of payments were made through an internet bank and an average of 210,000 payments were made each day, which is a tenth more than a year ago. Payments through internet banks have fallen as a share of payments by a couple of percentage points in the last three years.

The third most commonly used non-cash means of payment in Estonia is the direct debit, which includes e-invoice standing orders and made up 6% of all non-cash payments. In 2013 the banks in Estonia started to change over from direct debits to e-invoice standing orders. In the last quarter of 2012 an average of 55,000 payments were made each day by direct debit, but by the fourth quarter of 2013 the number had fallen to 42,600, while 15,100 payments were made each day with e-invoice standing orders. The migration from direct debits to e-invoice standing orders will end on 1 February when domestic direct debits will no longer be shown in the national statistics.

A notable feature of the Estonian payment environment is the large share of electronic payments. In the fourth quarter of 2013, 99.6% of all payments between banks were initiated electronically. An average of only 1,100 payments per day were made in cash in bank offices, a number that was five times higher fifteen years ago.

Payments within a single bank accounted for 78% of all domestic payments other than card payments in the fourth quarter of 2013, and 22% were interbank payments. The shares of payments that are within and between banks has barely changed for the last three years. One fifth of the total number and value of payments were made between banks using the ESTA retail payments system run by Eesti Pank.

On 31 January ESTA will be closed down and after that, domestic interbank payments will be made through the pan-European STEP2 system run by EBA Clearing. Deadlines for interbank settlements will change as a result of this. Movements of funds from one bank to another will now take 3-5 hours and if a payment needs to be made on the same day, it will need to be made by 15.00 or 16.30, depending on the bank.