In Estonia are mainly used non-cash payment methods as most people usually use cards to make purchases in shops or they make payments over the internet. The only European countries where card payments are even more common are Denmark, Sweden and Finland. Every day over 700,000 card payments are made in Estonia and over 200,000 payments through internet banks. The systems used for the payments have to function without interruption and so Eesti Pank as the overseer has to pay close attention to the functioning of the card payment system, the securities settlement system and the interbank payment system.
There are three payment systems that are important for the payment market in Estonia:
- STEP2 – a pan-European retail payments system where the banks operating in Estonia settle interbank payments, which are ones where the payer and payee have accounts in different banks;
- Card payment system – a local system where card transactions are processed. Most of these transactions are card payments made to pay for goods and services. Card payments are the most commonly used method of payment in Estonia;
- TARGET2-Eesti – part of TARGET2, the pan-European real-time gross settlement system used to make fast and large-value payments.
Payments move from one bank to another through STEP2 on the same conditions within Estonia and to other countries in the European Economic Area. TARGET2 is mainly used for large-value payments between the banks and for the monetary policy operations of central banks, but bank clients can also use this system for urgent payments. Whereas money can take several hours to move from one bank to another through STEP2, in TARGET2 it takes only a few minutes. The TARGET2 system is maintained by the national central banks, including Eesti Pank in Estonia.
Over 100,000 payments are made each day in Estonia through STEP2 while three thousand payments are made each day through TARGET2-Eesti, but these payments are very large, averaging around hundred thousand euros per payment.
The Estonian securities settlement system is a local system where obligations arising from securities transactions are met. In 2017 the Estonian securities settlement system will start using the services of TARGET2-Securities. This will make the same settlement services as elsewhere in Europe available in Estonia and will provide access to a large range of securities.