Banks operating in Estonia settle both domestic and cross-border euro retail payments in the pan-European retail payment system STEP2. The system is operated by EBA Clearing, a private company that was founded by 52 European and international banks.

The system is used by 127 direct participants across the European Union and other SEPA1 countries. Today, over 4,700 banks and 14 interoperable systems are reachable via STEP2 all over Europe. Banks can be part of the system as direct or indirect participants, and the payment orders of indirect participants are sent into the system by direct participants. SEB AS and AS LHV Pank are the only banks operating in Estonia that are direct participants in STEP2 and other banks make their payments through SEB AS, or their parent or partner banks2.

The STEP2 payment system makes transfers across Europe in the same way, by settling credit transfers and direct debits using SEPA schemes. As well as credit transfers, which are the normal form of payments, the pan-European system allows direct debits, for example for an automatic subscription to a newspaper in a foreign country. Banks operating in Estonia do not provide the SEPA direct debit service yet.

STEP2 is a designated-time net settlement system where banks can send payment orders into the system 24 hours a day and 7 days a week, but the processing and net settlement of payment orders is only carried out at fixed times on working days. STEP2 has five daytime settlement cycles for processing SEPA credit transfers, and there are two optional night-time settlement cycles that are usually not used in Estonia. The multilateral net settlement of STEP2 discloses the net claims and liabilities of the banks and final settlement of them takes place in the real-time express transfer system TARGET2.

Table 1. Processing of credit transfers

Acceptance of payment

Acceptance of STEP2 payment order from direct member

Settlement in TARGET2

Received by payee’s bank (STEP2 direct member)

Received in client’s bank account


Information from bank

3:00 8:30 10:00 Information from bank

Information from bank

10:00 10:45 12:15 Information from bank

Information from bank

12:30 13:15 14:45 Information from bank

Information from bank

15:00 15:45 17:15 Information from bank

Information from bank

17:00 17:30 17:45 Information from bank

Payments are only made from one bank to another if the bank has sufficient funds for settlement in its TARGET2 account. If the bank does not have enough money available at the time of settlement, it is allowed to obtain additional liquidity. If this is not done, the payment orders are withdrawn and are processed in the next settlement cycle, which can also be deferred to the next settlement day.

[1] Member States of the European Union and Switzerland, Iceland, Liechtenstein, Norway and Monaco

[2] Swedbank, Nordea, Danske, Krediidipank, Äripank, Citadele, Handelsbanken, DNB, Versobank, Pohjola and BIGBANK