Around 15 million euros have been saved on transaction costs in Estonia since the introduction of the euro
From February 2014 all bank accounts will become international. This means they will be changed into IBAN (International Bank Account Number) form. In the second half of this year, all domestic direct debits will be replaced by an e-invoice service. For customers the changes will happen automatically, and each bank will inform its own customers of the changes in good time.
Since the changeover to the euro in 2011, the use of common Europe-wide payment terms, including the use of the IBAN, have lowered costs for people in Estonia, because the cost of domestic and cross-border euro payments became the same. Statistics for SEPA payments show that Estonian residents have saved an estimated 15 million euros on payments since the adoption of the euro.*
From February 2014 common payment terms will apply across Europe in the Single Euro Payments Area or SEPA. In connection with this, all individual bank accounts will be presented in the international format of the IBAN, and banks will replace direct debits with payment services based on e-invoices.
IBANs have been used in Estonia since 2004, but they have been used in parallel with national bank account numbers. From February 2014 codes identifying the country and the bank will be added to the national bank account number, creating a 20-digit number. Eesti Pank statistics for 2012 show this will affect around 2.5 million bank accounts held by private individuals in Estonian commercial banks.
The new payment service based on e-invoices is essentially a further development of the e-invoicing service currently in use. The quality of the service will remain the same, and it will still be possible to pay invoices electronically and to archive all the e-invoices in the internet bank. It will be possible to make the payment of e-invoices automatic if so desired.
SEPA will bring a new service, SEPA direct debit. This will allow customers to make payments for goods and services from across Europe through their home bank. At first the SEPA direct debit will only be used for payments to Europe on a cross-border basis. The providers of SEPA direct debit services will depend on market demand and competition.
These changes will mean that businesses and the public sector will need to upgrade their accounting software and change their invoicing systems (including displaying IBAN accounts on invoices).
In 2012 direct debits were used for one quarter of the electronic payment of invoices. The remainder were credit transfers. It is estimated that around 19 million direct debit payments were made in 2012, or around one and a half million each month. Only around 500,000 of these were made between banks. Data for 2011 from the European Central Bank put Estonia in 19th position in the European Union for the share of all non-cash payments made by direct debit.
* The calculations are based on the average price of SEPA-compliant cross-border payments, which has a weighted average of 0.41 euros (calculated from payments both in bank branches and over the internet), and on the banks' statistics for all SEPA-compliant credit transfers. These figures are used to calculate the savings for customers compared to the prices used before 01.01.2011, which were about 1.92 euros for making a credit transfer, and 5.11-5.75 euros for receiving one.
Further information on SEPA can be found on the Eesti Pank website.
Further information on SPEA direct debit services can be found on the Estonian Banking Association website http://www.pangaliit.ee/en/welcome.
For further information:
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