Contactless payments are becoming more and more common



  • Three Estonian banks started to issue contactless cards in 2016 and by the end of the year they accounted for 4% of all bankcards.
  • It is expected that by the end of the year 80% of all card payment terminals will be able to handle contactless payments.

Last year saw the introduction in Estonia of contactless cards, which are already common in other parts of the world. By the end of the year, 4% of all the bankcards issued in Estonia were contactless cards. A contactless card is a bankcard that can be used for small payments at contactless enabled payment terminals without the card needing to be entered and without a PIN code. This allows payments to be made even faster than before. The majority of new bankcards issued are now contactless. Swedbank, LHV and Nordea started issuing contactless cards last year, and SEB will start to do so this year.

For a contactless payment to be made using a card, the payment terminal has to be able to handle it. At the end of 2016, around one third of all payment terminals were able to handle contactless payments. There are over 35,000 payment terminals in use altogether. The banks forecast that by the end of 2017 some 80% of payment terminals will be enabled for contactless payments, and by 2020 all terminals should be able to handle them.

Contactless payments are already commonly used elsewhere in the world. The first contactless cards were issued in the United Kingdom in 2007 and one in four payments there is now contactless. Other European countries where contactless payments are quite common are the Czech Republic, Poland, Hungary and Slovakia. Further afield, most of the cards issued in Canada are contactless and they can be used at 80% of sales points. One card payment in ten in Canada is contactless. Over half of residents of Australia have made payments with a contactless card.

Contactless cards can be used without a PIN code for payments of up to 25 euros in most euro area countries, though the limit varies between countries. The banks in Estonia have agreed that contactless cards can at first be used for payments of up to 10 euros in Estonia. They explain that card payments of up to 10 euros account for more than 60% of all card payments. Whether the contactless card belongs to the person using it can be checked by the PIN code being required for every third or fourth payment or when a certain amount has been spent with it. The Estonian banks may raise the maximum payment amount in future by joint agreement.

The banks say they have heard the worry that contactless cards will be activated by a payment terminal and the cardholder will end up unwittingly making someone else’s payment. For the contactless payment to work, the card has to be held about two centimetres away from the terminal, and the terminal does not debit the same amount from the card twice. Cardholders should still remember that if they notice they have lost their card, they should contact their bank as soon as possible so that the card can be closed. It is possible to put a daily limit on the card, and if desired, the contactless function of the card can be disabled. More information on contactless cards is available from the banks that issue them.

At the end of 2016 the banks in Estonia had issued 1.8 million bankcards, 82% of which were debit cards and 18% credit cards.

Statistics for Eesti Pank’s payment and settlement systems

Eesti Pank will publish its next statement on payments on 27 April.