The Estonian Payment Forum focuses on promoting digital solutions
The Estonian Payment Forum held at Eesti Pank this week agreed that although the design of the Estonian digital state is good, businesses and traders could make more use of digital solutions for payments than they have so far.
The central point on the agenda of the forum was how to promote an innovative, contactless and competitive payments market in Estonia. The discussion focused on solutions that could achieve this and that would set an example for development that Europe could follow.
Deputy Governor of Eesti Pank Maive Rute noted that since instant payments moving within seconds has become the new normal, it is possible to develop new solutions that can help make the payment process even faster and smoother. “We were recently taught a lesson by the pandemic, and we are still not free of its influence. For business activities to remain smooth and contactless, an electronic sales environment is vitally necessary, with digital payment solutions that are convenient, fast and widely used”, she said.
Half of businesses do not consider it important to digitalise their activities
Head of the payment committee of the Estonian Banking Association Tatjana Grünvald told the forum that a survey carried out by SEB in the Baltic states surprisingly found that half of small and medium-sized enterprises do not consider digitalisation of their activities important.
“The level of digitalisation of businesses could be raised substantially by introducing e-invoices, digitalising receipts, and making simpler interfaces with banks for receiving automatic account statements and making payments. Financial services are support services for businesses and so the key point for any client is ease of use, as they would want to spend as little time as possible on support services without provoking any risks”, she said.
“A thought-provoking example is a survey of online traders in the United Kingdom, which found that 67% of millennials have abandoned an online purchase halfway through because it was too much hassle to complete”, she added.
“Small businesses may not necessarily be able to keep on board day-to-day with the latest developments and may not know how to move their business to a digital sales platform or start using digital payment solutions as well as card payments”, said Ron Luvištsuk, a member of the management board of the Estonian Association of SMEs.
The banks are setting a very fast pace in developing payments
Banks in Estonia started offering an interbank proxy based mobile payment service this spring that allows payments to be made using contacts from a mobile phone without needing to know the account number of the recipient. To use the proxy based mobile payment service, it must be activated and the mobile phone number must be linked to an account.
Kaspar Loog, Head of Payment Services at LHV, noted that although the general direction is to spread the proxy based mobile payment service across Europe and activate it for all clients, strict data protection limits on the use of personal data are an obstacle to this. “These limits mean that mobile phone numbers and account numbers cannot automatically be connected. The experience from Estonia and internationally shows though that people are very interested in this service, as banking apps in smart phones are becoming ever more popular and this makes it much more convenient and also safer to make payments”, he said.
The next step that the banks see is to offer a Request-to-Pay service between banks, and the further development of this service could bring revenues to merchants that do not offer card payments or would like to use this service alongside card payments and cash.
Small traders are very interested in new payment solutions
Eesti Pank carried out a survey of small businesses in summer 2020 to find out whether they were interested in payment solutions that would allow them to request payment in a banking app or with a QR code and receive instant payment through such solutions.
“The survey found that small businesses are very interested in being able to accept payments without having to have the infrastructure needed for card payments. Some 76% of respondents, most of whom were small businesses, said they would be interested in new payment solutions if they were cheap and consumer friendly and would help move money quickly”, said Rainer Olt, head of the Payment and Settlement Systems Department of Eesti Pank.
The members of the Estonian payment forum are the banks and other payment service providers operating in Estonia; users of payment services; stakeholder representatives including the public sector and business and trade organisations; and infrastructure companies. The Estonian Payment Forum works with market participants to support the development of the Estonian payment market and its adjustment to changes in the international payments market. The forum has operated since 2012 and is led by Eesti Pank.