More and more payments are being made in Estonia with contactless cards
Residents and companies in Estonia made an average of 1.2 million domestic payments a day in the third quarter, with a total turnover of 369 million euros. The number of payments is up 6.5% over the year, and turnover was up 4.1%. Two thirds of all payments are card payments, and in the third quarter cards were used an average of 791,000 times a day for payments in Estonia, which is 7.8% more than a year earlier.
The statistics published by the European Central Bank for 2016 show that people in Estonia are among the most convinced card users in Europe. An average of 117 card payments per resident were made in the countries of the European Union in 2016, but the average for Estonia was 217. This puts Estonia in sixth place in Europe for this indicator, behind Denmark, Sweden, Finland, the Netherlands and the United Kingdom.
Contactless cards have been in the wallets of many Estonian residents for a little over a year1. At the end of 2016, 4% of the total of almost 2 million bank cards that had been issued were contactless, but by October 2017, 17% of them were. The option of the contactless card is being offered by more and more banks.
At the end of September there were a total of 36,000 payment terminals in Estonia, and 65% of them could handle contactless payments. There were half as many such terminals at the end of 2016. Banks forecast that by the end of 2017, 85% of terminals will allow contactless payments and by 2020 all terminals should offer the option of contactless payment. The banks report that merchants have accepted the new terminals eagerly as contactless payments make serving customers quicker and both customers and service staff are satisfied.
The banks forecast that by 2020 half of all card payments will be contactless. The current share of contactless payments is still not very large. It varies from bank to bank between 1% and 9% and depends on when the bank started to issue contactless cards. At the end of last year the share of contactless payments at all the banks that had issued contactless cards was 1% or less.
The limit for contactless payments was raised to 25 euros in October. Last year the banks in Estonia, Latvia and Lithuania decided to start offering the option of contactless payments with a limit of 10 euros so that cardholders and merchants would be able to get used to the new solution. Most countries in the euro area have a contactless payment limit of 25 euros and Lithuania raised its limit to 25 euros in October, while in Latvia it is still 10 euros. Data from the banks show that around 75% of all card payments are for less than 25 euros.
Contactless payments are secure and no case of contactless card fraud has been reported to the banks in Estonia. The serving staff can check whether the contactless card belongs to the person using it, and the PIN code will be required for every third or fourth payment or when a certain amount has been spent with the card. For contactless payment to be made, the card has to be held about 2 cm away from the terminal. If the cardholder has several cards using contactless technology in their wallet, such as cards for public transport or opening doors, or multiple bank cards, the terminal will not be able to recognise a card inside the wallet and so the card will need to be taken out for payment to work. The terminal can never debit the same amount from one card twice in a row. If a cardholder loses their card, they should act the same as with the loss of any other card, and contact the bank as soon as possible to have the card closed. More information on contactless cards is available from the banks that issue them.
1 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 into the terminal. This makes paying faster and simpler.