A payment system is used for transmitting payment orders, processing them through clearing, and settling them. The banks in the system settle their claims and liabilities amongst themselves so that money gets from the payer to the payee. There are three types of payment system in general use:
Multiple parties are involved in payments and making transfers of money through payment systems:
Securities settlement systems are used for transactions with securities. The securities market is divided into a primary market and a secondary market. The primary market is where securities are issued. This is generally done electronically and the registration of the securities is run by central securities depositories that record the securities, provide and maintain securities accounts and operate the securities settlement systems. The secondary market, or exchange, is where securities are traded after they have been issued. The financial obligations that arise during trading are fulfilled in the securities settlement system. The national securities settlement system is usually operated by the central securities depository and the Estonian Central Securities Depository keeps the register of securities in Estonia and manages the securities settlement system.
Securities settlements are divided into two types by how the payment is settled:
Since October 2014 a common T+2 settlement cycle has been used in Europe, where securities are transferred from the seller to the buyer by the second day after the trade is made at the latest.
The principal means of payment are cash and money in bank accounts. Payments in cash do not use any payment system. Payments made with money in accounts use the money in the bank account, a payment system, and various methods of payment like card payments or internet bank payments. Methods of payment are ways that a payment can be initiated and they are based on three main instruments, which are credit transfers, payment cards and direct debits.
Payment instruments |
Payment methods |
credit transfers |
internet-bank payment orders, including e-invoice payment orders |
|
standing orders |
|
e-invoice standing orders |
|
payment order through a bank link |
|
telebank payment order or bank connection |
|
mobile phone payment order |
|
telephone-bank payment order |
|
payment order initiated in an ATM |
|
paper-based payment order |
|
mobile phone payment |
payment cards |
card payment |
|
e-commerce card transaction |
direct debits |
direct debit |
cheques |
cheques |