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All Estonian banks should rollout IP within a year says central bank

05 December 2017

All banks operating in Estonia should introduce instant payments (IP) within a year, said central banker Madis Müller, the Bank of Estonia’s (Eesti Pank) deputy governor.

SEB is currently the only bank in Estonia to offer single euro payments area (SEPA) instant credit transfer (SCT Inst) compliant fast payments to its customers in the country, with Versobank understood to be not far behind.

But Müller wants every bank operating in Estonia to introduce IP within a year, he said in a statement on Monday.

“When other banks start providing instant payments in Estonia alongside SEB, private customers and companies will benefit as funds will start to move between banks within just seconds,” said Müller. “I hope that all banks operating in Estonia will start to offer clients this new and improved payment method within one year at the latest.”

The deputy governor added that when IP becomes more widespread it will allow banks and companies to change to new business models: “It will be possible to develop payment solutions that make it easier for individuals to settle payments between themselves and to pay for purchases in shops or internet stores.”

The voluntary SCT Inst scheme, developed by the European Payments Council, went live on 21 November, with the EPC claiming 585 payment service providers (PSPs), 15% of the total in Europe, as early movers that already offer instant euro payment services up to a €15,000 maximum on a constant 24×7 operational basis, in less than 10 seconds.

SCT Inst launched in eight countries initially from Austria to Latvia, Italy to Spain and will continue to rollout on a voluntary basis in future years. Estonia was one of the national clearing and settlement mechanisms (CSMs) to declare adherence to the framework upon its launch.

Eesti Pank, the central bank, now wants to see PSPs in the country rollout the service to customers as soon as possible using the centralised infrastructure provided. Connecting to it, however, and integrating it into bank operations is not an easy task though. It remains to be seen how many PSPs operating in Estonia manage it before the deputy governor’s self- declared ‘deadline’ of November 2018.

By that time the European Central Bank’s (ECB) TARGET Instant Payment Settlement (TIPS) platform should be live, making it easier for smaller banks to join an interoperable cross-border system that isn’t solely reliant on partnerships between domestic CSMs or pan-European ones such as EBA Clearing’s RT1 platform to achieve reach. Connection figures next year will be closely monitored.

  • An earlier InstaPay Baltic overview of the regional IP scene, including Latvia and Lithuania, can be seen by clicking on the highlighted text.


Author: Neil Ainger