Payment is the shift of value between two parties. It may be used for a variety of purposes, including purchasing goods & services, to settle a legal obligation or to transfer funds between parties/ locations. It encompasses a wide range of activities such as paying with cash, writing a cheque, writing money overseas and paying for inventory via EDI.
According to study, “Payments Landscape in Estonia: Opportunities and Risks to 2022” some of the major companies that are currently working in the payments landscape in Estonia are Eesti Pank, Swedbank, AS SEB Pank, Luminor Bank, Danske Bank, Nordea, Visa, Mastercard, American Express.
Some payment systems are involved paper-based system, real-time gross settlement, real-time net settlement system and cards. Paper-based systems are involved checks or drafts. Real-time net settlement or high-value payments, commonly called wire transfers. Real-time net settlement systems are processed in batches. Cards are a payment medium that includes credit, debit and stored value cards.
Some key drivers of payment industry are involved real-time payments, distributed ledger technology/block-chain, expansion of payments to non-physical interfaces and unified platform etc. Some technologies disrupting the payments landscape include social payments, biometrics, machine learning, and pay-by-installment.
The payment system is conditioned by two major crossover factors: regulation and security. Regulation has a major impact on business models: it is developed in different layers: sector, channel, and product. Some main points of the regulations are reduced customer liability, limited network exclusion, greater access to bank accounts & account information, ban on surcharges and reporting etc. Security involves objective elements and subjective elements: it refers to any system designed to ensure that contractors and sub-contractors are paid even in case of dispute. Additionally, some secure methods of payments are merchant account, mobile payment processor, point-of-sale system, online payment gateway, and software & payment application program interfaces.
Some challenges for payment industry are involved new consumer behavior & needs, technology changes, regulatory pressure, and industry trends. Some of the technological changes are from mobile, wallets, platform/architecture renewal, biometrics, and cyber-security. Regulatory pressure is involved in compliance, data privacy, open banking, and resiliency. Additionally, industry trends are involved cost reduction pressure, new trade corridors, and instant payments.
Nowadays, Estonia is adopting instant payments to remain on a par with its European peers and to promote electronic payments in the country. In November 2017 the SEPA Instant Credit Transfer Scheme a pan European instant payment scheme was implemented across SEPA compliant regions, including Estonia. The scheme enables fund transfers of up to EUR15,000 (USD 17,997.92) in less than 10 seconds across Europe, 24 hours a day seven, days a week, 365 days a year. The service was first introduced by AS SEB Pank (SEB) in Estonia. As well as the limit for contactless payments without the need for a PIN was increased from EUR10 (USD 12) to EUR25 (USD 30). By the end of 2018, the central bank has asked all banks operating in Estonia to offer instant payments.
Drive contactless payments, transportation and ticketing companies are planning to introduce ticket payments through contactless cards in Estonia. Transit ticketing provider Ridango has collaborated with the Tallinn Transport Board, Nets Estonia, LHV Pank, and Mastercard to enable travelers to pay with their contactless cards on Tallinn trams, buses, and trolleybuses by November 2018. Additionally, the emergence of contactless technology will further boost card-based payments. Major Banks such as SEB and Swed bank have started to offer contactless cards. It is estimated that all card terminals will accept contactless payments by 2020.
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