In the second quarter of 2014, an average of 30 million domestic payments were made in Estonia each month with the total value of 13 billion euros. Compared to the same period a year earlier, the number of payments increased by 4%, while the value of payments contracted by 12%. The value of payments did not grow considerably across any method of payment; however, the value of telebank payment orders and payment orders on paper decreased significantly year-on-year. These two methods of payment have been on a downward path for years, but SEPA-related conditions, which entered into force in February, caused the recent sharp fall. The division of payments has remained quite stable over the past four years: more than 60% of domestic payments are made with a bank card, and the share of payments initiated in an internet bank hovers around 20%. At the same time, the majority of the value of payments goes through an internet bank – in the second half of 2014, a total of 75% of the value of payments came from internet banking payments. In the same period a year earlier, the share of internet bank payments in the total value of payments was 10% smaller.
As of February 2014, domestic interbank payments have been made through the pan-European STEP2 system run by EBA Clearing. A fifth of all domestic payment orders are made via STEP2. The payments made through STEP2 make up 26% of the value. Until February, domestic interbank payments were made using the ESTA retail payment system run by Eesti Pank and payments were sent from one bank to another ten times a day. In STEP2, interbank settlement takes place five times a day, which means that a payment from one bank can take three to five hours to reach another bank. If a payment needs to reach another bank on the same day it will need to be made by 15:00 or 16:30, depending on the bank. 80% of domestic payment orders are settled within one bank; these payments are usually settled immediately and around the clock.
In the second quarter of 2014, an average of 1.7 million cross-border payments were made each month with a total value of nearly 6 billion euros. The number of payments was almost the same as a year before, but the value had increased by 16%.
A tenth of cross-border payments are made using STEP2, but these payments make up a fifth of the total value of payments. Cross-border payments made through STEP2 are most often sent to Finland, Germany and Latvia (17%, 16% and 10% of the volume of all cross-border payments, respectively). The most money was also received through the system from these countries.
As at 30 June, banks have issued 1.8 million bank cards, 1.5 million of which are in active use. A few years ago, people tended to use bank cards for cash withdrawal rather than for paying at points of sale. By now, the situation has reversed. Card payments amount to approximately 340 million euros per month, while an average of 316 million euros of cash are withdrawn from ATMs. In the second quarter, people used ATMs to deposit an average of 144 million euros per month, which is 17% more than a year earlier. This increase could be explained partly by the fact that cash payments in bank offices (including depositing and withdrawing cash) have become more expensive and thus, people use more ATMs. The average amount of a card payment has been around 17 euros for more than five years. The average amount withdrawn from an ATM at once is 93 euros and the average amount deposited using an ATM is 364 euros. Both figures are nearly a tenth larger than they were a year ago.
Source: Bank of Estonia
Author: Tiina Soosalu, Payment and Settlement Systems Department of Eesti Pank
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