PAYMENT AND SETTLEMENT SYSTEM

In 1998, Eesti Pank continued elaborating the new payment and settlement system complying with the European Union (EU) requirements. By the end of 2000 Estonia will have an inter-bank payment system based on two subsystems: a Real Time Gross Settlement System (RTGS) for processing large value and urgent payments and a Designated Time Net Settlement System (DNS) for processing retail payments. The designing of the systems was completed with the help of the EU Phare programme in 1998 and the contractors to build and implement the systems were chosen. By 2001 at the latest, large-value and urgent payments will be settled in the RTGS system.

Eesti Pank began collecting data on payment statistics in 1998 by asking credit institutions to start submitting respective reports. The methodology and choice of data is mostly based on the system applied by the European Central Bank, although in accordance with the requirements of Estonian credit institutions and Eesti Pank it is more detailed in several categories. The collected data gives Eesti Pank and the credit institutions a survey of the number of payments and of the turnover as a whole and across different payment instruments. The detailed data helps the central bank in making strategic decisions on the development of the entire inter-bank payment system, while the credit institutions can better evaluate the use of different payment instruments and design new products.

SETTLING OF PAYMENTS

Due to bank mergers, part of inter-bank payments were settled intra-bank in 1998. This reduced the growth rate of the number and turnover of settlements through Eesti Pank (see Table 6.1) - as compared to 1997 turnover increased by 2.3% and the number of payments increased by 1.9%. 96% of the payments were for the sums of up to EEK 50,000. Such payments accounted for 13.5% of the total turnover of payments.

PAYMENT INSTRUMENTS

Cash

In 1998, the share of cash payments accounted for 6.7% of all the payments settled through credit institutions. Based on the Market and Opinion Research Centre EMOR research, banking statistics and expert opinion, one can draw the conclusion that in the entire Estonian payment system cash payments are estimated to account for 80% of payments.

Non-cash Payment Instruments

The most widely used non-cash payment instrument in 1998 was the credit order comprising 83% of the total number of non-cash payments and 97% of their turnover (see Table 6.2). More and more bank clients prefer more convenient and cheaper telebanking to the traditional paper-based credit order. Private individuals and small companies prefer telephone and Internet banking services, while larger companies opt for specialised telebanking products. In 1998, the turnover of telebanking credit orders was 482,383 million kroons and the turnover of telephone and Internet banking credit orders 5,239 million kroons and 6,913 million kroons, respectively.

Cheques have never been extensively used in Estonia as payment instruments and their use has decreased with every year. At the same time the role of another debit instrument, direct debit, has increased. In 1998, direct debit was used for settling 104,000 payments and although this accounts for just 0.3% of the total number of payments, the popularity of this instruments is increasing rapidly.

The most widespread type of debit instrument was still payment with the bank card, which accounted for 15% of the total number of payments. With the growing number of bank cards the role of card payments has increased over the years as well. By the end of 1998 credit institutions had issued 697,600 bank cards (see Table 6.3) of which approximately one third were passive, that is, not used for making payment.

The number of ATMs increased by 15% in 1998 and reached 490 by the end of the year. Nearly 90% of ATMs allow cross-usage of local bank cards issued by different banks, as well as the use of international bank cards Visa and Europay/Mastercard issued in any country of the world (see Table 6.4).

The number of points of sale accepting bank cards increased by 20% in 1998.