Estonia’s Central Bank Prepares Payments Upgrade Ahead of SEPA
Estonia’s central bank, the Bank of Estonia – known in the country as Eesti Pank – is upgrading its payments system to meet the conditions of the single euro payments area (SEPA), the project designed to harmonise electronic payments across Europe.
Eesti Pank said that it began procurement last September to bring its retail payment processing system in line with SEPA’s conditions and chose the tender from French company Systèmes technologiques d’échange et de traitement (STET), which already provides a payments platform for France’s banks. The proposed system should enable inter-bank payments to be made more quickly in Estonia and should become cheaper for banks than under Eesti Pank’s current Settlement System of Ordinary Payments, known as ESTA. The new solution also allows the number of days the system is in operation to be increased.
According to Eesti Pank, STET’s solution will reduce the cost of payments for commercial banks by up to one third from the current ESTA price of three cents per payment. It will also increase the speed of settlements between the banks and the amount of time when the system is available. The STET system will allow SEPA credit transfers (SCTs) and direct debits to be settled in accordance with the new requirements being introduced from 1 February 2014, when SEPA compliance for the eurozone countries is mandatory. Non-eurozone countries have until October 2016..
To ensure that the new STET service is launched successfully in the Estonian market, Eesti Pank is urging all commercial banks operating in Estonia to join the system and will present the STET tender at a meeting of the banks on 23 January. It hopes that all current members of the ESTA settlement system will continue to use the single payment system provided by Eesti Pank for their domestic payments at least. The final choice of solution and the conditions for bank clients will be clarified once the negotiations between the commercial banks and Eesti Pank are completed.
An average of around 100,000 retail payments are made daily in Estonia, at a total value of around €125m.