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While nearly a half of bank transfers are currently made as instant payments, it can be predicted that soon all domestic transfers will be instant payments. Although instant payments are already rather common, people do not know much about them. Teet Kerem, head of daily banking at Coop Pank, has put together 7 important facts for us.

1. What are instant payments?
Instant payments allow euro transfers between banks to reach the payee’s account in under ten seconds at any time of the day or night including weekends and public holidays. In Europe, approximately 60 per cent of all the providers of payment services have joined the system, instant payments can be made between 34 European countries, and 99 per cent of instant payments transactions are made faster than in 3 seconds.

2. The instant payment will deposited before you have even told your friend about it
In the past, you would make a transfer and then inform your friend about it by forwarding the payment confirmation or copying the payment confirmation message. Then your friend would be eagerly waiting for the money to be deposited; the most eager ones would look up the period it takes a transfer between banks to reach the account on the bank’s web page, and the most desperate ones would phone the bank to ask when they could expect the payment. These days, users of mobile apps and instant payments do not need any of that: before you have even told your friend about the payment, the bank will have informed them about the deposited amount. All major Estonian banks provide notifications about incoming deposits.

3. Security first
Payments and their speed make everyday life more convenient, but each new convenience is accompanied by risks. Moving money by means of bank transfers required time before, but it also allowed banks to interfere with greater ease if any problem occurred concerning the payment. Banks do their best to prevent money from being transferred to a wrong account by mistake, but more responsibility than before rests with the payer in case of instant payments. So, make sure to double-check the account number when you make a payment and, what is even more important, do not share your online banking passwords with anyone. It is also a good idea to protect your mobile phone screen with a password or requirement for biometric authentication to prevent unauthorised persons from making a payment through your online banking app.

4. Choose the bank that is right for you
In recent years, the Estonian banking landscape has experienced a major shift towards free banking. The notion of one’s “home bank” is becoming more and more vague and dividing financial matters among several banks is the new normal. People choose services where the most convenient and suitable services are offered to them, be it a bank card with additional bonuses or instant payments through all channels. If you or the people you deal with make more and more transactions between banks, and the speed of making payments matters, it might be worth investigating what the market offers and make your choice accordingly.

The Estonian banks which have joined the instant payment system are Coop Pank, LHV Pank, SEB Pank and Swedbank. According to the data obtained from the Bank of Estonia, these cover approximately 94% of all the bank accounts opened in Estonia by individuals and companies. Still, instant payments do not yet make the same share of all payments. Coop Pank, LHV and SEB implemented instant payments through all their channels right away, which means transfers are sent and accepted as instant payments. However, Swedbank’s clients can only initiate instant payments in the mobile app at the moment.

5. The share of instant payments is growing fast
The share of instant payments among domestic transfers between banks is on the rise: Coop Pank joined the system this April, when instant payments amounted to 40 per cent of all domestic bank transfers. In mere months, this share has increased to 44 per cent of all transfers made in Estonian banks. The Bank of Estonia forecasts that the share of domestic instant payments will increase to 70 per cent of all payments as soon as all the bank manage to integrate secure instant payments in their systems. As to the transnational interbank transfers from Estonian banks, instant payments amount to 40% of these.

6. There is always a probability that the transfer will not be completed in seconds
At the moment, amounts up to 15,000 euros can be transferred between banks as instant payments. If your transfer is larger or there is some technical problem, there is always a probability that the transfer will not be made as an instant payment. For such occasions, banks offer a variety of solutions: for instance, on your payment confirmation in Coop Pank, you can always see whether the transfer has been made as an instant payment or not.

7. Soon it will be possible to transfer larger amounts as instant payments
A decision was made on 10 September to increase the current limit, raising it to 100,000 euros as on 1 July 2020.

The pan-European vision implies that SEPA instant payments will in the future become a payment method equivalent to cash and card payments. For this to happen, payment solutions are needed that will make settlements between individuals, in shops, in e-commerce and in the offices of service providers equally convenient. Instant payments have become the new normal, and they are bound to replace most ordinary payments soon.