Estonia and other Baltic and Scandinavian countries are developing a card payment network that would allow people to pay for food, medicine and fuel by card even in the event that there is no internet connection, which is otherwise used to process card payments.

Systems with this capability will be set up in designated crisis stores and select gas stations in every county. In effect, it will work similarly to how airlines can accept card payments mid-flight — but with a slight difference.

"Limits will be set on people's bank cards so purchases can only be made at specific locations," explained Rainer Olt, director of the Payment and Settlement Systems Department at the Bank of Estonia. "And in a crisis situation, everyone must decide what is essential for them — whether at a grocery store or a pharmacy — and everyone also knows how much they need to fill up the tank."

Swedbank has already developed an offline card payment solution and is prepared to implement it if necessary. In cases where a payment terminal can't connect to the bank, nothing changes for the customer — except that contactless payments won't work.

"The customer will need a physical bank card for this," explained Martin Kõrv, Swedbank's retail banking communications manager. "It isn't possible to make offline card payments using a smart device, so the customer will need a physical bank card and must know their PIN code."

EU eyeing alternative to US-based systems

Starting this year, the European Central Bank (ECB) has also been emphasizing the need for such a system EU-wide. In an increasingly fraught geopolitical environment, card payment systems provided by the U.S., like Mastercard and Visa, could also become a security risk.

"It is possible to cut off data communications — and cut off communications between Europe and the U.S.," Olt acknowledged. "And if that happens, card payments won't work. That's why it makes sense for us to implement alternative rails."

The primary solution currently in development is the digital euro, a digital payment method offered by the public sector that does not require a bank account. Estonian experts believe the question is no longer if, but when the digital euro will be introduced.

"Of course, banks in Europe want to know exactly what this will mean for them," noted Kadri Martin, an adviser at the Finance Ministry's Financial Services Policy Department. "For merchants, it may also mean some new developments. Interest is high, and there are countries where banks are more critical than in others."

Martin estimated that the earliest the digital euro could be launched is in five years' time.

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