The Estonian government at its Thursday meeting approved the Minister of Finance's bill of amendments to the Payment Institutions and E-money Institutions Act, with which the government seeks to promote competition, implement additional payment services and strengthen the security requirements of online payments.
In order to promote competition, the bill will add payment initiation and account information services among the payment services, the Ministry of Finance said. Modern security requirements will also be applied to online payments, which is why the field of use of password cards will be limited. The bill will also seek to coordinate Estonian laws with the new European Union Payment Services Directive.
"The rapid development of the market of payment services, specifically card, online and mobile payments, has created the need to update the law," Minister of Finance Toomas Tõniste said. "The existing regulation does not include a number of modern payment products and services, which is why the potential exists for significant legal problems in the field of competition, security and consumer protection to arise."
The bill seeks to equalize the operating conditions of business operators operating on the market or entering it, extending the scope of relevant laws to include new payment services, mitigating security risks linked with payments and ensuring consumer protection.
"The consumers in the form of new payment services will have additional opportunities to pay for their purchases online and monitor their financial status. Strengthening the regulation will in turn ensure the trustworthiness as well as continued security of existing and new services," Tõniste said.
The new services to be added to payment services include payment initiation and account information. The first will allow payments in online stores even if there are no opportunities to pay be credit card or use a bank link. The payment initiation service allows through a payment institution to initiate a transfer and inform the seller that a transaction took place. The account information service allows the customer to receive a summary of their financial status from different banks. The new services can only be provided by businesses, which hold an activity license issued by the Financial Supervision Authority.
The bill will also strengthen the security measures concerning online payments. In the future, payment service providers will have to implement so-called strict authentication requirements when identifying a customer. In order to mitigate security risks concerning payments, the use of existing password cards will be limited as the cards are easy to be copied.
The security measures in question are expected to fully enter into force in the first half of 2019. The exact date depends on when the European Commission will approve the relevant implementing regulation.
The law is slated to enter into force on Jan. 13, 2018.
Editor: Aili Vahtla