Payment

To put it simply, payment is transferring money from one party to another, and it is a key factor in all economic activity. Payments can be examined on the basis of the nature of the payment or the payment method.

Some payments are recurring, such as wages, pensions and payments of housing charges and electricity bills. Credit transfers are typically used as the payment method in these recurring payments. Daily payments concern making purchases at the point-of-sale in a shop or service point, or online.

The most common payment method in daily payments is debit card payment, but cash continues to play a role in daily payments.

Payment is a basic function in society and the lifeblood of economic activity.  

The Bank of Finland’s guiding principles on electronic payments and on the maintenance of cash services together form the Bank of Finland’s vision on the desired way forward for retail payment services. The guiding principles for the maintenance of cash services are also used by the Financial Supervisory Authority in its assessment of the availability of basic banking services.

The guiding principles on cash services were published on 28 November 2018 and on electronic payments on 25 May 2022. According to the guiding principles, different user groups must be able to select the payment method that suits them best in various situations. Having a wide variety of available payment methods will also promote preparedness and the ability to function during any payment system disruptions.

Guiding principles on electronic payments

A range of payment methods that suit various situations and serve different user groups must be available. Alternatives must be made available to payment service users, from which they can select the one best suited to the particular situation and need.

Payment is a basic banking service that must be accessible on an equal basis, also in electronic form. This guiding principle also fits well with the promotion of preparedness and resilience. We need parallel payment methods that rely on different payment instruments.

Payment systems must be open and function effectively for society as a whole. It must be possible to bring new payment methods to market to improve the service level and competition.

Seamless payment requires that the payment services widely used in Finland be based on infrastructures compatible with European payment systems and standards. This will support innovation and help ensure that payments efficiently serve society as a whole. Openness also means that the systems will help to make the information created in payments available to the owners of the information (i.e. the payer and the payee).

Electronic payment methods must be secure and reliable. Payment systems and payment service providers must take sufficient precautions against disturbances and threats posed to the service they provide. Efforts must be made to prevent service disruptions from spreading to other entities via payment systems.

Improving reliability and resilience will be important. Security also includes the ability to implement the measures required by regulation, such as the prevention of money laundering and terrorist financing.

Electronic payment methods must support the ability of consumers to manage their own finances, and they must protect users from abuses. The convenience and ease of electronic payments can obscure the scale of consumption and put consumers at risk of taking on debt, especially when lending is combined with the payment transaction.

Consumers must have sufficient information about the characteristics of different payment methods and the associated consumer protection framework. This allows consumers to select the most suitable payment method for each situation. While all payment services do not need to have the same level of consumer protection, all payment methods need to ensure that abuses which are independent of the consumer do not take place.

Guiding principles for the maintenance of cash services

According to the Act on Credit Institutions (610/2014), banks are obliged to ensure the provision of their customers’ basic banking services. The right of customers to deposit cash in their own bank accounts and make cash withdrawals from them is one of the basic banking services.

Even if a shop offers buyers the chance to withdraw cash up to a certain amount when making a purchase, this service does not replace the basic banking service of a cash withdrawal. If a bank does not provide this service itself, it must at least provide assurance by way of agreement that the customer has access to the necessary services.

Bank customers must be entitled to make a reasonable number of cash withdrawals from their account at no charge. Reasonableness can mean different things to different people, but e.g. once per week could be deemed a frequency at which a depositor should be able to withdraw cash from their account at no charge. People must have the right to access money that is theirs, and this must be accessible from their bank accounts without having to spend anything first. Legally speaking, the assets in a bank account are the bank’s debt to the customer.

Small businesses and associations should be primarily viewed as comparable to private customers when it comes to cash services. The interpretation of current law is that an entrepreneur is deemed comparable to a consumer if less than half of their account transactions are related to business activity. If high fees designed for large companies are charged from small businesses for depositing cash from their registers, the grey economy risk can increase.

Retail stores’ cash withdrawal services ('cashback services' or ‘cash-in-shop services’) should be available equally to all customers. In rural areas, this can be a service that helps people in their daily lives, if they would otherwise have a long distance to go to the nearest bank or ATM. However, the retail trade is highly centralised in Finland, and if one large entity offers a withdrawal solution that does not include the customers of most banks, then cashback services cannot in reality supplement cash services in rural areas.

Cash must be accepted as a means of payment at least for services that are important for people's wellbeing. Cash is legal tender that transfers money in real time from the payer to the recipient, without electronic devices, systems or commissions. In this way, it produced by the private sector. Cash also continues to be a commonly used payment method and the only backup system in serious electronic payment disruptions.