The bank account as the basis of payments
A bank account is the foundation of all payment transactions. Current accounts are intended for handling day-to-day payments, and banks usually pay little or no interest on funds in a current account. A current account is linked to the services the customer needs for everyday banking, such as debit cards, online banking and payment services. A credit facility can also be attached to the account. If larger amounts of money accumulate in a current account, they are typically transferred to savings accounts with higher returns or to other investment options.
Opening a bank account
A bank account can be opened either by visiting a bank branch in person or by applying online through the bank’s website. A valid ID is always required so that the bank can verify the customer’s identity. If necessary, the bank also has the right to check the customer’s credit history.
When opening an account, the bank determines the intended use of the account and what additional services the customer needs. Accounts are usually opened for personal use, but the account holder can authorise another person to use the account. An authorised user can withdraw funds and make payments from the account. A minor child’s account is opened by their guardian. If the child has more than one guardian, they must open the account together and agree on how it will be used.
Payment cards
All payment cards issued in Finland have an EMV chip, and they must also work outside Finland, at least within the Single Euro Payments Area (SEPA). The card details are stored on the chip, and the payment is authorised using a personal identification number (PIN). EMV chip cards also support contactless payment (also known as tap-to-pay). Most cards issued by banks in Finland are debit cards linked to a bank account.
Why do cards have an EMV chip?
• The chip helps prevent card cloning and fraud.
• The chip enables more reliable identification of both the cardholder and the card.
• Payments no longer require a signature.
• Payments are authorised by entering the PIN.
It is essential to keep your PIN separate from your card and disguise it so that it cannot be easily connected to the card. The best practice is to memorise the PIN so that there is no need to write it down. Always shield the keypad when entering your PIN to authorise a payment.
Payment processing
In Finland, payment processing is handled by banks. Banks offer their customers several ways to pay bills. Currently, most bills are paid through online or mobile banking. Payments can also be made automatically via e-invoicing or direct debit. In addition, bills can be paid using a payment service, in person at a bank branch or through a telephone service.
Mobile payments
Today, there are various solutions for mobile payments – paying for goods or services with a smartphone. Mobile payments are often based on card payment, meaning the consumer has an app on their phone that stores the details of one or more cards. A smartphone may also be linked to a mobile wallet containing stored funds or a credit feature.
Mobile payments can also be used for transferring money between private individuals. These kinds of transactions are often referred to as peer-to-peer (P2P) payments, money messages or simply friend-to-friend payments. In most cases, both the sender and the recipient need to use the same service. The payment is routed based on the recipient’s phone number or email address.
Contactless payments
In contactless payment, the card is not inserted into the reader but tapped or held close to the payment terminal, which reads the card data using radio-frequency identification. Contactless payments also have a cumulative spending limit. Small contactless transactions up to 50 euros do not require the PIN, but when the limit is exceeded, the payment must be authorised with a PIN. For security reasons, the terminal will occasionally request the PIN even for contactless transactions, making contactless payments safe to use.
The use of contactless payment is not obligatory – customers can always insert the card and use the PIN instead. The main advantages of contactless payments are speed and security: not having to enter a PIN speeds up the transaction and reduces the risk of someone spying on it.
Different ways to pay bills
E-invoice
In e-invoicing, the payee sends the invoice electronically directly to the payer’s online bank. All the necessary payment details – such as the account number, reference number and amount due – are pre-filled and do not need to be manually typed in. The bank can pay the e-invoice automatically on the due date, or the payer can choose to approve each invoice separately in their online bank. The bank can send a notification of incoming e-invoices by email or text message. Switching from paper to e-invoice is quickly done in the online bank if the payee offers e-invoice as a billing option.
Direct payment
Direct payment is intended for recurring bills for customers who do not use online banking. The payer gives their bank a direct payment authorisation, and the bank pays the bills automatically on the due date. The payee – the recipient of the payment – sends the invoice with a note that it will be paid by direct payment, while the invoice details are also sent electronically to the payer’s bank as part of the e-invoice data.
Recurring payment
A recurring payment is an automatic transfer from one account to another on a set date. This method is used for regular payments such as transfers to savings accounts, housing company maintenance fees, or rent, if the housing company does not use e-invoicing.
SEPA direct debit
SEPA direct debit is rarely used in Finland, but it is more common in other parts of Europe. To use SEPA direct debit, the customer must sign an agreement with their bank. They must also give a mandate directly to the biller. The payment is debited from the account on the due date. Consumer customers have the right to request a refund from their bank within eight weeks of the debit. If the customer has not signed an agreement with their bank, any SEPA direct debit requests from billers will be rejected.
Other payment methods
Bills can also be paid by sending signed bank transfer forms by post in a payment envelope, using a payment terminal, through telephone banking or at a bank branch. Various mobile services also make it possible to pay bills on a smartphone through online banking.
Online shopping payment methods
Bank transfer. The payment is debited immediately from the account, 24/7. When making a bank transfer, the payer is authenticated with their online banking credentials.
Card payment. Most major card schemes provide services that verify both the payer and the online merchant, making online payments more secure.
Online bank payment. Paying through online banking is currently the most common payment method in Finland. The invoice details are entered into the payment form in the payer’s online bank. The payee or invoice details can also be saved for future use. Online bank payments are fast and easy.
Payment security
Thanks to technological advances, banking services have become increasingly secure. However, fraud attempts targeting bank customers are on the rise. Fraudsters try to obtain online banking credentials, payment card details, PIN codes and other confidential information in various ways. Payment cards and online banking credentials issued by the bank are personal and must not be shared with others.
Banks, the police or any other party will never contact customers by email, phone or other means to ask for online banking credentials, PIN codes, credit card numbers or any other confidential information.
For tips and advice on how to prevent fraud, see the Stick it to the Scammers website. ↗
Cash handling
Private customers typically withdraw cash from ATMs and rarely need branch services for cash transactions. Cash can be deposited easily at deposit ATMs or banks or via cash-in-transit services. Small cash amounts are usually deposited at ATMs, as not all bank branches accept cash. Larger amounts are transported by cash-in-transit and security companies, which collect the cash and deliver it to banks’ shared cash centres, where the funds are counted and credited to the customer’s account.
Businesses that receive cash regularly must have a separate agreement with their bank covering the delivery of cash, counting services and provision of change. Banks charge a service fee based on the amounts of cash received and delivered.
Cashback at checkout
Some stores allow cash withdrawals at checkout when making a card purchase. The withdrawal is authorised with the card’s PIN.
Cashback is a service provided by the merchant, who is responsible for ensuring it works, The merchant may set the terms and pricing of the service. The card-issuing bank may also set a maximum withdrawal limit, which can be adjusted for security reasons.