Information Technology Landscape in

ESTONIA

                                      E-Commerce

One of the most significant breakthroughs for the development of e-commerce in Estonia was the enactment of the Digital Signature Act on March 8, 2000, which became effective on December 15, 2000. This Act provides for the legal validity and enforceability of digital signatures. Additionally, the Act delineates the requirements for a valid certificate, as well as who is able to issue these certificates. The Act also addresses Time-stamping Services and Service Providers, and discusses the supervision necessary Certification and Time-stamping Service Providers. 

Overall, Estonia has emerged along with Taiwan as a leader among developing countries in the ability to support e-commerce. In Europe, Estonia, benefiting from a close relationship with its Scandinavian neighbors, matched Taiwan in leadership, human capital and e-business climate. Nearly a third of Estonia's population is connected to the Internet, and nearly 90 percent of public employees work in a computerized environment.

Estonian e-commerce firms now operate throughout the Baltics - in Latvia and Lithuania - as well as in Hungary, the Czech Republic and other countries in Central and Eastern Europe, where they have been both taking over local concerns and creating new enterprises

More than 80% of all Estonian bank transactions are made over the Internet, and even their Scandinavian counterparts have admitted that they have a lot to learn from Estonian banks. Estonian farmers trade their produce on local versions of auction sites. About 23% of the population of the country are using Internet banking and a number of companies are e-billing. Altogether non-cash transactions already account for over 95% of all business transactions made in Estonia. The Internet and the New e-economy is equally being embraced by the commercial, governmental and financial sectors of Estonia. As an example, the Estonian Taxation Board has launched a new e-revenue service where tax income-returns can be dealt with on the net.

Research shows that 6 per cent of Estonians have made purchases over the Internet.

One of the Estonian search engines, http://www.ee/, showed 16 online businesses selling computers, 30 selling computers, nine selling office accessories, 82 providing various merchandise, 30 dealing in real estate, 43 offering advertising services, 7 providing banking services, 14 offering E-cards, 18 selling books and 16 offering message delivery. Some of these businesses do not offer online payment option, though.

Along with the exponential increase in the number of Internet users in Estonia, there has also been a rise in the number of people who use Internet banking services. The number of online shops is growing quickly, as well – from 57 to more than 100 in the last six months alone. These figures refer only to those shops, which offer online payment links. The explosive increase in the number of fully online shops has greatly been facilitated by the fact that all major Estonian banks now offer online payment links. Estonia’s residents are making wide use of Internet banking services – the total number of Internet bank clients in Estonia at this writing is around 227,000, or fully 16.2% of the entire population. This provides a good foundation for the further expansion of E-retailing. (DT Media)

The latest development in Estonia has been the introduction of WAP-based services. Several mobile phone companies launched the services earlier this year, offering innovative opportunities such as being able to pay parking fees via the mobile phone when your automobile has been parked.

There are also several successful B2B projects operational in Estonia. One the examples is the wholesale company of medicals Magnum Medical which started to develop its Internet based ordering system in 1997 and currently the share of electronic commerce has raised to 200 million EEK (13 million EUR) per year; it counts for half of the whole turnover of the company.

Another B2B environment Logistic2000.com for transport firms was also established in March 2000 to facilitate the everyday co-operation between transport organizers and carrier transport companies

Portals.

According to the web-site visiting frequency report prepared by Tele2 Media Group in April 2000, in the category of Estonian newspapers Eesti Päevaleht is the leader, it is visited 379,000 times weekly. Postimees follows with 354,000, advertisement newspaper Kuldne Börs with 183,000, Sõnumileht with 64,000 and Äripäev with 54,000 hits. 

In the category of directories the leader is Neti with 1.7 million weekly hits. Free e-mail server mail.ee had 1.69 million and portal Delfi 1.25 million hits.

Additionally, several portals were launched relatively recently:

Obstacles for e-commerce.

The culture of shopping in Estonia still favors traditional shopping behaviors and does not seem to be turning around. The main reason of why more people do not shop on-line is claimed to be the fact that buying goods or services in a store is much safer in the sense that you know what you are buying, as well as buying stuff in shops being easier and more interesting. (europemedia.net)  

For businesses, especially foreign ones, a major obstacle to dealing on-line with Estonians is high credit card fraud. Many e-commerce consulting sites, such as Americart, have Estonia on their lists of countries where the vast majority of credit card orders are fraudulent.

Many Estonian retailers have an online presence, but they require cash payments because of the absence of a suitable on-line payment system and relatively low credit card penetration among Estonian population. 

Important State Projects.

One of the projects aimed at reducing the effect of the above mentioned obstacles is the Estonian ID-card project. The purpose of the project is to develop a multifunctional smart ID-cards that Estonians would carry with them for identification purposes as well as for various other uses such as banking, insurance, social security, etc. The new card will replace passports for all inside EU identification purposes. The way ID-cards may help the development of e-commerce is that they will add a higher security assurance to electronic transactions.

Another important project is the E-Citizen project. The project's vision is to provide all the public services for Estonian citizens on-line with easy and available to everyone access. The majority of the government-citizen transaction will be performed on-line. Also, the impact on e-commerce is reflected in the fact that private enterprises that help finance the project will share the developed high quality network to conduct their business transactions.