Estonian regulations allow for your company's share capital to be paid from any business banking account in the EU/EEA. This means having a business bank account in the EU/EEA is a great option for some e-residents. This also means that having an Estonian bank account is, in fact, not necessary for many e-residents.
Many e-residents choose to use a payment institution (fintech) for their business banking needs as they can be opened entirely online and often offer more flexible terms. This category is where the widest variety of choice for business banking has emerged in recent years and where more choice is expected in the future.
Banks in the EU/EEA
Banks in the EU/EEA may not be initially familiar with e-Residency or location-independent entrepreneurship, but there may be other factors in your favour if you are a citizen of the EU/EEA and already have an account with the bank you are considering.
Overall, banks are more likely to be able to conduct the due diligence necessary to determine whether you are conducting a legitimate business if you are applying at your place of physical/permanent residency. In addition, you can choose a bank you already have a longstanding relationship - they will know you much better than a new bank or fintech.
A local bank account might also be a better option for you if you are mainly operating your company in your country of residence, your company is involved in manufacturing in said country, or if you are acting as an intermediary to sell the services of others.
Fintechs and payment institutions
Payment institutions can offer accounts with many of the same features of traditional banking, including an IBAN (International Bank Account Number) that your company can use.
As there are a large number of these companies operating globally and disrupting the banking industry, fintechs often focus on more niche features that benefit specific types of companies, like payment processing for e-commerce companies or invoicing and accounting tools ideal for freelancers, consultants and solo entrepreneurs.
Considerations
Unlike banks, these fintechs are not authorised to lend out the money paid into your account. Because of this, the way they operate and manage risks is different. Payment institutions are not covered by typical deposit insurance schemes, but they are required to protect customer funds using other means, such as segregating each client’s deposits. It's always recommended to research your options carefully before deciding which service provider to use.
Who to choose?
The variety of choice in business banking is so wide, complex and ever-changing that it is difficult to map out all options available to e-residents. You will find the current list of services we've identified and established communication on our Marketplace, but this does not mean you cannot use other payment institutions if they meet your needs.
We are continuously engaging new banks and payment institutions to encourage them to extend their services to e-residents, from ensuring they are compliant with Estonian business rules to helping them integrate authentication with your digital ID card. We appreciate feedback if you find a new solution that might also work for other e-residents.
When opening an account with a new service provider, always be sure to provide as much information about your company and its activities as possible to help them understand your business activity. A well-written business plan can help answer any questions potential service providers may have about your business.