When Cathy Wang was stuck in Dubai without her Estonian ID card reader last summer, she tweeted a plea to expat Estonians in the Gulf city, in the hope of finding one she might be able to borrow.

In a sign of just how small and tight-knit the Estonian community is, the country’s tech-savvy president Toomas Hendrik Ilves retweeted the message himself.

This was all so that Wang, a Canadian-Taiwanese user experience designer, could file her Estonian corporate taxes from the United Arab Emirates. As the owner of a business based in Tallinn at the time, the 32-year-old qualified for an Estonian ID card used to access everyday services online.

In an online world that is more connected that ever before, the tiny eastern European country Estonia – or E-stonia as it has been dubbed – has breaking geographical boundaries with online technology for years.

The ID card, issued to every Estonian at the age of 15, is supported via an IT platform called X-road and gives citizens access to around online 4,000 services – allowing them to manage their banking, register businesses, apply for child benefits, pay for parking tickets, and even check their medical records on their smart phones. It is used by 90% of residents, with about a third of Estonians using it to vote online.

Now, foreigners like Wang are set to gain extended access to some services with Talinn’s new initiative – e-residency – giving people across the world access to Estonia’s public and private online facilities.

The concept has been heralded as the first of its kind to bridge the “digital borders” of a country, giving “digital citizens” in other countries new rights in Estonia.

How does it work?

On 21 October, Estonia’s parliament unanimously voted to extend national digital e-residency rights to foreigners by the end of the year. With this e-residency programme, the least populous country in Europe, of 1.3 million people, intends to attract around 10 million “digital citizens” by 2025.

Estonians say their open and online culture – 77% of the population has internet access – is behind this experiment on a state level, and there has been little controversy over the move. After all, this is the country which created Skype.

From Talinn’s point of view, it hopes that foreign citizens will be encouraged to open an online business in the Estonian domain. Authorities say with their online system, applications can be processed in as little as 18 minutes.

An advert promoting Estonia’s ID card

“The primary goal of the e-residency initiative has been straightforward: to make life and business easier for our international partners and non-resident foreigners who have a relation to Estonia – who invest, work or study here and do trade with us,” says Siim Sikkut, who works in the government’s strategy unit and is one of the drivers behind the scheme.

Digital identity for non-residents will have nothing to do with constitutional rights or actual citizenship – it’s about everyday matters. Access will come in the form of an ID card with a microchip and no photo, used with two-step authentication and a USB card reader.

“General banking, government dealings, company management, contracts, medical visits; non-residents will have secure access to online services and ability to digitally sign in legally binding manner just like Estonians do,” says Sikkut.

Who will use it?

More than 13,000 people from a range of backgrounds have signed up to be beta testers of the new scheme.

Azael Salazar Guajardo is from Mexico but is based in Ireland, and has an international company organising Latin dance events in Estonia. “It’s where my daughter was born and lives, but I only moved to Europe two years ago,” he says. “A digital identity could help me a lot to manage business.”

Some are world nomads who see the advantages of e-residency. Aditya Nag is an Indian citizen who is living and working in the US. “Doing business via an Indian identity is hard – I can’t go the local government offices, fill out forms, and so on. Nor am I a citizen of the United States, and navigating the system here requires local knowledge or a competent attorney. I could have a company based in Europe, and be living anywhere. The future of the world will look like this.”

Others, like Oleg Antipanov, are tired of the bureaucracy in their home countries. “Russia has a lot of strange requirements for business. Here if you want to open a bank account you must show them pictures of your office and have a landline, even though some of us work remotely. Plus, after the crisis in Ukraine the pressure only got worse.”

I could have a company based in Europe, and be living anywhere. The future of the world will look like this.

Small and medium enterprises are among the main beneficiaries of a system which says it will cut support service costs and red tape.

Ruth Chamberlain says she will be applying as soon as possible so that she can launch Investly, a business funding platform currently based in the UK, in Estonia.

To do that she will have to visit the police or border guards in Estonia at the end of the year, undergo a background check and wait for two weeks before collecting the card, which costs €50 (around £40), in person. However, Estonia is in the process of developing a system whereby this process can be available in embassies in the future, so e-residents would not need to set foot in the country to apply.

“Our UK lenders would become e-residents, too, taking advantage of digital signatures and secure authentication,” says Camberlain’s Estonian colleague Siim Maivelthe, a 24-year-old from Haapsalu. “It will save time on signing documents for everyone.”

“You have to go where you have the best means of doing something. The UK has a lot of capital and highly talented people, but Estonia has the infrastructure,” he says.

Expansion

So far, Estonia has had trouble keeping business talents from taking their skills abroad. Cathy Wang says she left Estonia because she was at the point when her business was expanding and she needed to tap into a bigger talent pool than the small Estonian startup culture offered.

“That matters a lot more than free public WiFi or easy-to-use government websites,” journalist Mark Adomanis wrote in a recent opinion piece for Business News Europe portal. “Estonia’s model hasn’t been attractive enough to prevent Estonians from pursuing their futures abroad.”

At the moment I really don’t see how it could benefit foreigners

Wang says she will be applying for e-residency, although she admits she doesn’t know much about it, and is not yet convinced it will give her access to more benefits.

Wang says Estonia tends to underplay its developments, and has not properly explained how the new measures will help foreigners to access services in Estonia. She remembers discovering that she could suddenly use public transport (of trams and buses) in Tallinn for free via her ID card, but couldn’t find any information online or on TV about the new roll-out.

“If the government were a company, I see the benefits of getting even more data, although at the moment I really don’t see how it could benefit foreigners.”

In the UK, concerns about immigration and euroscepticism have dominated the political agenda, but Siim Sikkut says Estonia’s outlook on both is more realistic.

“Estonian government and society have always understood that as small economy, we have to be open to the world - especially in trade and investment. Thus, any measures that improve the business climate are well-regarded and sought for.”

Privacy

Critics have expressed concerns about the level of centralised data the Estonian government holds on those with ID cards. But Tallinn is keen to reassure people that privacy is paramount as they continue to expand e-services.

“If people can’t trust e-services, they will never use them.

“We have to protect everyone’s privacy,” said Andrus Ansip, former Estonian prime minister and the European Commission’s vice president for the continent’s digital future, during a speech in October. “Trust is a basic principle. If people can’t trust e-services, they will never use them.”

Kaspar Korjus, a 26-year-old project manager on the scheme, who studied in the UK, admits that the project is still evolving, but believes it is positive that Talinn seeks to be technologically innovative.

“It’s most definitely an experimental development,” he says. “I’m bringing more of a start-up ideology to the government side.”

Ansip’s role suggests this Estonian logic looks set to become more influential.

“It seems obvious that everyone else should be able to use these services,” says Korjus. “The inspiration is from the negative side of how, in 25 years of the internet existing, places still don’t do business internationally seamlessly. How can the internet not be ready yet?

In 25 years of the internet existing, places still don’t do business internationally seamlessly. How can the internet not be ready yet?

“There’s also so much fraud,” adds Korjus. “I was flat-hunting in France this summer and the first three turned out to be scams. I had to go to France to sort it out. This new initiative for Estonia is about trust, authentication and a simpler way of life. You can make a signature online. It’s about very basic things.”

The Guardian