Payments by card: specificities of the French market

The electronic payments ecosystem in France is made up of a wide range of players (banks, cardholders, merchants, laboratories, manufacturers, issuers, processors, card networks, regulators) with a specific payment system based on EMV (Standard Europay Mastercard Visa) technology. The multilateral cooperation agreement signed between the members allows users to access all the approved facilities (EPTs, ATMs, etc.) of the payments system members.

In France, bank card payments are transmitted to the authorisation systems via the CB, Visa or Mastercard card networks; cleared by the CORE clearing system of the French STET initiative, then settled by the settlement service of the Banque de France / European Central Bank / Bank for International Settlements. Some operations can be carried out via the domestic CB network (if the French cardholder carries out transactions in France), or via the international Visa or Mastercard networks (for international payments or for French bank cards that do not have the CB application).

 


In France, a distinction is made between immediate debit cards and credit cards (deferred debit). Somecards have systematic authorisation (online), others are offline. A French card co-branded Visa or Mastercard is accepted all over the world. Foreign bank cards co-branded with Visa or Mastercard are also accepted in France due to the principle of interoperability or agreement between the financial institutions. However, before June 9, 2016, when a French customer paid with their CB bank card supported by Visa or Mastercard, the electronic payment terminal (EPT) automatically selected the domestic network (CB). But since that date and to present day, the cardholder now has the option to choose between CB, Visa and Mastercard (European Regulation 2015/751).

The issues concerning bank card payments are expressed through several challenges (structural, organisational, technological and regulatory (1) ) that are imposed on the players, forcing them to review their organisational structures and chains of operations to make them compliant with European regulations. These challenges have led to a broadening of the scope of electronic banking and the emergence of new forms of banking activities. The bank card can now be used to carry out several types of transactions with varying levels of security: mobile payments (NFC / QR code), contactless proximity, biometric (facial recognition / fingerprint), etc.

In 2019, 54 million debit cards and 39.3 million credit and payment cards were issued, of which CB cards accounted for 27.5 million, or 70% (France Cards & Payments: Opportunities and Risks to 2024 p. 33; 52; 60). According to the same source, 77% of cards in circulation in the French market are co-branded and only 23% are purely international network cards. The top five financial institutions accounted for 86% of transaction value in 2019 (France Cards & Payments: Opportunities and Risks to 2024). In 2018, there were more than 1.8 million electronic payment terminals and almost 55 million ATMs in France (Statista, 2021).

Although card payments are still the most widely used payment method in France (2)  and will continue to grow in the years to come, PSD2-related regulations have created a technological and strategic revolution that will allow the various players (new entrants, financial institutions, etc.) to free themselves from the interbank networks and offer innovative services at lower cost. In fact, they will rely on the Internet infrastructure and not on private structures. Based on these new operational models, these new services (mobile payments in proximity, P2P (peer-to-peer), etc.) are developing to serve new use cases with a new user experience (Payments Cards and Mobile, 2021). The ISO 20022-based Request to Pay complements these payment methods as a powerful end-to-end payment tool offering an opportunity for new services and bringing more value to customers.

The proliferation of multiple channels and the increasing dematerialisation of payments could open up new opportunities for acquiring with increased competition on the acquirer side, which will undoubtedly lead to lower fees and better service. All of this will be closely linked to the ability of the solutions to operate together, because it is in the merchant's interest to have as many payment methods as possible on the same device at the lowest cost, so as to optimise the possibility of offering the customers their preferred payment solution.

 

Author: Tite-Voltaire Soupene

(1) Strong authentication (PSD2 Directive, 2018); Card payments (PCI DSS); Interchange fees (EU Regulation 2015/751). 
(2) In 2019, more than half the French population, i.e. 58,6 %, preferred to pay via bank card. (Statista, 2021)

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